business loan

5 Great Ways to Finance Your New Business Venture in 2021

Setting up a new business in India has become easier than ever with the government easing various policies and the availability of online processes. This, along with the growing domestic market, India is a place to be for an aspiring entrepreneur.

To provide some context, this sector contributes about 30% to India’s GDP, which the government aims to drive up to 50% in the coming years.

Nonetheless, to set up a business, be it small or big, one needs financing. There are various ways of securing funds for a business nowadays. It includes business loan, crowdfunding, venture capital, partnership, and many others.

5 ways to finance a new business idea

Here are some ways to fund a new business idea in 2021 –

  1. Self-funding

Probably the easiest and most convenient way to finance a business idea is through self-funding. It includes using savings or mortgaging property to establish the venture.

On the downside, in case the business does not take off, individuals can lose their personal assets over it.

  1. Crowdfunding

Crowdfunding, as its name suggests, is gathering business capital from various individuals. There are dedicated online platforms that allow individuals to pitch their ideas and secure funding against them.

A positive side here is that if an idea becomes popular, it can garner substantial funding and great word-of-mouth publicity as well. Also, it can generate interest on social media platforms as well, which is always a boon.

On the other hand, a business’s liability remains varied and across a wide range of investors, which is not an ideal scenario.

  1. Venture capitals

Various private investors can help to finance your growing business. These are different firms that aid small businesses with the required capital and operational infrastructure to help them set up and start delivering.

An advantage of venture capitals is that these are usually headed by industry experts, and they can evaluate a company’s potentially better than anyone else. Also, they have the considerable financial strength to pump in required funds to set an organization. Furthermore, they have a big enough network to aid a small business to scale up without much hindrance.

However, one must have a flawless business plan and present a clear picture of its organization structure and the numbers it can produce.

A point to remember here is that venture capitals usually fund businesses against equity. It means they will become a shareholder in exchange of money and provide operational assistance.

  1. Government schemes

One can find the answer to how to get startup loan through assistance from government-backed financial schemes. The Indian Government has introduced different affordable credit schemes to aid entrepreneurs in their aim to find financing. They also provide necessary training to make individuals able to find employment and generate jobs for others as well.

Here are some notable schemes that the Union Government has launched over the years –

  • MUDRA loan: One of the most celebrated schemes in this segment is MUDRA loans. Under this scheme, applicants can get funds of up to Rs.10 lakh against favorable repayment terms. Also, it requires no collateral to avail of this funding. However, this scheme is only accessible for trading, service, and manufacturing sector companies.
  • National Small Industries Corporation Subsidy: Another notable government-backed financing scheme is the NSIC subsidy available only to MSMEs. Under this scheme, businesses get financial assistance in two parts, for raw materials and to help with marketing to build a business brand.
  • Udyogini: Targeted specifically to help women entrepreneurs, this scheme, like others, offers financial assistance to set up a business.
  1. Traditional business loans

Last but not least, traditional business loans are another way of meeting the financial requirements of a venture. Extend by financial institutions; these loans come in all shapes and sizes. For instance, Bajaj Finserv, a leading NBFC of this country, offers an unsecured business loan of up to Rs.45 lakh to meet an array of requirements.

Advantages of opting for a business loan is that –

  • They come with favorable loan terms and repayment flexibility
  • Usually, the paperwork here is not long and takes less time to disburse
  • The lender will not ask for any equity of a business, even if it is a secured business loan
  • The applicable interest rate is attractive, and with a long tenor, it is easy to repay the amount
  • It is not limited by any industry type or business goal; any business owner can apply for it

Furthermore, leading financiers like Bajaj Finserv extend pre-approved offers that save time during loan application. This offer applies to other financial products like personal loans, credit cards, etc. Individuals can check their pre-approved offers by submitting their essential contact details.

Irrespective of the financing method one opts for, be it availing a business loan or crowdfunding, having a clear business plan is imperative. It will allow prospective investors, be it a lender or a venture capitalist, to comprehend the goals and potential of an organization and make a decision accordingly. Also, as a borrower, one must always go through the terms of credit before signing it to avoid any future complications.

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