8 Ways to Get Instant Funds to Start Your Small Business

An entrepreneur needs to invest substantial finances in managing the various administrative and operational costs. These expenses usually include purchasing land, warehouse, stocking raw materials, hiring workers, and more. In such situations, depending merely on savings and assets can prove inadequate.

To comply with the funding needs, one can look for credit forms like a business loan. Lenders offer business finance at affordable interest rates and against simple eligibility parameters. Apart from a business loan, individuals can also check other instant funding options that can be helpful when starting a firm.

  • Angel Investors

When looking for instant credit to start a business, individuals must give weightage to reliability. Angel investors or angel funders are high-net-worth individuals who extend credit to new start-ups or small companies showing potential. Typically, the dealing is done based on ownership equity. The simple terms levied on the credit makes angel investors favourable among new entrepreneurs.

These factors substantiate the advantage of borrowing funds from an angel investor to purchase essential technology that every small business needs or to manage liquidity. However, it is advisable to maintain a proper business plan before approaching such investors.

  • Crowdfunding

Another option for small firms can be crowdfunding. As the name suggests, crowdfunding is a process of receiving a small amount of credit from a group of financiers or investors. This funding source uses social media apps and crowdfunding websites to connect entrepreneurs and investors. Before signing up with these platforms, individuals need to draft a proposal for investors. This is an efficient platform for entrepreneurs with a unique product or business idea. It is important to know that these advances are equity or debt-based. Hence, one must understand the repayment terms and related variables before signing a deal.

  • Government schemes

Government driven schemes fall under the list of common options for financing one’s small business. According to a report, nearly 6.3 crore Indian MSMEs or Micro, Small, and Medium Enterprises employ around 11 crore individuals. This is one of the primary reasons government extend various types of business loan to MSMEs. MUDRA Loan, Stand Up India Scheme, Credit Linked Capital Subsidy Scheme, etc., are part of this initiative. There are also special schemes for women applicants that offer sufficient credit against simple eligibility criteria.

  • Surplus from savings

Investing the excess funds from savings can be a viable option for novice entrepreneurs. Showing a stable financial structure or extra income would also aid an individual in availing credit variants like a business loan. This would increase the credibility of an applicant and streamline the process of finding additional benefits.

  • Partners and venture capital 

Partners or venture capital firms are the quickest way to secure funds for business. These strategic partners extend funds against company rights. They own a percentage of the firm ownership or work as an employee. VC firms offer small funds in the preliminary stages of a project. It is important to know that they invest against equity and end their partnership in times of acquisition. Hence, opting for such a credit form should be assessed before signing a contract.

  • Peer-to-peer lending

This is a form of borrowing that has no involvement of intermediaries. Typically, entities lend funds to individuals as their investment. Borrowers can utilise the funds to address any number of business requirements. However, the interest rate levied against this credit is generally high.

  • Selling assets

Individuals can sell their unused assets to gain immediate funding. For instance, gold items carry a high value in the market. Selling them can help an individual gain sufficient funds to run a business and save the excess for future endeavours.

  • Look for alternative funding 

Individuals can opt for alternative funding options, such as business loans to support their ventures. These loans can be easily availed against simple eligibility criteria and minimal documentation. Comparing different lenders for this purpose would aid in finding affordable business loan interest rate and added benefits.

For instance, NBFCs such as Bajaj Finserv extend pre-approved offers, which aid in a smooth and hassle-free application process. Such offers are levied on financial products such as business loans, personal loans, etc. Check your pre-approved offer by entering information such as name and contact information. 

These are the smart ways of generating finance from reliable sources apart from a business loan. However, individuals must keep track of the new funding schemes and regulations to make an informed decision. 

According to a report, the budget allocation for MSMEs has been doubled up to Rs.15,700 crore for FY2021-22. This indicates a positive time for individuals planning to start their small businesses.