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The 3 Most Feasible Ways for Micro and Medium Sized Businesses to Raise Funds

A financial report suggests that nearly 94% of the new businesses that crop up in India tend to fade away into oblivion within 12 months of operation. The report also states that the prime reason for such early closure of the start-ups is the lack of sufficient funds. Literally, thousands of people aspire to establish their own business but fail to execute their idea and a few others who are able to establish a business fails to survive in the long run. The reason again is the lack of funds. The journey of rolling the idea ball in action and keep it rolling until you earn profits from it, is quite painstaking and yet quite exciting. But, to kick start the journey, one of the most paramount things required is Capital.

No matter, if you are just starting out or if you have already established a business, at some point you would need to pump in funds in your business. When the need arises, some of the best and sources for raising funds are discussed below:

Bank Loans

Typically, banks have been the most popular or rather the first source that most entrepreneurs go to for getting funds for their business. Today, there are plenty of banks that are willing to offer MSME loans for all the aspiring and existing small business owners. The banks, typically, provide two kinds of loans – funding and the other one is working capital. The latter is usually availed to begin the operations of the business; this may include buying machinery, raw material or even setting up the entire business process. The interest rate greatly varies from bank to bank so make sure that you compare the rates and choose the bank that offers the best deal.

funds for their business

Win Contests

Yes, you heard it right; you can get the desired amount of funds to set-up your business idea rolling. Recently, several contests are held that helps the business aspirants increase their opportunities to raise funds. Depending on your skill and knowledge levels, you can participate in business contests that would require you to build a new, unique and innovative product or prepare a creative business plan. By participating and winning such competition would not only get you funds in the form of prize money but also you would get a lot of media coverage, which is free marketing for you and your business idea/product. Do your research on the competition calendar and just by being there at the right place and at the right time; you may make your business dream come true.

Look for angel investors

Angel investors are essentially individuals who have surplus cash and are keen to invest in a new business that promises to yield good returns or profits. The angel investors typically, analyze the business idea, the success potential of the business and the profit sharing margin before they invest in any organization. Business owners can obtain funds from the angel investors, either at the very beginning or in the early stages of the growth of the company. However, you need to know that when to raise funds through angel investors, the investors expect a stake or equity in the business.

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