6 Best Options to Get Small Business Start-up Loans

6 Best Options to Get Small Business Start-up Loans

6 Best Options to Get Small Business Start-up Loans

According to a report, India has the third-highest number of start-ups in the world. This indicates positive prospects for individuals planning to boost their start-up growth. A study showed that nearly 94% of new businesses fail in the preliminary operation years. This is caused by the lack of stable funding and liquidity backup. 

When facing such a situation, individuals can look for an efficient solution like startup business loans. These credit forms offer substantial funds to borrowers against simple eligibility and documentation. However, fund requirements depend on nature and business type. Since there are multiple options in the market, one needs to understand the different sources of finance available in detail.

What are the best options available to fund start-ups?

  • Taking a loan from family 

The first option to acquire business finance for start-ups is taking a loan from family members. This is a secured way of investment as first-time investors can easily avail of the credit facility once their business gains stability. This option further prevents a company from going into debt as an individual is free from monthly obligations. Entrepreneurs who want their own start-up can start investing today and completely focus on cash flow generation. 

  • Crowdfunding 

With digitalisation, new variants of fundings have emerged. For example, crowdfunding is a gift of social media that connects investors and business owners. This method involves collecting funds from multiple investors interested in the idea or product of a firm. First, they are detailed on the fund corpus and its usage. Then, depending on the pitching, interested investors offer financial aid.

Crowdfunding is similar to debt-based funding, which obligates borrowers to make repayments. Hence individuals must evaluate how much working capital they need and approach such investors accordingly.

  • Loans under government schemes

The Government of India has been supportive toward the youth and individuals owning start-ups. They have created multiple schemes with simple terms to support socio-economic growth. These loans are focused on supporting MSMEs, start-ups, women entrepreneurs, etc. Since there are simple eligibility terms, novice start-up owners can easily access the funds by submitting their portfolios.

Some government-backed start-up business loans for entrepreneurs are Pradhan Mantri Mudra Yojana, Atal Innovation Mission, Stand-up India, Make in India Initiative, etc.

  • Partners and venture capital 

The next best way to gain business finance is meeting a VC or venture capital firm that offers capital during the preliminary stages of operation. However, these firms seek a larger investment and ownership over company shares. Typically, they invest against equity and end their partnership in times of acquisition. Similarly, a strategic partner aligns their resources to help a start-up. These partners also hold ownership right and can choose to work as an employee.

  • Angel investors

Angel investors are organisations or people who invest their funds into potentially high-rewarding businesses. The benefit of working with angel investors is that the obtained funds are not needed to be repaid, making it a lucrative form of start-up business loans. However, there is an equity stake in such credit forms. Make sure to evaluate the priorities before availing of this equity investment.

  • Small business loan from NBFCs

Start-up owners who are uncomfortable sharing their company ownership against credit can look for high-value alternatives like business loans. This credit form offers funds to applicants against simple eligibility criteria and documentation. The repayment terms are also flexible, which adds to the advantage scale. However, to find additional benefits, one needs to compare lenders. 

For instance, leading NBFCs like Bajaj Finserv extend pre-approved offers on products like business loans, personal loans, etc., to streamline the application process. Check your pre-approved offers by entering information such as name and contact information. 

These are the smart ways of getting start-up business loans from reliable sources. However, individuals must evaluate the fund requirement and read the terms carefully before signing any contract. Moreover, they should practice the responsibility of a credible borrower, which is timely repayment.

To acquire any of the financial assistance listed above, entrepreneurs would need first formulate an airtight business plan. Investors or financial institutions demand to study such plans to assess the potential of a particular start-up. 

The post 6 Best Options to Get Small Business Start-up Loans first appeared on Tekrati and is written by AyushiChoudhary


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