You, the small business owner, have put up the capital. How successful are you at securing new funding with Financer ?
To grow and expand, small businesses require supplemental funding at critical junctures. Small business owners typically seek investors for two main reasons: initial funding and expansion funding.
Do You Really Need Funds To Start Your Business?
Getting funding for your business allows you to move faster and make better decisions. However, investors also offer other benefits, such as new perspectives and an additional business mind to help you grow your company.
If this is your first time looking for funding, you’ve come to the right place. If you Google “types of investors,” you’ll get many definitions in no particular order.
How To Get a Financer (Investor) For Your Business?
You must be wondering how I can get a financer for my business. Here are some tips to keep in mind as you look for an investor for your business:
- Do business with people you know and trust: Try to borrow money from loved ones. This may be the best way to launch your company without winning over any skeptical investors.
- Find local individuals interested in investing: When you need assistance expanding your company, your local community is often the greatest place to look. Small businesses are a driving force in urban and rural revitalization because they provide jobs and economic stability. In addition, seek out local business executives and financiers. Join groups that support enterprise and look for powerful people to connect with to expand your professional circle.
- Take advantage of a local bank’s lending services: Business loans from local banks can help you build relationships in your community and gain access to capital, regardless of how quickly you plan to expand your operations.
- Angel investors should be sought: When all other avenues for funding have been explored, it may be time to seek out private investors from your industry, such as angel investors. Find thriving business communities and contact local business leaders and angel investors.
- Collaborate with venture capitalists: Finding venture capitalists is often the last step in a startup’s funding growth, though not all businesses require this. If your small business is established and profitable, you don’t need to approach a venture capitalist for funding. However, working with venture capitalists is a good option if you have a successful business idea that could benefit from extremely fast scaling and large amounts of capital.
How to Raise Funds for Your Business?
You must be curious about how to raise funds for your business. Here are some ways to raise funds for your business:
Self-Financer your Start-up Business
Numerous new businesses opt to fund themselves through personal savings or investments. Whether you approach a bank for a loan, a venture capital firm for funding, or the government for a grant, you will inevitably be asked how much money you plan to put into your new business.
First-time business owners should prioritize investing in personal savings. The stability of a business in its later stages is a low-risk factor for lenders, so you shouldn’t have any trouble getting a loan if you’re interested.
Submit a Loan Application to a Private/Public Sector Bank
For obvious reasons, new businesses use banks as their primary funding source before exploring other options. Banks offer new companies two types of loans: a term loan and a working capital loan.
Loans for new businesses are available from nearly every bank in India, both public and private. Loan amounts, interest rates, and repayment terms will vary by financial institution.
Get Microloans from Banks and Larger Financial Institutions
Borrowing money from private or public banks will become challenging if you are new to the lending game and still need a financial track record or a credit score.
Before applying for a Startup Loan from any Non-Banking Financial Companies (NBFCs) or Micro Financer Institutions (MFIs), check your credit score first. Compared to PSU banks, the interest rates offered by NBFCS and MFIs are greater.
Look Into Government Loan Programs
The government of India has established several loan programs designed to help new businesses get off the ground, established businesses expand, women business owners, college-educated young people, members of the Scheduled Caste and Scheduled Tribe (SC/ST) population, small-scale industrialists, farmers, residents of rural and urban areas, etc.
Startup India, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), PSB Loans in 59 minutes, Atal Innovation Mission, Stand-up India, Trade-related Entrepreneurship Assistance and Development (TREAD), Make in India, etc. are all loan schemes started by the Government of India to aid Startup businesses.
In peer-to-peer lending, individuals directly transact with one another instead of going through traditional financial institutions. Money is lent from investors to entrepreneurs so both parties can make initial investments in their respective startups.
Lenders can profit from borrowers in this procedure since the interest rate they give is higher than what banks, NBFCS, and MFIs typically offer. The Reserve Bank of India (RBI) enforces regulations on P2P lending platforms that benefit both lenders and borrowers.
P2P financing is a form of borrowing for new businesses, but it’s more like an investment for the lender.
Do your homework on potential investors, whether people or businesses, before making a final call. Investigate their past performance and the investments they’ve made. How committed are they to becoming part of your team? Can they add value beyond just funding through connections or knowledge? It’s important to consider the future of your relationship with your investing partners because it’s a two-way street and can persist for years.