The denial of a business loan can be disappointing for any business loan applicant. In India, 90% of the start-up business fails and the reason behind the failure of most of the businesses is the lack of fund. Getting fund for business especially when your business is at the initial stage is like a hard-won bread. The journey from an idea to revenue is indeed an exciting one and this needs the fueling of the fund throughout its journey. The lack of fund can even crush the best ever business ideas blooming in your mind.
The need of fund is a common situation for any business owner at any stage. Whenever a business needs funding, the first thought that comes to us is a business loan. Though a business loan is a funding meant especially for businesses, availing the same is quite tricky and most of the times the applicants have to face the rejection. In such scenarios, many entrepreneurs become disappointed and take it as the end of their business. But a bank loan is not the only way to get funding for business.
How to Choose the Right Business Loan for Your Small Business
Smart Ways to Fund Your Business with Better Assistance
1) Bootstrapping
The self-funding or Bootstrapping is one of the best ever ways to fund a startup business. A business at the budding stage needs more ideas, creativity, hard work, and comparatively less money. It is much difficult to get a funding for your business till your business plan gets execution. One can use their surplus fund in their business at the starting. In a later period when the business will run in its full swing, it would be easier to get an external funding.
2) Angel Investor
Angel investors are the individuals with a surplus fund and they are interested in investing in small business. The Angel investors generally work in groups and they jointly examine the businesses before investing. Some of the angel investors even monitor or advice the business owner for a better performance of the business. Many of the biggest business of the present day such as Google, Yahoo and Alibaba were funded by angel investors at the initial stage.
3) Business Loan From Microfinance Providers and NBFC
A rejected business loan application can get an approval from the microfinance companies and NBFCs. One can apply for business loan at such small microfinance companies which is much easier to avail. The rules and regulations that a microfinance company follows are lenient than that of nationalized banks. So one can avail a funding from such sources even when a bank denies for a loan. But the thing to remember is that the charges of the loan seem to be higher than a bank loan.
4) Fund From Government Schemes
One can get a start-up business loan from Government schemes too. There are a number of schemes run by the present government which ensures the funding for the start-up businesses. The ‘Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRA)’ Which is a government scheme starts with an initial corpus of Rs. 20,000 crore to extend benefits to around 10 lakhs SMEs. One can get a benefit from the ‘Startup India’ too which is a scheme, especially for the new businesses.
5) Funding From Venture Capital
Venture capital is the professionally managed platform of the investors who invest in small companies for a bigger profit. The venture capitalist generally invests in a business against equity and exit from the same when the business becomes an IPO. Along with investing money, the venture capitalists provide expertise and mentorship. When your business will be funded by venture capitalists, you are to respect the decisions and the piece of advice provided by the investors. Many of the fast-growing companies of present date are funded by venture capitalist and this is indeed a very convenient way to get huge investment.
6) Crowdfunding
Crowdfunding is an option which can provide a small business loan to the business owners through which they can get funds for their business easily. In crowdfunding, funds are provided by more than one person. Here you approach many people through the internet for funds. You have to present your idea and strategy for your business, and if people find it worth to invest in your business they will give you funds. There are many websites where you can approach such people who can invest in your business. Against the funds, you have to give some equity in your business or some profit percentage.
The best part about crowdfunding is – it can generate interest and can help in marketing the product too along with financing. Crowdfunding can act as a boon for those businessmen who are not able to get a business loan from a bank or who are not able to find an angel investor in their venture for the desired amount. Moreover, when you go on a crowdfunding website and try to attract people to invest in your business, it might attract venture-capital investment down the line if your company has a particularly a good idea behind your business and successful campaign.
