US SBA report says, 50% of small businesses fail after five years of operation. The main reason for failure is the lack of funds. Apart from small business loans, other creative financing options are also available. Innovative financing options are critical for the success of small businesses. Many SMEs don’t get business loans from banks. Hence, you may need to consider options other than small business loans.
In this article, we will explain the creative ways to raise funds for small businesses.
Small Business Loan from NBFCs
If banks reject your application for small business loans, then Non-banking financial corporations (NBFcs) can come to your rescue. They provide Small business Loans to SMEs at affordable interest rates. NBFCs provide easy online business loans. NBFCs like Ziploan have business instant loan apps in India for hassle free and easy processing. They can get the business loan in 59 minutes. Working capital can be accessed in 48 hours.
Crowdfunding
Crowdfunding is a boon for small businesses. To get started, a small business needs to present its idea for which they want to receive funds. They can reach out to investors through online lending portals. It can be reward-based which promises a reward to investors on profit or either debt or equity.
Venture capital
Venture capitalists invest in a small business that shows a high potential for growth. Most of the venture capitalists request a combination of equity and debt financing.
Trade creditors
As a small business, you are associated with many manufacturers and distributors. They can provide you with short-term small business loans. They can be convinced to not charge you for their services until you make profits. Once you pay your trade creditors and earn their trust, you can ask for longer small business loans. You can convince them for easier payment terms by showing your potential.
Angel Investors
Angel Investors have surplus money and are keen to provide small business loans to profitable ventures. Make a promising proposal to them. If they are glued up to your planning they can also offer to mentor apart from an msme loan.
Business Incubators and accelerators
If your business is in the early stage, consider an Incubator and Accelerator. These are the programs that assist small businesses with loans, training, operations, and nurturing. These programs normally run for 4-8 months.
Winning contests
Many contests are held worldwide to encourage entrepreneurs to set up their business. You need to make a captivating project in order to increase your chances to win.
Government Programs
Pradhan Mantri Rojgar Yojna – Micro Units Development and Refinance Agency Limited (MUDRA) provides Rs. 10 Lakh of small business loans. You need to submit your business plan and once approves, the business loan gets sanctioned.
FAQs
- How can I raise funds for my business?
Small business loans are the best way to fund your business. Many banks and non-banking finance corporations provide easy online business loans. You may also opt for crowd funding and Venture capital to get funds.
- How do I get free money to start a business?
Government grants like MUDRA scheme are the best way to get free or cheap money to start a business. A promising proposal can create higher chances of getting a government grant.
- How to ask for money to start a business?
You need to be confident about your business. Prepare a well-crafted business plan that can show your real potential. You must research about the investors before contacting them for small business loans.
- How do I get a government grant for my business?
Many state or local governments offer small business loans. Check with your local or state government for grant opportunities.
- What are the best sources of finance?
The best sources of finance for businesses are business loans, equity, debt, debentures, venture funding, and term loans.
