Any business will need funding to take care of its daily operations and expansion,. Whether you are starting a business or already a small business owner you need to think about funding. Traditionally MSME loans availed from banks and NBFCs are the best way for small business financing. But, since banks have stringent conditions and hence small businesses have to look for other options in order to get the funding.
In this article, we will explain to you the small business financing solutions available in the market.
Business loans
Business loans are designed for small businesses are they are considered as the best way to avail the funding. You can get a business loan without collateral online. There are business loans for machinery purchase, business and even for infrastructure expansion. If you have land and assets available then availing a secured business loan is considered the best option. While the business loan interest rate depends completely upon the financial institutions. Government Business loans like the CGTMSE loan scheme have lower interest but are mostly secured.
Use your saving or seek help from family and friends
Friends and family are the ones who can understand your business well. Ask them who have funds to invest in your business. If you are borrowing it from them then inform them of the terms of repayment clearly. You can use your savings and invest them in your business.
Lines of credit
Lines of credit are a great option for small business financing. It works like a credit card where you can access these certain amounts. Financial institutions can make regular payments and the business owners can withdraw the funds, whenever needed. The business loan interest rate here is higher than banks but lower than credit cards.
Take order and get financing
Businesses generally don't want to take debt from the bank. Taking orders and getting finance is a fast and flexible option. With this process, the producers, distributors, and wholesalers can expand their business and make a profit. It also increases market sharing.
Crowdfunding
Crowdfunding is a boon for small business financing. To get started, a small business needs to present its idea for which they want to receive funds. They can reach out to investors through online lending portals. Kickstarter, RocketHub, Fundable, and Fundly are some popular crowdfunding sites among small business owners and the general public.
Venture capital
Venture capitalists invest in a small business that shows a high potential for growth. Most venture capitalists request a combination of equity and debt financing. The top VC firms are Accel, Benchmark, Index Ventures, Sequoia Capital, Founders Fund, and GGV capital.
Angel Investors
They are the ones who have surplus funds to invest and they provide business loans to profitable ventures. Make a promising proposal to them. If they are glued up to your planning they can also offer to mentor apart from a business loan.
