10 FUNDING OPTIONS TO RAISE STARTUP CAPITAL FOR YOUR BUSINESS

Starting a business? Has the thought about capital or funding ever crossed your mind? Most business startups begin with great expectations and investor faith. However, a few factors might either make or break a business start. This is why it is said that funding makes your business start with a strong base and helps it expand.

That being said, finding funds for a startup business comes with its own set of challenges. In order to make your life easier, we have compiled a list of 10 funding options to raise startup capital for your business: -

• Bootstrapping the Business

  Self-funding, startup funding, or personal investment, is the most common kind of financing employed by new businesses. Even if you take out a loan or seek a venture capitalist or government institution to support your startup, they will still ask how much cash you should put into it. For first-time entrepreneurs, investing their own money is the logical alternative. You may simply apply for business loans in the later phases of your firm when there is business growth and the stability of the business can be evaluated.

• Crowdfunding

  Crowdfunding is a method of financing a business over the internet via a variety of investor groups that allow you to pitch your ideas.

  These investments can be made using either a loan or equity. Some crowdfunding platforms also provide prizes in return for investments. These allow you to reach out to a large group of investors rather than a single large investment.

• Gold Loan for Business

  Since the days of the maharajas of the Indian subcontinent, gold has been regarded as a must-have. Gold has traditionally been regarded as a valuable item and maybe a saviour in times of crisis.

  A gold loan is a secured loan in which the borrower receives funds from the lender with their gold assets as collateral. It is one of the most popular sources of funding for small firms or startups since it is quite forgiving in terms of credit history or CIBIL score. You could always promise a comparable quantity of gold and use the loan amount to fund your business ambitions, purchase raw materials, acquire licences, or even hire workers if it's to fund your startup dreams, purchase raw materials, obtain licences or even hire staff.

• MSME Loan for Start-up Businesses

  An MSME loan is one that is built with the criteria of a small or medium-sized organisation in mind in order to satisfy financial demands for various business sectors. A Micro, Small, and Medium Enterprise (MSME) loan is a credit facility provided by financial institutions to individuals, MSMEs, startups, and a variety of other business entities in the form of a business loan, term loan or working capital loan. MSME loans are often used by startup businesses for growth, starting a new firm, fulfilling working capital requirements, controlling or boosting cash flow, purchasing equipment or machinery, paying off debt, and so on. You can check the  MSME loan eligibility criteria before applying for it.

• Working Capital Loan

  Small enterprises can obtain SME working capital loans to address their short-term liquidity needs. A working capital loan can be quite useful when there is a lack of funds for everyday operations. Firm finance is often issued for a period of six months to a year with interest rates ranging from 12 per cent to 16 per cent depending on the credit risk of the business.

• Government Business Loan

  The government of India has created numerous loan programmes with the goal of benefiting start-up firms, SMEs, and MSMEs as well as promoting rural India's socio-economic progress; women entrepreneurs, educated young people, people from the SC/ST category, small-scale industries (SSIs), villages, people living in rural and urban regions, and so on. Startup enterprises include many government business loan schemes like the MUDRA loan scheme, Start-up India, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Stand-up India, Make in India, Trade-related Entrepreneurship Assistance and Development (TREAD), and others.

• Small Business Loan for Women

  Many enterprises provide small business loans for women with a variety of appealing features to assist the country's growing number of female entrepreneurs in meeting their business’ financial needs. With this loan, you may expand your business without financial constraints or the requirement for collateral. Women must either own the entire small or microenterprise or own at least 51 per cent of the company to be eligible for a small business loan. Other qualifying restrictions, such as minimum age, income, and so forth, will differ per lender.

• Business Credit Cards

  Business credit cards are useful for distinguishing between business and personal expenses. These kinds of credit cards, also known as corporate credit cards, are allocated to a corporation rather than a person in order to satisfy the regular financial expenses of that firm. They provide a convenient way for business owners to get short-term working cash. These credit cards can be used for a range of purchases, payments, and bookings that may be required by business operations.

• Angel Investment

  For entrepreneurs in the early stages of a business's growth, having quick access to finance is critical. Only after providing a proof of concept can startups seek funding from angel investors and venture capital firms. Similarly, banks only provide loans to applicants who can back them up with assets. It is essential to provide seed funding for startups with innovative concepts in order for them to conduct proof-of-concept experiments.

• Venture capitalists

  Venture capitalists (VCs) are often businesses that invest in early-stage enterprises with significant growth potential. VCs are professionally managed by individuals who provide not only money but also their experience. These funds often invest in creative and risky firms in return for a stake or stock in the company. VC money is often obtained after a company has received initial capital and is intended to help the company develop further. In most circumstances, your VC will closely monitor your activities and you must agree to that.

  For a business to stay competitive, you must have multiple sources of funding at your disposal as and when the need arises. This gives you some flexibility and reduces your reliance on a single source of cash.

  At Muthoot Finance, we offer business low interest loans with easy repayment options, no preclosure charges, and insurance coverage, among others. Please visit your nearest Muthoot Finance branch to know more or apply for an SME business loan online.