So Start-up funding(STARTUPS FUNDING.).So money needs to launch a new business. But It can come from a variety of sources and it used for any purpose that helps the start-up go from idea to actual business.
Means I want to say that. And if you want to open a start-up then how you can raise funds for that. So if you want to start a start-up and you have an idea. So You have to make a business model for that idea and run it successfully,
- LINE OF CREDIT:-
- EQUIPMENT FINANCING:-
- STARTUP BUSINESS LOANS BY THE GOVERNMENT OF INDIA:-
- FEATURES AND BENEFITS OF STARTUP BUSINESS LOAN:-
But from where will the money come that you need to start your business. So we call this fundraising. Means you need money so you have two options, either you take loan or approach investors.
Let us assume you do not take the loan and go to investors so let us understand investors first. So Basically investors are of many types like angel investors and venture investors and private equity.
Angel investors are big businessmen. But CEOs of companies. So They invest in your business and provide business know-how. So They tell you the loophole in your business model and way to improve it.
Basically they help you in improving business and also invest in your business. And venture capital is different. They invest in tour business but do not provide business know-how.
So I can say that. But Venture capital is companies that take money from a big investor and invest in your company. So let’s talk about venture capital and private equity. So if you are starting a business or have done it,
But everyone needs money. So where does investment mean, Where are you from, some stages are the first start-up, early-stage, growth stage, and maturity.
So Will only get angel investors after this then come venture capital and private equity. In this topic, we will talk about them.
The biggest difference so that venture capital brings seed capital to you and private equity growth capital comes to you. So venture capital means you invest money in your idea. And private equity when you come when you have a profit.
(STARTUPS FUNDING.)LINE OF CREDIT:-
A start-up(startup funding) business loan in the form of a line of credit works similarly to a credit card. So, However, the card is tied to the individual’s business instead of their personal credit.
One of the best benefits of a small business line of credit is that customers will have no obligation to pay interest on the borrowed so sum for the first nine to 15 months, thereby making it easier to cover expenses whilst getting their business to a good start.
The interest after the period will rise to anywhere between 7.9% and 19.9%, But the customer will only have to pay interest on the sum they use (similar to a credit card).
In this type of loan for start-ups, the equipment that is bought when starting the business is pledged as collateral, Thus enabling the lender to charge a relatively low rate of interest with a slightly higher risk.
The customer is expected to repay the amount. But used to purchase the equipment as revenues are generated from their business. So Similar to a line of credit, applicants are expected to have a high credit score (680+),
Firstly the documents required to avail equipment financing include a vendor quote, a detailed credit report, And a statement showing the manner in which the customer intends to utilize the equipment.
STARTUP BUSINESS LOANS BY THE GOVERNMENT OF INDIA:-
There are more than 39,000 start-ups in India at present who have access to much private equity and debt funding options. However, it is a challenge to get funding when the business is just an idea or is in the early stage.
Also, the Micro, Small, and Medium Enterprises (MSME) sector in India only has limited access to formal credit. So This is why the Government of India decided to roll out start-up business loan schemes for MSMEs and start-ups.
Small industries development bank of India (SIDBI). Has also begun lending to start-ups and MSMEs directly rather than channelizing it through banks.
The interest rates on these loans are lower than the one offered by banks by almost 300 basis points. let’s talk about some of the most notable and popular schemes offered by the Indian government for start-ups and MSMEs are as follows:-
Bank Credit Facilitation Scheme Headed by the National Small Industries Corporation (NSIC). So this scheme is targeted at meeting the credit needs of the MSME units.
The NSIC has partnered with various banks to provide loans to the MSME units.
The repayment turn of the scheme ranges between 5 years and 7 years but in special cases, It can be extended up to 11 years.
Pradhan Mantri Mudra Yojana (PMMY) –
PMMY Is Launched in 2015, so this scheme is headed by the Micro Units Development and Refinance Agency (MUDRA).
But it aims at offering loans to all kinds of manufacturing, trading, and service sector activities.
So The scheme offers loans under three categories – Shishu, Kishore, and Tarun in amounts ranging between Rs.50, 000, and Rs.10 lakh.
The mudra loan can so be available by artisans, shopkeepers, vegetable vendors, machine operators, repair shops, etc.
Credit Guarantee Scheme (CGS) –
This loan can be available by both new and existing MSMEs. That is involved in service or manufacturing activities but excludes educational institutions, agriculture,
Retail trade. But Self Help Groups (SHGs), etc. Up to Rs.200 lakh can be borrowed under this scheme headed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
So stand-up-India is Launched in April 2016 and headed by SIDBI, this scheme extends loans to enterprises in manufacturing, trading, or services. So under this scheme, loans ranging between Rs.10 lakh and Rs.1 crore can be availed.
The repayment of loans taken under this scheme can be done in seven years while the maximum moratorium period allowed is 18 months.
This scheme is also headed by the SIDBI and aims at offering loans to industries that deal with green energy, Renewable energy, technology hardware, and non-renewable energy.
So government started this scheme with the intent to offer support to the entire value chain of cleaner production/energy efficiency and sustainable development projects.
FEATURES AND BENEFITS OF STARTUP BUSINESS LOAN:-
No collateral or security needs to be provided to avail of a start-up business loan and Start-up business loans come with easy and flexible repayment tenures.
So The documentation required for availing a start-up business loan is minimal. So The funds are swiftly disbursed to the applicant’s bank account.
Start-up funding is the money need to launch a new business. So It can come from a variety of sources and it used for any purpose that helps the start-up go from idea to actual business.
Means I want to say that if you want to open a start-up then how you can raise funds for that? So You want to start a start-up and you have an idea. So You have to make a business model for that idea and run it successfully,
Under the Startup India program, So the Government created the Fund of Funds for Startups (FFS) with a corpus of INR 10,000 crores to provide funding support for Startups, over a period of XIV and XV Finance commission cycles. The Fund was set up with the approval of Union Cabinet in June 2016.