Funding Guide to Your Small Business Idea
                     Funding Guide to Your Small Business Idea
https://www.imprezz.in/ | Imprezz
Businesses are primarily driven by the unique ideas that build them. 
However, the lifespan of a business is entirely dependent on its ability to 
sustain and grow. Which means it requires money; technical equipment, 
office space, website, initial financial security to pay bills and so on. You 
require at least a little bit of financing to get going with your small 
business idea. Therefore, understanding the concept of business funding 
for start-ups is significant to succeed.
Starting your own venture could seem like a nightmare, but it’s worth it! 
Studies prove that 94% of start-ups or new companies fail to sustain 
during their first year of operation. Coming up with a billion-dollar idea for 
a new company is cool. But, the journey from having a view to building a 
profitable business can be challenging. In that case, how to finance a start-
up business? Funding mainly requires you to understand the nature and 
type of your business thoroughly.
Do you want to take a tour to find out how to get funding for a business 
idea? Congratulations! You are at the right place. This article is a part of 
our comprehensive guide on small business ideas – explore the small 
business funding guide to know the effective financing options 
recommended for Indian enterprises. From traditional bank loans, lenders 
to alternative financing methods here’s everything you ought to know to 
fund your business idea.
10 Funding Options to 
Raise Capital for Your 
Small Business Ideas
1.   Bootstrapping
Bootstrapping, also known as self-funding, is the go-to funding 
option for most business owners. It is proved to be the most 
effective form of financing a start-up or enterprise, especially 
while starting. Entrepreneurs prefer funding their enterprise by 
accumulating any personal funds they can find. It could be their 
savings, or a share from their family members/friends, credit 
cards, or home equity lines. Raising funds within your closed 
circle reduces the stress of paperwork or compliances.
Usually, it is ideal to utilize the money you have rather than 
borrowing capital. Experts suggest that business owners must 
continue to bootstrap until their venture turns profitable. It is an 
excellent approach towards potential success and rids you of the 
burden of paying interests. Moreover, people tend to work hard 
when their own money is on stake. When you want to scale your 
business at a later stage, you can consider pooling in outside 
sources for financing. All-in-all, bootstrapping can be the medium 
for expanding resources both financially and non-financially.
2.   Angel Investors
The second-best funding option for your new business is to 
approach angel investors. Who are angel investors? You can 
usually find this type of investors in networking groups where 
they selectively collect proposals for investing. These passionate 
investors are one’s that helped launch high-profile companies like 
Google, Yahoo and Alibaba.
Angel investors are more likely to invest in your small business, 
provided you approach them in the early stages of your 
enterprise growth. These investors throw themselves in risky 
scenarios while investing to obtain higher returns; expecting up 
to 30% capital gain. If you think this is an ideal business funding 
option, look out for some of India’s famous angel investors and 
draft a precise plan to pitch them.
3.   Venture Capitalists
Venture capitalists are an ideal funding option if your company 
requires higher capital sourcing. These investors are likely to dig 
deeper into your business plan before bringing a tremendous 
amount of money into your enterpise. Venture Capitalists prefer 
investing is businesses that stand out from the rest.
Alongside investing venture capital, they also expect a return of 3 
to 10 times more than their original investment cost within a 
timeframe of 5-7 years. Quick tip? Better keep an exit strategy 
ready. Tap into your contacts to hunt for a venture capitalist; a 
cold approach is less likely to fetch positive results.
4.   Crowdfunding
Crowdfunding has gained immense popularity lately. The new 
funding option has been providing a financial boost for several 
businesses in India. It is a platform that allows businesses to pool 
some small investments from multiple investors rather than 
depending on a single source of investment.
You can benefit from crowdfunding by increasing your initial 
working capital required to start your business. Do read about 
various crowdfunding platforms for stock option before selecting 
one. Selective platforms might charge payment processing fees 
or demand business owners to uplift their financial goals to 
preserve the collected funds.
5.   Invoice Financing
Invoice financing is one of the best funding options to maintain 
the cash flow your business requires for daily operations. This 
funding option is also known as factoring, where your service 
provider lends you money from your accounts receivables that 
you can pay back when your customer scans the invoice. Invoice 
funding is a great way to bridge the payment gaps between your 
business bills/payments and your suppliers/contractors. It allows 
a growing business to accept new projects and provide effective 
results.
6.   Business Incubators & Accelerators
Considering incubators and accelerators to raise money for the 
business at an early stage is a good idea. These funding 
programs have been popularly helping businesses in India and 
are available in every possible city. Their utility is interchangeable 
despite the fundamental differences between them. They operate 
by providing training tools, business networks, and support for 
enterprise growth.
