Business Funding Options for Small Businesses in India

Many new businesses go through the long, painstaking journey only to shut shop within a year of operations due to lack of funds. 

Capital is the fuel that businesses run on. That’s why startup entrepreneurs find themselves in need of capital at every stage of their business. In this article, we’ll talk about the funding options available in India for small companies:  

1. Crowdfunding 

Crowdfunding is becoming immensely popular these days. In crowdfunding, the entrepreneur puts a description of the business on the crowdfunding platform, outlining the details of the business plan, goals, vision, earning potential, and strategy to market along with the request for funds. Consumers who are on the platform read the detailed business description and if the business idea appeals to them, they decide to pre-buy the product or give donations.  This may sound simple, but it’s not. Crowdfunding is a competitive space to earn business funding. So, you need to have a rock-solid business idea to crack the deal.

Some of the crowdfunding platforms in India are: 

• Catapooolt: Catapooolt is a crowdfunding ecosystem, which brings together relevant partners, communities, resources, latest tools and resources to give a potential business idea the success it deserves. 
• The Indiegogo: This platform gives entrepreneurs a chance to launch new and ground-breaking products, with the help of innovations in tech, design, and much more.
• Wishberry: It is one of India’s successful crowdfunding platforms, which is on a mission to empower creativity in India by providing a platform for creative artists to raise capital. 

2. Angel Investors 

Angel investors have surplus cash and a keen interest to invest in upcoming startups. They screen the business proposal and provide capital in the early stages of growth while expecting up to 30% of equity. 

Some of the Angel Investors are: 

• Indian Angel Network: This firm is a network of Angel investors, who are leaders in the entrepreneurial ecosystem. 
• Mumbai Angels: This premier platform in India is focussed on creating platforms where both founders and investors can network, learn, invest and grow.
• Hyderabad Angels: This platform invests in promising early-stage companies to create tangible as well as intangible value.

3. Venture Capital (VC) 

Venture capitals are huge investors who invest in companies that are beyond the startup phase and are already generating revenue. They usually invest in the business against equity with an exit strategy which is implemented when an IPO or an acquisition takes place. VCs provide expertise and mentorship while evaluating the business from the sustainability and scalability point of view.

Some of the VCs are as follows: 

• Nexus Venture Partners: The team consists of ex-entrepreneurs who are strong thinkers and operators. They bring decades of experience in building and funding the startup company. 
• Helion Ventures: Founded in 2006, this company invests in small businesses in early to mid-stage. 
• Accel Partners:  The VC firm partners with founders of small companies, right from inception through all phases of growth.

4. Unsecured Business Loans From Fintech Lending Platforms, Microfinance Providers or NBFCs

There are plenty of online lending marketplaces that offer funds for small businesses to meet their specific financial requirements. This kind of funding is increasingly becoming popular for entrepreneurs whose financial need is limited and credit ratings not favored by traditional banks.

• MoneyTap: Offers hassle-free unsecured business loan of up to ₹ 5 Lakh at a low-interest rate, and flexible repayment options 
• Bajaj Finserv: Offers unsecured business loans of up to ₹ 50 Lakh
• Lendingkart: Offers customized business loans for small and medium businesses in India of up to 2 crore rupees. 

5. Business Loans From Banks

Banks sanction the business loan through a process that involves sharing of the business plan and the valuation details. The loan is sanctioned when the eligibility criteria are met and the lenders are convinced with the facts, figures and the potential of the business. 

Some of them are mentioned below: 

• Bank of Baroda: Offers a business loan of ₹ 1 Lakh up to ₹ 2 Lakh
• HDFC Bank: Offers a business loan of min ₹ 50,000 and max ₹ 50 Lakh
• ICICI Bank: Offers a loan of ₹ 1 Lakh up to ₹ 40 Lakh