Funding is the first and foremost step of running a business. Generating capital for business is a messy work. Some get this capital easily, some struggle. The reason for this is, people don’t have enough knowledge about how to generate funds their new business apart from Moneylenders, Bank Loans and Self acquired.
According to a recent survey, 94% of new business in India fail in their first operating year. The reasons to failure of business are multiple but the most common reason seen in the survey was – Lack of Funds.

In the following article we discuss sources of generation of funds for small business in India.


Creating capital using your own funds is the most basic and simplest way of generating funds for your business. Asking for funds for the first time without can be difficult. Using your own savings and investing them in your business. Or you can ask your family and friends to invest in your business since you can offer them a flexible interest rate.

Crowd-Funding Events

Crowd funding is another way to generate funds for your business. You can invite potential investors to a gathering and Discuss in details what your business has to offer and how much you have planned. You can discuss goal of your business, how you plan to make profit out of it, how much funds you require. By organizing a crowd-funding event you not only work for generating finance but also conduct a marketing campaign where you can generate interest among crowd to try your product.

Collaborate with Investors

Business Investors, also called angel investors or private investors are individuals or a group who show interest in Investing in new businesses. They have expert knowledge of financial management and offer insights/mentorship for your business alongside providing capital.
All the big companies- Google, Yahoo, Alibaba took the help of angel investors when they began their journey.

Venture Capital

This source of finance is for businesses who have moved past the startup phase and are now generating regular revenues. These VCs invest in businesses against equity and also offer mentorship/insights for guiding business in the right direction.
Venture Capital Organisations mostly look for stable companies, who have a strong team and good revenue.

Programs for Entrepreneurs

There are various programs that help accelerate business growth and motivate entrepreneurs and uplifting business performance. These programs are interested in Startups and offer Mentorship, nurture business growth, helps business. These programs are short period. Project Based Operations benefit a lot from such programs.
Such Programs also helps you to generate more business leads, connections with investors and good relations with competitors.

Bank Loans

Increased competition in the market has resulted in increased sources of bank loans. Various banks have been promoting themselves by encouraging entrepreneurs and their business. Thus, making Bank Loan-the first choice for generating funds for business.
Leading Indian Banks- Axis Bank, HDFC, ICICI, Bank of Baroda have more than 7 different schemes for funding new businesses.
Bank loans are the best source for generating funds for working capital for business.

Government Programs

Indian Government has always encouraged startups in India and has invested 10,000 crores for Startup Fund in Union Budget in 2014-15
Various startup programs like MUDRA, Kerala State Self Entrepreneurs Development Mission (KSSEDM), Maharashtra Centre For Entrepreneurship Development, Rajasthan Startup Fest are programs that have encouraged many startups and provided funds for their business.
SIDBI- Small Industries Development Bank of India Offer various loans for SMEs in India.

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