Did you know that, according to a report from Evoma, there are approximately 42.50 million small or medium enterprises (SMEs) in India, unregistered and registered? Clearly, small businesses are popular, especially after the pandemic when people are exploring out-of-the-box ways to earn. However, gathering sufficient cash to start or even continue the business is a common problem since such companies lack the capacity, financial records, or awareness to access traditional loans.

So, why not be creative? Here are some innovative solutions on how to raise funds for small businesses:

Crowdfunding

Businesses are all about word-to-mouth, aren’t they? For smaller companies, this creates a significant advantage for gaining funds through crowdfunding. Also called peer-to-peer lending, this is where you can pitch your business idea online and reach out to thousands of people to provide you with funds.

In India, crowdfunding sites like Kickstarter, Indiegogo, Wishberry, FuelADream, etc., are quite popular. Donors offering money can also receive rewards, which further incentivize them to help raise funding.

Trade Creditors

Being a smaller business, you are most likely associated with some distributors and manufacturers. You can request them to give you a short-term business loan, in which their services won’t cost you until your company makes profits or its rolling target is met. Once you repay them on time, you can earn their trust and ask for further financing if needed.

Lending Schemes for Small Businesses

While the usual financing is not available, several lenders now offer loans for small businesses. These are provided as a single line of credit for funding companies’ urgent financial needs. Moreover, such schemes usually have business loan eligibility, EMI, tenure, and other favourable terms for small-scale enterprises.

Additional Read: Different Ways to Raise Funds for Small Businesses in 2021

Government Programmes

Other than lending institutions, the Indian Government has launched numerous programmes to help small enterprises get the capital they need. One of the most prominent ones is MUDRA (Micro Units Development and Refinance Agency), which supports smaller and micro-business companies. Through this, you can avail of financing depending on the capital you require, along with an affordable             

Additional Read: How to Get a Small Business Loan from the Government

Pitching to Angel Investors

Another creative way is to pitch your business ideas to angel investors. These individuals usually have surplus cash and invest in profitable companies, be it small or medium, with affordable loans. Such investors also prefer more risk for higher returns, and hence, if your proposal is compelling enough, they’ll be on board. Mumbai Angels, Hyderabad Angels, and Indian Angel Network are some of the country’s top angel investors.

Choose Tata Capital for a Friendly Financial Helping Hand

Tata Capital is here to bring you the best-in-class financing. As a small company, if you need short or long-term business finance, we’ve got it as well. Our small business finance offerings provide higher eligibility terms, no-collateral funding, flexible tenures, and attractive interest rates. You can even use our business loan EMI calculator to check the monthly instalment and interest payable accordingly!

Reach out to us today to know more.

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