If you’re an entrepreneur at heart, there’s nothing better than developing a business idea that you know you can turn into reality. The same goes for business ideas, just as with full-fledged companies. 

Once you have momentum behind you, try to find a way to fund your business idea with a loan for startup business in India or otherwise. Naturally, saying this is easier than doing it. What are your loan for startup business in India options for finding funding for a business idea without a financial history? Banks are unlikely to provide business loans to people who approach them. However, there are quite a few non-bank options that you can explore when your business idea needs funding.

Where to look for business idea funding

Crowdfunding

The digital economy favors crowdfunding to raise capital for new businesses. The key to a successful crowdfunding campaign for getting a loan for startup business in India is having a compelling pitch, one that emphasizes your startup’s potential for growth and interacting with your cash-rich crowd. 

Your operations will remain independent if everything goes smoothly, as you won’t need to repay the capital. Crowdfunding has the benefit of being a great way to advertise a company before it even launches. There is no doubt that one of the most serious difficulties in crowdfunding is advertising your business case first! 

Angel investments

The only real work is convincing them that your startup merits their investment and not be a high-net-worth individual. You should start researching local angel investment groups and online angel investment networks and start submitting your pitches to them. 

Aside from financial support and the necessary business loan eligibility, angel investors can also offer you mentorship. Often, they offer mentorship as a complementary feature along with their capital. However, unlike banks and venture capital funds, they typically do not provide as much support.

Bank loans or credit lines

The concept of getting a bank loan today almost seems anachronistic. It is still possible to obtain funding for a startup if you have a solid credit history, business loan eligibility, or existing assets you can pledge as collateral, along with a solid business plan with a clear forecast of profits. 

Choosing this option has advantages such as full equity retention, the possibility of obtaining a large sum, and building your credit. The disadvantages are you’ll have to repay everything plus interest or risk bankruptcy.

Venture capital 

It is usually a good idea to raise money by finding a venture capitalist who believes in your vision or believes you can turn your idea into a successful, profitable venture. You will need to finalize your business model, and ideally, it should be scalable. 

Entrepreneurs often struggle to convey their enterprise’s ability to scale when pitching venture capitalists. Because venture capital funds’ very nature tends to be short-lived, they do not last long as they generally seek to make a profit before moving on to the next fresh startup.

Microfinancing

A microfinance institution may provide capital to small-scale entrepreneurs, circumventing banks entirely. Anyone with a poor credit record may find this an especially good option because non-banking financial institutions (NBFCs) often loan to people deemed high-risk, even if they have the right business loan eligibility. 

They can promote financial inclusion and provide services to those at the bottom of the financial pyramid. Pros: Low-interest rates, no need for assets. Con: Small loans, numerous documents required (references, financial statements, business plans, etc.).