Most of the innovative business ideas are lost in the market due to a lack of appropriate funds. Startup funding is undeniably an essential part of any new business launch, which is typically a hard nut to crack.
However, here, we have attempted to shortlist a few easier ways for funding a startup.
Usually, banks are the first go-to place for entrepreneurs when looking for a loan. Bank provides two types of finances, namely, working capital and funding. The working capital loan is required to run a complete cycle of revenue-generating operations. The time limit of the loan is decided on the basis of the instrument of hypothecation.
However, funding involves the usual process of sharing the valuation details and business plan along with the project reports, which then determines the sanctioning of the loan. Therefore, based on your situation and needs, you can apply for either of the two.
A personal loan from a peer-to-peer site
Apart from acquiring loans from institutions, online loans are also available for startups today. Peer to peer lending (P2P) allows one to borrow money through an online service that connects you directly with institutions and individuals. This highly advanced and user-friendly technology matches you with multiple suitable investors, which you wouldn’t have access to otherwise.
Typically, the P2P sites provide personal loans for one to five years to clear credit cards or consolidate debt. However, the loans can also be used to buy, start, or operate a business. As per requirements, one can apply for the same.
Loans from microfinance providers
Multiple factors determine one’s eligibility for a loan for your startup funding. In a situation where you cannot qualify for a bank loan, microfinance can emerge as an alternative. Microfinance is merely providing access to financial services to those who might not be eligible for conventional banking services.
It is increasingly becoming popular for those who have limited requirements, and banks do not favor their credit ratings. You can look online for the non-banking financial corporations (NFBC) available in your area to draw a better idea.
Startups are a vital component of social innovation. The government of every country has special provisions to encourage relevant startups by providing them grants as well as infrastructural support. Based on the kind of startup, area of operation, and your needs, you can apply for grants and loans.
Conventionally, government loans come with a lot of strings attached; however, they have lower interest rates making them more attractive. Notifications regarding the schemes and their timelines keep coming up on government websites, which you can accordingly apply for.
Crowdfunding is another new method that is gaining massive publicity. It is, in fact, one of the easiest and quickest ways of obtaining finance for a new business. A compelling pitch is all you need to begin the entire process. The pitch should be firmly put across your potential for growth.
People nowadays are also offering incentives, coupons, and equity to the people involved in startup funding. This can also be an excellent advertisement for your business and help in creating a more extensive network of customers.