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Any business needs a constant flow of funds. Continuous capital infusion ensures that a business gets timely upgrades and resources to be on top.

There are two kinds of funding required for any business: Short Term Funding and Long Term Funding

Short Term Funding is usually in line with a company’s day to day needs or operational needs. They come with shorter terms than long term financing. They are best suited for short term business needs like raw material purchase, daily cash requirements, salaries and wages, etc.

Long Term Funding are generally aligned with the long term goals of the company. They are generally utilized for bigger plans like expansion or acquisition, investing in infrastructure and assets, large scale project acquisitions, etc. They have longer tenures and don’t have a fixed amortization schedule like other loans.

Some of the most common sources or avenues to get short term or long term business funding are:

1. Bank Loans: This is the most common borrowing method for businesses. Bank loans allow for higher loan amounts and lower interest rates. Borrowing from formal lending channels is more advantageous as they come with pre-determined terms and repayments. Bank loans are of different types: Working Capital Loans, Equipment Loans, Term Loans, Line of Credit, Bridge Loans, etc.

2. Government Schemes: The government announces various financial schemes regularly to boost the MSME sector. Be aware of these schemes to take advantage of them. Some of the schemes like the MUDRA Yojana, CGTMSE, Mahila Udyami Yojana and more have disbursed considerable funding to eligible business entities. Most of these loans are also collateral free with a very low rate of interest.

3. Angel Investors: Angel Investors are a group of investors who are looking to invest in potential business models. This kind of financing is suitable for start-ups and new initiatives. The business owner has to present his business idea to these group of investors and if they are convinced of the sustainability and profitability of the business, they will invest in it.

4. Crowd Funding: This new method of financing is gaining popularity these days. Here, the business owner presents his business on the internet and seeks funding from the general public. There is usually no minimum amount to invest and anyone can invest how much ever they want into the business.

5. Venture Capitalists: Venture Capitalists are somewhat similar to Angel Investors. Here, an investing firm funds a small business. They seek equity in the company in return. They also offer mentorship and consultancy services for the business to help them make a profit.

Conclusion: There are various sources of funding for businesses. As a business owner, you should continuously get updated with these resources so that you can approach the right channel to get your business going. Also, determine the type of funding you need; short term funding or long term funding. This helps you in getting timely funding from the best source.

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