New ways to finance your small business in 2020

When it comes to small businesses, whether in India or anywhere else in the world, arranging adequate finance is very important for their sustenance and success. While consistent and efficient fund-raising isn’t an easy job at all, it isn’t the toughest one either. Traditional banking establishments have always been the first choice of small business operators for raising capital. However, if you look closely, they aren’t the only one.

For a small business to reach revenue generation stage, followed by profit-making, it’s very important for it to get that initial solid push. And the only way that can happen is with money. With everything having gone digital over the past decade, businesses today can think beyond banks and small business loan when it comes to financing. There are several other novel and reliable options which can be explored nowadays. Below detailed are some such useful ways in which you can finance your small business in 2020.

Angel investors

These are simply people who have initiative, interest as well as investment power to get involved in any business. They keep a constant watch on sectors they believe can deliver the best returns for them. Normally, these angel investors are a part of some networks where they regularly go through business plans and proposals submitted by start-ups and small businesses. Getting an angel investors backing is a huge deal for a small business. Considering their expertise and background, angel investors also actively involve themselves in the business operations and offer useful suggestions and advice from time to time.

Crowdfunding

Although an excellent fund-raising option, crowdfunding is an extremely competitive space. Considering how it’s extremely popular these days and offers easy accessibility to funds, it’s rapidly turning out to be the most preferred financing method for a large number of start-ups. It’s literally as easy as putting your idea out there on a crowdfunding platform and then watching the money flow; obviously if your proposition is good enough. It’s a fairly novel financing method and people who know how to work it well can get plenty of support for their business ideas.

Lending establishments

There’s a great multitude of independent lending establishments out there who can help you get a small business loan in India. Securing a small business loan from banks and NBFCs can sometimes be very exhaustive for start-ups and small businesses. Unlike these conventional organizations, these independent lenders are more forthcoming in taking financing risk, as long as they feel confident about the success of the business. They have their own eligibility criteria and are not very stringent about their policies. They cater specifically to smaller and newer entrepreneurs who face difficulties in accessing credit (small business loan) from conventional sources. Although these lenders don’t hold the same reputation as established banks, entrepreneurs prefer them as they’re quite forthcoming.

Bootstrapping

Although used majorly by start-ups, bootstrapping has proven to be an effective financing source for existing small businesses too. These businesses need capital for expansion or for scaling up operations. It could also be needed for payroll management, logistics or equipment purchase. Bootstrapping is about investing either one’s own money or borrowing money from family and friends at a low interest rate. However, please note, this method works only if your requirement isn’t very large.

Venture capitalists

Getting a venture capitalist to invest into your small business is like unearthing a diamond. Although very difficult to accomplish, if achieved, it can mean big things for your small business. Majority of venture capitalists prefer investing into existing small businesses rather than start-ups. If they are provided sufficient proof of scalability and potential, they can get involved with not just money, but plenty of guidance, mentorship and expertise too. Often these VCs stick around till the point of business going public or getting acquired by some big entity.

If you too are interested in a small business loan, experts at GoSahi.com can help you compare best offers from multiple lenders, and handhold you through the entire process, till the point of loan disbursal.