11 Simple and Effective Ways to Fund Your Business Idea

Have you ever thought of being an entrepreneur?

Do you have the required skills and resources to start your business? Are you looking for various sources to help you gather funds for your business? Well, there is no doubt that owning a business of your own is one of the finest feelings to have.

how to raise funds for startup businesses in India 

It gives you liberty and freedom and gives you peace of mind. Additionally, you can manage your work-life balance in the most seamless manner that might not be possible with a 9-to-5 job. 

But how to fund your business idea?

Well, no doubt it is a big question and requires quite a level of patience as well. The requirement for the fund for business depends on the nature of the business and the amount of capital you currently own. Without properly estimating the need and creating a proper breakup chart, you might fail to raise the fun from the outside.

Though there are multiple choices that you can select from, here are the top ones listed for you. 

Also Read:

11 Best Business Funding Sources

Whether you are an established business or an entrepreneur seeking to start your business, there is no doubt that the need for fun can arise anytime. Knowing the multiple sources can help you fulfill this need and ensure that your business is running smoothly and generating profit for you.

Though there are multiple choices, you can see from the first that you should understand that it should be linked to your needs and should be very beneficial for you. 

Say you need fun for quite a short period of 2 or 3 months; you can always rely on your peers or a working capital loan for the same. But if you are looking for a long-term and are planning to invest it in some new product or service, you can always go for a bank loan or investment from Angel investors. 

So, now let us explore the answer to your prime question: how to raise funds for startup businesses in India? 

1. Self Finance

This is the first and the best way to raise funds for your business. You can invest in your business with the help of your savings. To start with self-investment, you first need to keep a portion of your feelings for yourself to help you in times of emergency.

Additionally, self-finance is considered the first source of enlightenment because if you go to any venture capitalist or bank for a loan, they will ask for the amount you have invested as capital in your business.

Plus, self-investment is the source of investment for your business that carries no interest, and the risk is also relatively low. Thus, this can ensure long-term stability and support.

2. Peer To Peer Lending

This is a common mode for raising funds for your business. You can always connect with your family or friends to ask for seed money to help you start a business. Additionally, there are money lenders as well who can offer you funds for the business.

This money comes with the terms of returning the funds as well as a particular rate of interest. This is a kind of unsecured loan. Since this amount is not from the bank or any NBFC, the interest rate can be higher. 

3. Bank Loan

Bank Loan

Banks are the priority of many when it comes to seeking loans. These follow the guidelines of RBI, are highly secured, and carry a low-interest rate compared to most other choices available.

You can get a term or working capital loan based on business needs. Private and public sector banks offer loans, but you need to have the entire set of documents, and high credit ratings are required for approval. The process is complicated and lengthy, so you must be patient. 

4. Small Business Loan From NBFC Or MFI

NBFCs are the Non-Banking Financial Companies that also work on the line of the RBI and support upcoming businesses with the funds. Microfinance essentially provides access to financial services to those who would not otherwise have it.

It is becoming more common for individuals with modest needs and unfavorable credit ratings. This is a great option when you do not have a credit history or a low credit score. The rate of interest applied by them is high compared to banks but is secured.

5. Loans Under Government Schemes

Currently, the government is also coming ahead to help you find answers to how to get funding for a business idea. The Indian government has introduced several loan programs to help new businesses, SMEs, MSMEs, women business owners, educated youth, SC/ST individuals, Small Scale Industries (SSIs), villages, people residing in both rural and urban areas, and others.

Some of these loans are Central, while the State sanctions others. They also carry some associated terms and conditions but are a great choice.

6. Business Credit Cards

One of the easiest and fastest ways to obtain immediate funding for a startup is by using a business credit card. It’s best when you don’t have many expenses and must make the minimum monthly payment.

However, remember that carrying debt might be bad for a business owner’s credit because of the high-interest rates and charges associated with the cards.

7. Angel Investment

Angel investors have extra money and a strong desire to invest in new enterprises. They screen the proposals before investing as a group in networks. Along with funding, they may also provide mentoring or counsel.

This alternate type of investment typically occurs in a company’s early development phases, and investors anticipate receiving up to 30% stock. For greater rewards, they favor taking more investing risks. Compared to venture capitalists, angel investors make smaller investments.

8. Venture Capitalist

Professionally run funds known as venture capital make investments in businesses with enormous potential. They typically make stock investments in businesses and leave when they are acquired or go public.

VCs offer knowledge and guidance and serve as a business’s litmus test. VCs frequently want to recoup their investment within a three- to five-year time frame since they have a short leash regarding corporate loyalty.

Venture capitalists might not be particularly interested in you if your product takes longer than that to reach the market.

9. Business Incubators and Accelerators

Programs like incubators and accelerators can be a source of investment for startups. These initiatives, found in almost every large city, support hundreds of new enterprises annually.

The business owners who participate in these programs must invest their time because they typically last 4 to 8 months. Using this platform, you’ll be able to connect with mentors, investors, and other businesses in your field.

10. Crowdfunding


One of the more recent and increasingly popular methods of startup fundraising is crowdfunding. It resembles accepting many parties’ loans, preorders, contributions, and investments.

The idea behind it is to share your business idea over the crowdfunding platform, and all who are willing and interested in investing can come ahead and do so. It aids in both financing and product marketing.

By putting funding in the hands of regular people, this technique can eliminate professional investors and brokers.

11. Mortgage

If nothing of the above options works for you, the last option is to go for the mortgage. You can place your house or any other asset as a mortgage and gain the loan. Additionally, this can be in the form of an overdraft facility. This will make you pay interest on the amount utilized, unlike the loan, where you have to pay interest on the entire amount. 


You probably need outside funding sources if you wish to expand very quickly. You may be unable to seize market possibilities if you bootstrap and go too long without receiving outside finance.

Although the abundance of funding choices may make it simpler to start, sensible business owners should consider how much financial support they require. But make sure to select one that offers you a lower rate of interest.

Additionally, when it comes to positively answering how to fund your business idea, you should compare and contrast all the options before selecting one.

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