The capitalistic world is progressing at a rapid pace, presenting opportunities in every sector with new, more advanced technologies, infrastructure, government policies, etc. Yet, all around the world, we witness inspiring stories of start-ups making it big with cutting-edge innovative products, processes, and technologies.
However, most start-ups lack the funds to go ahead with their ideas and may require start-up business loans or investor funding to get going. Pitching your ideas to investors could be a time taking ordeal and that makes seeking loans for your start-up a viable option. Taking a business loan online has an advantage, it is online! The Internet has made things easier than ever before and increasingly convenient. You now have multiple online channels for getting your start-up funded through the online route.
Every business needs capital funding for smooth operations over a period of time, whether it is a small, medium, or large enterprise. Thus, every business needs capital for its start-ups, and for the unfortunate many, seeking funds from external sources is the only way to get their venture running. Applying for business loans online can get you the much-required funds easier and in a more convenient way. So, here are a few ways to get start-up business loans online:
· Government business loans
Government business loans intend to fund Micro, Small & Medium Enterprises. There are many Online Business Loans available. The information regarding these plans can also be found online regarding their features and benefits.
The most popular start-up business loans in India include the Mudra loan, Stand-up India and PSB Loans, which can be sought for even the smallest business enterprises like shops and they can sanction a loan in less than an hour in many cases. These government loans are offered to individuals, start-ups, partnership and sole proprietorships, SMEs, MSMEs, and private limited companies. The minimum age of the applicant should be 18 years of age and the business should be in existence for at least 2 years. The minimum credit score of the start-up should be more than 650 for getting a loan.
· Business loans from banks
Banks are the traditional sources of getting small business loans online due to their reliability and speedy disbursements. Banks provide working capital loans for every kind of business according to the sector they pertain to. Some banks also offer business loans without collaterals and mostly, availing loans from banks involves flexible repayment options and tax benefits.
HDFC, Bank of Baroda and Axis Bank are some of the banks that provide easy loan solutions for businesses online with the loan amount ranging from Rs. 50,000/- to Rs. 75,00,000/-. The policy tenure depends on the loan amount and can have a duration between 1 year to 5 years. To avail of loans from banks, the applicant should be at least 21 years of age and self-employed with his/her business in existence for 2 years. Additionally, the applicant also needs to provide proof of business turnovers and Income tax returns for the last 2-3 years.
· Business loans from Non-Banking financial institutions (NBFCs)
Non-Banking financial institutions provide start-up business loans online even more quickly and with lesser documentation process than banks. NBFCs provide business loans often without any collateral and sanction a loan even when the credit history of the business/applicant is low, making them incapable of applying from banks. The rate of interest is generally higher than the banks.
NBFCs offer banking services without actually holding a banking license. NBFCs in India include investment banks, insurance providers, hedge funds, mortgage lenders, private equity funds, money market funds, and P2P lenders.
Crowdfunding is a kind of funding where entrepreneurs can get business loans online from investors on social media platforms and web portals. This kind of funding is done by investors who are more interested in social causes rather than profit and the commonly crowdfunded businesses include education, events, charity, and other social causes.
Crowdfunding generally involves multiple small donations in return for a social or niche product or equity share in the business. Entrepreneurs can list their ideas or products on crowdfunding platforms online and interested individuals make donations to fund the business or project. However, crowdfunding is not a sure way of obtaining capital and is not considered suitable for every kind of SME venture.
· Angel Investors
Angel investors are financially sound individuals or groups who invest in businesses through equity financing. Angel investors can be approached for funding new businesses or a recent start-up in operation. Once angel investors become interested in an idea, they start the negotiations regarding the investment and their stake in the start-up.
Angel investors generally prefer high-growth sectors with media involvement, as they want to see a super-growth in the idea they have funded and want quick, big returns. You can find angel investors on various online portals or social media groups and build connections for booking a round table meeting and presenting your idea.
· Peer to peer lending
Peer to peer lending involves disbursing credit through online platforms to entrepreneurs seeking start-up business loans. Retail and institutional investors lend money to applicants who need business loans online. Their application is screened, and they can then pitch investors directly and borrow money.
P2P lending involves spreading investments in multiple small loan amounts in a transparent manner. The investors generally get monthly returns on their investments. For entrepreneurs, P2P lending is a convenient way to fund their start-up with low-interest rates, complete transparency, and a lower risk profile with multiple investors generally spending small amounts in your business.
· Venture capitalists funding
Venture capitalists are investors who fund high-growth opportunity start-ups with pooled investments. These venture capital funds are generally used as seed money by start-ups that aim for accelerated growth, mostly engaged in high-tech or emerging sectors. Venture capitalists earn returns when the portfolio company merges, is acquired, or otherwise exits through an IPO.
Once start-ups reach their potential growth stage, the entrepreneurs can seek online venture capitalists to fund their business to reach the next stage of their business operations. Entrepreneurs can avail of funding through venture capitalists online, the most famous ones in India being Sequoia Capital India, Blume Ventures, Accel Partners, Helion Venture partners, etc.