Have a business idea you want to make real? That’s exciting. But with the thrill also comes a demand for money. It can cost a significant amount to start something new or expand what you’re already doing. The right funding can change everything.
Fortunately, India has no shortage of options for businesses to access the funding they require. From government schemes to private investors, there are a host of options to choose from. In this blog, we will break down some of the most popular forms of business funding available to startups in India.
1. Bank loans and overdrafts
This is the classic route most people think of when they need money for their business. Almost every major bank in India offers loans that can help with setting up, running, or expanding your operations. You’ll usually need to provide some kind of security, show your credit record, and explain your business plan in detail.
Sure, it can take a bit of time and paperwork, but once you’re through, the money is reliable and the terms are usually clear. That’s why so many businesses still go with banks.
2. Support from government schemes
The Indian government has announced various schemes to help small businesses and start-ups. Programs like MUDRA and Startup India offer a leg up by providing loans without requiring large amounts of collateral. The aim is to make it easier for new and small businesses to start their journey, especially in parts of the country where banks are typically wary of making loans.
3. Loans from NBFCs
Non-banking financial companies, or NBFCs, are emerging as an alternative. Why? Because they tend to be faster, more flexible, and require less documentation than a bank. If your business fails to tick all the boxes a bank wants, NBFCs might be willing to lend.
Interest rates may be a little steeper than elsewhere. But if you’re seeking an option for short-term needs or unexpected costs that provides quick cash access, this may be worth considering.
4. Getting funds from investors
Tech or consumer goods startups might attract interest from angel investors or venture capitalists. These people invest in businesses in return for a piece of the company. In addition to money, they frequently come with contacts and mentorship.
These types of business funding can provide critical assistance, particularly if you are hoping to scale fast. Just remember, you’re most likely going to have to surrender some control in exchange for their investment.
5. Crowdfunding and peer lending
The online platforms have changed the game. Crowdfunding allows you to get small amounts of funding from a bunch of people who believe in your idea. Peer-to-peer lending is a way to get cash without using an official financial institution.
Either one can be a godsend for businesses that won’t win approval from traditional lenders. If you have an exciting and fresh idea, people will be willing to lend.
6. Using your own money
Plenty of Indian entrepreneurs start out by putting in their own savings or borrowing from friends and family. This is called bootstrapping. It’s a great way to avoid outside pressure, but of course, it comes with its own risks.
Once the business starts making money, putting those profits back into the business is a smart move. It’s slower than other routes, but this kind of steady, self-driven business growth keeps you in full control and builds financial discipline along the way.
Wrapping up
There is no one-size-fits-all solution for funding your business. Much of it will depend on where you are in your journey. Your repayment capacity and risk appetite should also influence your method of business financing.
With so many options available in India today, there are more opportunities than ever to receive the funding you need.
