As per a recent survey, almost 82% of small businesses in India experienced a negative impact during last year’s global health emergency, and the economic downturn resulted from it. Almost 34% of surveyed companies cited the lack of funds as one of the major reasons that could hinder the scaling of their businesses.
Hence, it is high time the small business should know how to get a small business loan to facilitate growth. Besides, they can also consider alternative funding options feasible to them.
Top 5 ways to finance business growth in India 2021
Primarily, individuals need to create a growth plan for their small business. Besides, following are the best financing options that business owners can consider while planning growth:
- Business credit cards
Relying on personal savings for business growth can be detrimental. However, one can consider opting for a business credit card which comes with a higher borrowing limit than personal ones. Selected business credit cards also offer 0% interest.
However, in case of delayed bill payment, this financing option affects business and personal credit scores.
- Venture capital
This financing option comes from affluent investors or selected financial institutions who invest in small businesses with growth potential. However, one needs to have an almost perfect business plan and evidence to support growth prospects to attract funding.
In such cases, usually, the investors have a say for company decisions once they invest in a business.
- Government scheme for small business
The Micro-Units Development and Refinance Agency provides a MUDRA loan to help small businesses raise funds to scale their ventures. Depending on the size of the business, the Government sanctions loans of up to Rs.10 lakh to help your small business raise finance. Individuals can visit the official website for MUDRA loan online apply.
Similarly, the Udyogini Yojana offers business finance to women entrepreneurs. The maximum loan available under this scheme is up to Rs.3 lakh.
However, to avail business finance under both these schemes, you need to meet certain eligibility criteria and submit a list of documents. Also, if business owners require higher loan amounts, these schemes may not serve the purpose. In such cases, they can alternatively opt for a business loan.
- Business loans
A business loan is one of the most convenient ways to raise funds to grow their enterprises. Almost all leading financial institutions, including NBFCs like Bajaj Finserv, offer substantial dedicated small business loans at competitive interest rates Accounting Software.
Following are some of the features of loans for small businesses:
- Collateral-free financing.
- Easy-to-meet eligibility criteria.
- Simple documentation.
- Flexi loan facility- With this option, business owners can opt to withdraw amounts multiple times without any restrictions. Moreover, they need to pay interest only on the amount utilised. It reduces the EMI burden almost by half.
- The business loans offer quick approval and disbursal. It enables business owners to raise funds for business emergencies as well. However, they need to know how to get a small business loan online.
This NBFC also extends pre-approved offers that simplify and expedite loan processing. Besides business loans, these offers are available on various financial products like personal loans, credit cards, etc. All you have to do is enter your name and contact number to check your pre-approved offer online.
- Loan from friends and family
Another way an individual can gather funds for business growth is by taking loans from friends and family. It can also be availed against equity of your business. However, taking a loan from your close circuit can be tricky and affect personal relationships.
Moreover, the available funds may fall short as the amount they offer depends on their discretion. Even after that, if you want to settle for this financing option, it is wise to draft legal agreement papers duly signed by both parties to avoid discrepancies later.
Individuals can avoid such hassles if they know how to get a small business loan and repay it conveniently. These are the top five financing options to ensure business growth in 2021. Regardless, business owners need to plan the repayment beforehand to ensure a hassle-free borrowing experience.