If your business is in its growth phase, you’re sure to have thought about funding at some point or the other After all, a growing business needs adequate finance to accommodate its expansion plans. Due to dynamic economic and market conditions, Indian business owners like you may find it difficult to secure appropriate sources of finance. So, whether it is to seize expansion opportunities or to diversify product portfolio, take a look at the top ways to finance your growing business.
1. Crowdfunding
This method of funding has gained a lot of popularity in the past few years. If you have a business idea that offers a product/ service which you reckon has high demand, you can set up a crowdfunding page on platforms that are dedicated to this exact purpose. To come close to your target, ensure that you highlight the USP of your offering, its novelty and how it will help consumers and/ or the society. Through crowdfunding, you can get access to several investors without giving up control of your business. However, be sure to read through the host platform’s terms, conditions and charges before you set up your crowdfunding page. For example, Kickstarter is one of the most popular crowdfunding platforms in the world.
Additional Read: Raise money for your business
2. Peer-to-peer lending
If your growing business is not eligible for a business loan or when you don’t want to pledge your personal or business assets, peer-to-peer lending is a good option for you. But, this source of lending proves to be the best when you need to borrow small amounts. You can borrow from friends, family or even from other professionals whom you share a good working relationship with. Do remember that there is no organisation governing this transaction. So, to avoid any future problems, ensure that all the terms and conditions are clear from the get-go.
3. Equity funding
Equity funding is another great way of raising business credit. Here, you give up a slice of your business in lieu of funds from investors or sell shares to investors. These investors do expect a substantial return on their investment, and more importantly, have a control over a part of your business. If you are looking for equity finance, ensure that you have a well-strategized business plan in place with a clear outline of how you aim to achieve your targets. The key advantage of equity funding is that the cost of borrowing is zero, and you do not have to make regular repayments.
Additional Read: Benefits of business financing by Bajaj Finserv
4. Debt funding
Debt funding is one of the most popular ways of financing the needs of a growing business as it helps you retain business ownership and control. A business loan gives you access to collateral-free funds that you can funnel into your business, and use as per your needs without any explanation to the lender. Business owners can also opt for specialised loans like a Machinery Loan for equipment purchase or a Working Capital loan for fulfilling their daily operational needs.
You can opt for a Flexi loan option when you are unsure of the precise amount of financing you need for your business. All you need to ensure is that you pay back the loan in a timely manner and plan your repayment in advance to avoid any penalties.
The most preferred option for financing a growing business is a business loan. Here Is why you should consider taking one -
- Collateral-free
- Offers competitive interest rates
- Gives you complete ownership control
- No restrictions on how you can use the money
- Opt for a loan with a flexible tenor and use it to hire more staff, diversify operations or even lease a bigger office space
- Most business loans give you access to funds up to Rs. 80 lakh and low EMIs ensure that this is a cost-effective financing solution
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