Summary – One of the most important things required for a start up is capital and here we provide you ways to get funds for your business. Some ways of  financing your startup is by using your own savings, bank loans, borrowing from family and friends, sourcing from venture capitalists and angel investors and by using new age methods of funding like peer to peer lending and crowdfunding.

Have you have decided to start your own venture? We wish you all the best. You need funds to invest in assets, begin operations and for day to day running of the business. Over time, revenue can be used to plough back in business. When you are starting your business, it could be that you have no other steady source of income. Therefore personal expenses need to be taken care of as well. Here are 5 ways to fund your business –

Savings – The decision to start a venture is surely not an overnight thought. When you are planning for your venture, you should start saving money. The savings in your bank account can be part of the initial capital required by your venture. It can also be used to take care of personal expenses when the steady source of income is not there.

Bank loans – Banks provide loans for businesses of all sizes. It is not easy to get a loan from the bank for a business. You need to have a solid business plan, clarity on revenue streams and a good credit history. It will add credibility if you are investing your own money in the business. Assets backing the loan will also help a lot.

Family and Friends – You can borrow money from family and friends. But make it a formal process and let them not feel obliged. Show them the plan and the returns potential. You should have a formal contract for the funding received so that things do not turn sour later on.

Venture Capitalists/ Angel investors – When you are starting off your business, it is difficult to find investors easily unless your idea is extremely promising and they see a lot of potential in the business. Maybe after the business has taken off, and there are positive results from it, you can approach venture capitalists and/ or investors to expand the business. They can provide funds for exchange of cash later or an equity stake. The terms and conditions can be different in different cases.

New Methods of Funding – New methods like peer to peer lending and crowdfunding can also be used for funding the business.
Peer to peer lending is the practice of lending money to unknown people in whose idea, you can see potential. It takes place on online lending platforms.  Kiva and i-lend.in are peer to peer lending platforms in India.
Crowdfunding is a practice where you can raise funds from a large online community. The people raising money may or may not offer returns in any form. For example the makers of the Hindi movie ‘I am’ raised money for the movie via crowdfunding. An example of a crowdfunding platform is Pik A Venture which manages to raise funds as well as gives consulting services.