10 Sources of Finance for New Entrepreneurs

Launching a new enterprise requires sufficient funding to turn your idea into reality. While securing the required funding is a daunting task, you must explore various sources of finance for entrepreneurs to make the process manageable. 

Are you a new entrepreneur looking for finance? In the following sections, you will find an overview of the top ten sources of finance entrepreneurship. While some apply to startups in the early stage, others are more suitable for mature companies in the growth stage. Nonetheless, all of them will provide a good amount of inspiration for your funding round.

List of Finance Sources for Entrepreneurs

By understanding these entrepreneurial finance sources, you will find the much-required financial support to finance your business journey:

1. Personal Savings

Personal savings is one of the most common sources of finance for entrepreneurs. It is the best way to maintain control over the funds while avoiding any external obligations. Moreover, it exhibits your commitment to the business, attracting more investors.

2. Family and Friends

Financial support from family and friends who believe in your business idea is an informal source of entrepreneurial finance that offers flexibility in terms of loan amount, EMIs, and loan repayment. However, mixing financial transactions with personal relationships often creates complexities. Therefore, maintaining transparency in communication is essential to avoid potential risks.

Also Read: Best Financing Options To Meet Your Business’s Needs

3. Crowdfunding

Crowdfunding has become a significantly popular source of business finance in recent years. By showcasing your business idea to a broader audience, you may attract multiple investors with trust in your vision. Create a compelling campaign by offering incentives to contributors and ensure delivering on your promises to the backers.

4. Small Business Loans

Traditional SME loans from lending institutions like Hero FinCorp are popular sources of finance in entrepreneurship. They provide access to a lump sum you must repay to the lender in easy EMIs over a pre-determined repayment tenure. However, these loans are mostly accessible to companies with a few years of vintage and not to new entrepreneurs.

5. Business Incubators and Accelerators

Business incubators and accelerators provide business funding along with mentorship, network, and resources. They are popular among early-stage startups looking for rapid growth. However, competition among businesses to join a reputable incubator or accelerator program is fierce, and their expectations and timelines are also demanding.

6. Business Credit Cards

It is like a regular credit card but specifically meant for business owners. It gives a credit limit to which the entrepreneur can spend each month and repay the expenses in credit card bills.

Also Read: Business Finance: Know About Meaning, Types, Importance & Sources

7. Bank Loans

Various banks provide small loans to entrepreneurs who meet the eligibility conditions and documentation requirements. However, the application process is cumbersome, and approval takes a long time to provide the required finance.

8. Government Subsidies

Government organisations, private foundations, and non-profit entities offer subsidies to small entrepreneurs. They do not demand repayment. However, the application process is stringent, and eligibility criteria are competitive.

9. Venture capital

Venture capitalists demand equity in return for their investment in high-growth startups. It provides a substantial financial boost to the company but demands a portion of its ownership and profits.

10. Factoring

Factoring finances working capital by reducing the size of accounts receivable. The factoring company pays the invoice so the business does not need to wait for clearance from the client. 

Also Read: How To Get Funding for a Startup Business?

Why should you Consider a Personal Loan as a Source of Finance for New Entrepreneurs?

A low-interest rate Personal Loan can be an excellent source of finance for new entrepreneurs. Here are some reasons to consider a Personal Loan from Hero FinCorp.

• Accessibility: Personal Loans are easily accessible online (Hero FinCorp website/mobile app) without any branch visits or physical paperwork.
• No Collateral Required: Personal Loans are collateral-free - available without collateral, security, or guarantor.
• Flexibility: These loans are highly flexible in terms of repayment tenures, EMIs, loan amounts, etc.
• Speed: No collateral requirement, paperwork, and branch visits accelerate the loan process for instant funding access.
• Building Credit: A Personal Loan gives you an opportunity to build credit with regular EMI repayments according to your budget.

Also Read: Funding Options For Small Businesses And Start Ups

How to Apply Personal Loan Online?

Follow these steps to apply for Personal Loan online from Hero FinCorp:

• Visit the Hero FinCorp website or the personal loan app.
• Click ‘Apply Now’ in the Personal Loan section.
• Fill out an online application form.
• Submit the necessary documents.
• Review and accept the loan offer to get disbursal in a few hours.

Also Read: How To Get Difference Types Of Business Funding In India

Conclusion

New entrepreneurs can obtain entrepreneurial finance from various sources. Therefore, getting acquainted with the different sources of finance for entrepreneurs always helps. It helps you choose the best funding source most suitable for your situation and business stage. Consequently, it increases your chances of successfully raising the required funding. Need a low-interest rate Personal Loan to set up your business? Apply for a Personal Loan at Hero FinCorp online to get the needed financing instantly.

Frequently Asked Questions

1. What are the most common sources of finance?

Personal savings, loans from family and friends, and Personal Loans are the most common sources of finance for entrepreneurs.

2. Why are sources of finance important?

In entrepreneurship, sources of finance provide the much-needed capital to set up the business, carry out operations, and finance growth when appropriate.

3. What are the means of financing?

Some means of entrepreneurial finance include personal savings, crowdfunding, SME loans, Personal Loans, and venture capital.

4. What is a finance example?

Personal Loan is a perfect example of entrepreneurial finance. It offers collateral-free loans to both salaried and self-employed individuals with no end-use restrictions.

5. What are the functions of finance?

Borrowers can use business finance for various business-related activities, including inventory purchase, staff hire, infrastructure setup, office rent, etc.