Incubators help nourish and aid businesses in standing out in the 
market place, wherein accelerators assist the business in taking a 
big jump that helps keep them running. These programs typically 
demand 4-8 months of commitment from the business owners. It 
helps develop great relationships with mentors, investors and 
other competitors.
7.   Partner Financing
The strategic partner financing is one the commonly known 
funding option. You can get a trusted partner interested from your 
industry to invest in your venture in exchange for exclusive 
access to your business data, products, items, distribution 
channels, sales or a combination of all these elements. Due to the 
commonalty, this funding option is usually overlooked.
You can also partner with another company that can boost your 
business growth. It is considered a risk capital that offers a share 
in sales; it can either be equity-based or commission-based. 
Partnering with large companies helps build a better network of 
clients, suppliers and provides access to great marketing 
programs.
8.   Bank Loans
Conventional banks in India offer business loans, provided you 
have necessary proof and records. You can easily avail these 
loans if adequate assets back your business. Banks usually 
provide various financing options; with an ideal business plan, 
you can quickly secure your funds by availing loan programs. 
What to do in case you are not eligible to request for a bank loan? 
You can always lean on microfinance funding to access financial 
services when you can’t rely on traditional banks. They have 
limited requirements whose credit ratings are not influenced by 
the banks.
9.   Government Programs
One of the most reliable funding options for entrepreneurs and 
start-ups in India are government programs. The Government of 
India launched a start-up fund project worth Rs 10,000 crore 
under the Union Budget to strengthen SME’s ecosystem in India. 
Further, the government also launched “Bank of Ideas and 
Innovations” to encourage 
innovative products and business ideas.
The government supports the “Pradhan Mantri Micro Units 
Development and Refinance Agency Limited (MUDRA)” to help 
spread the benefits to around 10 lakh SME’s in India. Under this 
scheme, business owners are provided with a MUDRA card post-
approval of the loan amount request. It acts like a credit card 
through which business owners can purchase raw materials and 
cover other expenses.
9.   Government Programs
In addition to central government schemes, the state government 
has also established various programs, Kerala State Self 
Entrepreneur Development Mission (KSSEDM), Rajasthan Start-up 
Fest, Maharashtra Centre for Entrepreneurship Development, so 
on to support small businesses. Besides, SIDBI – Small Industry 
Development Bank of India also provides commercial loans to the 
MSME sector.
Provided enterprise meets the eligibility criteria, government 
schemes and programs are the best funding options compared to 
the rest. It is vital for business owners to educate themselves 
about various government initiatives; research thoroughly about 
the Indian government’s Start-up India Action Plan. Recently, GOI 
announced a new program – “Atmanirbhar Bharath”, a package to 
combat the COVID-19 economic crisis.
10.   Quick Financing Options
Funding options for enterprises have increased drastically over 
the past decade. Apart from the popular financing option 
mentioned above, you can also try out other ways to raise 
capital. Although these options may not apply to all enterprise 
types, it’s worth exploring these options.
Product Pre-Sale
Selling your products before the official launch is an effective funding 
strategy. Sadly, not many businesses in India follow this funding approach. 
Some of the most popular companies worldwide follow this funding option 
to improve their cash flow and prep themselves for the consumer demand.
Asset Sale
Asset sale can be a daunting process in terms of raising funds. But look at 
the bright side, it helps meet the short-term enterprise requirements and 
finances. You can always re-purchase the assets once your venture 
becomes stable.
Credit Cards
Having a business credit is a boon; it is the best funding option that 
provides instant cash. If your new business idea doesn’t require a lot of 
investment, you can use business credits cards to cover your small 
expenses. However, beware of the interest rates and card costs. They can 
sum up into a large amount and accumulate in no time.
Conclusion
Finding the best financing option can be the most challenging 
part of starting a business. It takes a clear understanding of your 
business model to decide what option best suits your enterprise 
requirements. However, once you crack the deal, save some 
capital, get your loan approval, or outsource money from 
investors, you will likely see your business grow. Although it might 
take quality time for you to succeed in this journey, your dreams 
will undoubtedly turn into a reality. Finding allies along the road; 
friends, investors, capitalists will ease your burden.
Businesses in India must focus on their finances in their early 
stages and later. Is your small business ready to see the limelight 
of success? Implement an 
all-in-one business intelligence software that keeps you up-to-
date and modern. You can always rely on Imprezz 
cloud-based invoicing software to streamline your 
small business accounting. The GST billing system will help keep 
your business GST compliant.
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