When you own a business, you constantly have to look for financing avenues to ensure that your operations continue running smoothly. Capital is essential for all your business activities, right from purchasing raw materials and paying overheads to wages and compliances. If you do not have sufficient funds, you could find yourself unable to scale up or maintain the trajectory of your business. To learn more about the different avenues from where you can source capital for your enterprise, continue reading.
What are the different avenues that function as sources of finance?
If you are looking for sources of working capital for your business, you can consider the following options:
Angel investors and venture capitalists: A prominent source of business financing is equity capital. This type of financing is especially useful if you are heading a start-up or a newer firm. In such instances, you might not have the credibility to apply for and avail of a traditional business loan. However, you can reach out to investors and venture capitalists for financial assistance. Do keep in mind that investors and venture capitalists only offer funding in exchange for equity in your company and a share in the profits.
Accounts receivables or invoice financing: As a business owner, you might not be able to pay for expenses like purchasing materials and paying off salaries if your account receivables remain unpaid. In such a circumstance, you can opt for invoice financing to get funds. You can use your unpaid invoices as collateral and approach a financial institution for assistance during a liquidity crunch.
Inventory financing: Another source of funds for your business is inventory financing. With this financing method, you can secure a loan for your business by pledging your company’s inventory as capital. Again, this solution is suitable for smaller or newer businesses that might find it challenging to access other financial aid options.
Business Credit Cards: A convenient form of sourcing capital for your business is to opt for Business Credit Cards. Since Business Credit Cards are an unsecured facility, you do not have to pledge any security. You can easily access funds; however, the availability and limit do depend upon your credibility.
Government grants and subsidies: The Government of India recognises the need for entrepreneurial ventures for the economy. To that end, they offer various subsidies and extend schemes to help Micro, Small, and Medium industries with their business expenses. You can look out for these subsidies and schemes in your state and apply if you meet the eligibility criteria for the same.
Read more about Credit Linked Capital Subsidy Scheme here.
Financial institutions: Lastly, one of the best ways to seek financial assistance for your enterprise is to opt for a Business Loan. You simply have to meet the eligibility criteria set by the financial institution in question and hand in the required documents. Do note that to apply for a traditional business loan from a financial institution, you must have a good credit standing. Your credibility could also dictate the amount offered to you via the loan.
Now that you know of the most commonly relied upon long-term sources of finance, make sure you have the capital needed for your operations.
HDFC Bank recognises the challenges entrepreneurs face while acquiring capital. Thus, HDFC Bank has created MyBusiness, a one-stop solution that gives you easy access to loans, digital solutions and provides you with the essential knowledge you need to run your business. With HDFC Bank MyBusiness, you can scale up, expand your operations, and nurture your business.
To learn more about the various products and services at HDFC Bank that can benefit your enterprise, you can check out the MyBusiness page here.
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. HDFC Bank recognises the challenges entrepreneurs face while acquiring capital. Thus, HDFC Bank has created MyBusiness, a one-stop solution that gives you easy access to loans, digital solutions and provides you with the essential knowledge you need to run your business. With HDFC Bank MyBusiness, you can scale up, expand your operations, and nurture your business.