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Ways to Raise Funding for your Startup Business

Ways to Raise Funding for your Startup Business

If the only thing stopping you from marching onto the top of the startup pile is a lack of funding, read on.

To get your business off the ground, you can raise funds via business startup loans, angel investors, crowdfunding, trade credit, government schemes, etc. So, let’s explore the ways you can fund your startup in detail.

Self-funding

Self-funding, also called bootstrapping, is one of the most common ways of financing a startup. With bootstrapping, you and your business’s co-founders or co-owners can invest your savings, funds from friends and family, etc.

Once your business has taken off and started generating revenue, you can easily qualify for a startup business loan to further expand your venture. Facebook, GitHub, and eBay are popular self-funded startups.

Angel Investors

Individuals with surplus cash or businesspersons looking to invest in budding startups are angel investors. They invest money in your startup, typically in exchange for ownership equity. To get funding from angel investors, you must have a rock-solid business plan ready to pitch.

Angel investors may make a large one-time investment to help your startup take off or provide funding to aid and carry the business in its early stages. Prominent companies like Google, Yahoo, and Alibaba were initially funded by angel investors.

Additional Read: How to Choose the Right Business Loan for Your Startup

Crowdfunding

Online crowdfunding platforms are gaining popularity as valuable funding sources for startups. In crowdfunding, you seek out multiple investors via social networking sites and online platforms. You put a detailed description of the startup, including your goals, plans to make a profit, amount of funding required, etc.

Customers choose to contribute in exchange for exclusive discounts, free products, premium merchandise, first exposure to new products, equity in the company, and more. This way, you not only finance your startup but also market your products to an interested audience.

Loans under government schemes

The central government provides Pradhan Mantri Mudra Yojana to help young startups secure funding. Here, MSMEs can meet the minimal business loan eligibility conditions to avail of the following loan schemes:

  • Shishu – Loans worth Rs. 50,000
  • Kishore – Loans worth Rs. 50,000 to Rs. 5 lakhs
  • Tarun – Loans worth Rs. 5 lakhs to Rs. 10 lakhs

Trade credit

Trade credit refers to a business-to-business understanding that allows exchanging goods or services against no upfront payments. This short-term business loan from manufacturers, distributors, or dealers reduces the pressure on the cash flow for early-stage businesses and helps manage the routine capital requirements.

Business finance

Availing a startup loan at competitive business loan interest rates from a reliable lender is also an effective way to finance your venture. However, before approaching the lender, you should prepare a detailed document highlighting how you plan on using the borrowed sum along with profit forecast, etc.

You can check the loan’s affordability with a business loan EMI calculator.

Additional Read: How to get a Startup Business Loan without Collateral

Conclusion

Looking for urgent financing to get your business off the ground? Tata Capital is here for you. We extend loans at affordable interest rates with flexible tenure.

Check your startup business loan eligibility and apply now!

Apply Now

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