The start up market is booming in India and owing to it’s growing economy, there is a lot of space for more start ups to start their operations and grow . The financial system in India has been organised and simplified, in recent times. The loan for business start up could be provided by banks, financial institutions, government grants, venture capital companies, friends and family. All of these institutions cater to the various financial requirements of business startups as well as well established businesses.
Start up requires planning and strategy. The first step is to identify a good business idea and study it, then comes the part of searching locations for your business. Once this is done, then next step is to work on finances. Plan out the finance required to start your business. Entrepreneurs face challenges to search source of finances, due to which many start up plans have failed. There are plenty of options available in the market to finance your business. Nowadays, government has many schemes to promote people to open their own business, to avoid unemployment. But every finance option available has its pros and cons.
Finance from Banks
Banks has started providing loan for business start ups. The loans from banks are cheaper than others. You could avail personal loans, business loans etc. Interest rate is low and the return options are pretty simple as well. Bring your project for business start up and start filing your case for business start up. They will study the project work on the finance required and will find a suitable payback option for you. Paperwork and processing of bank loan approval takes time.
Loans from Private Finance Companies
Private finance companies are ready to finance your business. Such institutions just need a collateral security and they approve your loans quickly. Although the time taken to process a loan and paperwork is bit easy, the interest rates are bit higher than the conventional sources and there are penalties for late payments as well.
Loans from Capital Ventures
Share your ideas and complete projects with such ventures; they will study it and finance you business. This option takes time and the return on loan is shared in the business profit, which is a big disadvantage.
Grants from Government
Government has few schemes and ideas for small scale business and provides business finance as well. Though not all ideas get approved, processing of such grants takes months to get approved. Such grants are comparatively cheaper; interest rates are less than bank finance.
Loan from Family and Friends
Another good option is to get your finances from friends and family. This option could work if the business investment is up to 4 to 5 lakhs. You may need bit of persuasion, for them to invest in your business.
Getting loan for your business idea has become easier than before. Before making the decision on getting your finance from an institution, study all pros and cons. The factor for finance matters a lot such as time taken to provide finance, interest rate, payback option, collateral security etc. Study all these factors before securing your finance.