There are many ways how a business can get a financial boosting when needed. But if you are a self-employed and in need of some extra fund for your business, the options are very limited for you. The need of fund is always the most when you are at the initial stage of the business, once your business starts functioning well, there should not be any crisis of working capital. But until you reach that stage where your business will start generating profit, you are to fuel your business with an adequate amount of money.
Getting a business loan from a traditional bank may seem more challenging and chances of getting an approval are really thin. Such situations leave many budding self-employed entrepreneurs with no hopes left. To the relief of those self-employees here are some different ways to collect fund for business.
7 Ways to Get Funds For Self-Employed
Use Your Savings
If your bank account has some surplus amount then you can make the best use of the same by investing it in your own business. Such type of investing is called bootstrapping. At the beginning of the business, a bootstrapping becomes the best way to fund your business. When your business is at the grassroots level and your ideas are still not concreated to present to the third party, it is too tough to get an external funding.
As mentioned above, until and unless your business gets a physical form, getting a fund against your business is almost impossible. But at the same time, I must mention that you can easily get a personal loan. A personal loan is an unsecured and multipurpose loan, hence if you are proved eligible for the loan, you will get it instantly. A personal loan can be taken as the last move if there are no other options left for you.
If you are servicing a home loan or personal loan, you can get some extra fund by taking an overdraft on your ongoing loan. An overdraft facility is provided to the persons who are servicing a loan and have a good repayment history. An overdraft loan is a multipurpose loan hence can be used for any purpose of the borrower. Not only that, an overdraft loan disburses sooner than a normal personal loan as the documents of the loan seeker are already deposited to the lender while applying for the first loan.
Angel investors are the persons who are high in net worth and interested in investing their surplus money. There are some websites which give you a platform to find angel investors. Angel investors work individually. If an investor is happy with your business idea and feels that your business idea has a potentiality to earn much profit in coming days he may invest in your business. The loan which you get from the investor is not to be returned as a bank loan on EMIs. But some shares of the business will be transferred to the investor. As your business grows, the investor will have a share of profit in your business.
The crowdfunding is the next way which can help a self-employed to get fund for business. Unlike angel investment where an individual invests money, here a group of people invests in your business. All those investors who invest in your business are not the super-rich people but they want their small savings to earn a better return by investing in a business instead lying the money idle in bank accounts. There are a number of websites from where crowdfunding can be availed. The best about crowdfunding is that along with fund gathering you create a market for your business. While trying to gather fund, you are to explain your business idea to a huge number of people. So all those people came to know about your startup business which can become an asset to your business. Against the funds, you have to give some equity in your business or some profit percentage.
Under the scheme of ‘Startup India’, the government is offering financial support to new business. The Startup India is not the only scheme which makes new businesses get financial aid from Government. One can take the help of the ‘Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRA)’ which helps the SMEs to grow. One can get a business funding up to Rs.10 lakhs under this scheme.
Business Loan from Fintech Lenders
As the business loan eligibility of a business loan from a traditional bank cannot be fulfilled by the new businesses, one can take the help of fintech lenders. Fintech lenders help the new business with an online business loan which is collateral free. The terms and conditions of fintech lenders are slightly lenient than the traditional banks. But one has to remember the fact that the business loan rates of fintech lenders are comparatively higher than the traditional lenders.