Jun 12,2017
A Small Business Venture can be defined as “start up entity developed with the intent of profiting financially”. Since every business firm needs funding in the initial stage, there are many ways of funding your small business venture. Out of these options, in my opinion, following are the best 7 ways to get your Small Business Venture Funding:
Own Investment: The first and the most basic option to fund your startup is put your own equity. The reason being that only you know exactly how much investment you require and equity is never a loan, so you are not debtor to someone. Moreover, when you are putting your own money into the business, you are answerable to only yourself for the consequences and not to anyone else.
Friends/Relatives/Family: The people besides you who believe in your ideas and put trust on you are your friends, relatives and family members. In fact, you can make your friends, relatives or family members, your business partners so as to diversify the risk of the business. But even if your motive is to control the business solely, these individuals can provide you money even without any credit worthiness of yours.
Government Schemes: There are certain schemes from Government to promote small business start ups. Taking loan from such Governmental schemes is beneficial as these loans are generally provided at lower interest rates. Following are the few governmental schemes for small business venture funding:
The Credit Guarantee Fund Scheme for Micro and Small Enterprises.
Small Industries Development bank of India (SIDBI).
Micro – Units Development and Refinance Agency Ltd. (MUDRA)
Bank Loans: There are various schemes for Bank Loans provided to Small Businesses. Working Capital Finance can be availed either through direct funding or by a letter of credit. A lot of banks provide Working Capital Finance like State Bank of India, Andhra Pradesh and Bank of Baroda. Besides, for starting new venture, Corporate Term Loans are also available.
Factoring: Factoring means selling your Bills Receivables to a third party in exchange of immediate cash. Factoring is useful when immediate need of fund arises.
Angel Investors: Angel Investors can also be used to fund your small business. These individuals or group of individuals in the business of field of their interest.
Venture Capital: These organizations provide money loan to startups in exchange of equity control. But, these organizations like to invest in huge amount and gain greater share in the company, or we can say, greater control in the company.
The above mentioned sources of funds are easy to obtain and simpler in process. Obtaining funds from these sources is easier, that’s why these sources, I believe, are the best ones.