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Tips to Finance Your Small Business in India

, June 23, 2016, 0 Comments

small-business-finance-mahindra-finance-marketexpress-inThe number of start-ups in India is rising enormously. However, the biggest problem faced by every entrepreneur is lack of funds. If you have an excellent business idea but lack of funds is hindering your growth, here is exactly what you need. These tips on financing small businesses can help your idea become a huge success. Take a look.

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PartnershipPartnership is a brilliant idea to finance your business as you get more capital and start-up cost is low. A strategic partner can help you with the funding. Partnership enables you to share profits and losses thereby reducing the element of risk.

Close relatives and friends
Family members and friends can often be the best investors. However, you need to be careful as to who you choose as a partner because business losses can also strain relationships.

Investors are the best resort
Angel investors are basically investors who are willing to fund small start-ups. These investors form groups of investment to reduce risk and gather research about people wanting to start a business. Angel investors are literally playing the role of an angel by providing SME loan.

Capitalists
Venture capitalists provide small business loans by making huge investments. They provide valuable guidance for the growth of a business along with a well-connected network. However, you have to provide them with a significant share of your company.

Crowdfunding
Crowdfunding is a recent phenomenon wherein you can ask people to help you generate funds for your business plan. You can start off with a campaign through crowdfunding websites and list down your idea, why you think it works and also the amount of money you need. Interested people can then help you out and you can reward them later.

Buzz your Bank Manager
Many banks provide SME loans in India. All you need to do is fill up a loan application, mention your type of business, financial position, type of product or service you want to sell, your tax payment records and your securities.

Banks providing loans for small business generally charge a higher rate of interest and take a few months to get approved.

Bootstrap your business
Let your business fund itself. Bootstrapping is one of the cheapest ways to finance your business. Here, you start your business with a little capital and build your company from personal finances without depending on external resources. It helps you to save time as you stop hunting for external funding. Bootstrapping also gives you all the control as you don’t have to be answerable to an investor. However, if your business incurs a continuous loss, you end up in a lot of debt.

There are many ways to finance your small business. All you need to do is follow these tips and have faith in yourself. All the best.

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