What are the Funding Choices for Indian Startups?

Have you decided to launch a new company? You’re committed to implementing your brilliant plan, and you know you can. Whether a startup is a micro, small, or medium-sized organization / MSMEor a huge corporation, financial backing is necessary for success. In order to establish a solid foundation for your company activities and allow them to develop and spread, you will need access to funding. It may be a time-consuming and difficult process to seek for funding for a new firm. Here, however, we have assembled a few key financing ideas or proposals that will facilitate your access to credit facilities from preeminent financial organizations, simplifying the process for your convenience.

The Best 8 Business funding plans to Get You Started in March 2023

Try to fund your business from personal resources.

Many new businesses get their start with funding from their founders. This issue remains no matter where you go for finance for your startup: a bank loan, a venture capital firm, or even the government. If you’re just starting out in business, investing your own money is your best bet. Lenders will have little incentive to say no to a loan application from a mature company, since they will see the company’s track record of success as a low risk.

Next, Approach a Private/Public Sector Bank for a Loan for Your Company

It is widely accepted that banks are the preferred funding source for new businesses because of the ease and security they provide. There are two types of loans available to new businesses from banks: term loans and working capital loans. Loans for new businesses are available from almost every bank in India, both government-run and private. Nevertheless, each financial institution will have its own terms for loans, including interest rate, loan amount, and length of time to pay them back.

Get Micro and Small Business Loans from NBFCs and MFIs

It will be tough to get a loan from a private or public sector bank if you are a novice borrower and do not have a financial history or a credit score. Learn your credit score’s status before reaching out to NBFCs and MFIs for a Startup Loan. NBFCS and MFI interest rates are often higher than those given by PSU banks.

Financing Options: Government Loan Programs

Start-up businesses, small and medium-sized companies (SMEs), and micro, small, and medium-sized enterprises (MSMEs) are all targeted by a number of credit programmes established by the Government of India to help boost the country’s economy and empower its citizens. Start-up India, PSB Loans in 59 minutes, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Stand-up India, Atal Innovation Mission, Make in India, Trade-related Entrepreneurship Assistance and Development (TREAD), and the MUDRA loan scheme under the Pradhan Mantri Mudra Yojana (PMMY) are just some of the loan schemes launched by the Government of India to aid Start-up businesses.

Browse the Newest Business Credit Cards 5

With the advent of new businesses in recent years, the use of credit cards for commercial reasons has increased. You may utilize credit cards for purchases and avoid debt or additional interest rates paid in the form of penalties if your startup does not need huge sums of money in the early stages of operation.

Get money together using crowdfunding websites.

The term “crowdfunding” refers to a method of raising money via online and social media channels from a large number of small contributors. Crowdfunding websites also collect money for things like social causes, charity, ideas, disaster assistance, events, etc. This approach promotes social and cultural issues while also aiding start-ups and first-time company entrepreneurs in need of financial backing. Kickstarter, Wishberry, Ketto, Milaap, Catapooolt, Indiegogo, Fundable, FuelADream, etc. are among the most popular Crowdfunding sites in India.

P2P Finance, or “Meet-Me” Loans, Comes in at No. 7

When it comes to borrowing money, peer-to-peer lending eliminates the need for middlemen. Borrowers ask for money from lenders, who invest it, and use the funds for business purposes. Here, lenders may profit from borrowers by charging them a greater interest rate than what they would get from traditional financial institutions like banks, NBFCS, or MFIs. Both lenders and borrowers benefit from RBI’s oversight of P2P lending platforms. P2P lending is a loan for businesses just getting their feet wet, but for the investor it’s a chance to get a return on their capital.

Locate a wealthy benefactor to back your startup.

Angel investors are wealthy people who are looking to put their money into emerging businesses in India and elsewhere. Angel investors want to invest for greater returns on profit, therefore they take on more risk than banks do when providing loans. Some of the most well-known Indian angel groups include Mumbai Angels, Indian Angel Network, and Hyderabad Angels. In order to get financial backing for their businesses, entrepreneurs may contact these investors directly.