Going against the tide and launching a self-driven, innovation-laden start-up is one of the most exciting and adventurous factor. However, it is tough to manage if your venture is not adequately funded. With a number of government policies to encourage startups, banks have come forward to fund the units. In case of banks, however, most of the startup owners find it difficult to pay down the debts along with interest amount in the form of monthly payments.
Another factor is that when you are just starting out, you're not at the point where a traditional lender or investor would be interested in you.
As the startup continues to grow and develop its product or service, it might not generate enough revenue to sustain its operations or staff. This may lead to subsequent rounds of funding.
Thus startups require more than one funding as they grow. Expenses for research, procurement of necessary hardware, and professional talent require funds that may not be available to the company on its own initially.
There are many options for arranging funds. The most successful entrepreneurs are the ones who think creatively to arrange funds for themselves. They have to sell themselves, more than their product, to close on every alternative source of funding.
The Government of India has a Startup Fund to improve startup ecosystem in India. In order to boost innovative product companies, Government has launched ‘Bank of Ideas and Innovations’ programme. The ‘Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRA)’ starts with an initial corpus of Rs. 20,000 crore to extend benefits to around 10 lakhs SMEs. You have to submit your business plan and once approved, the loan gets sanctioned. You get a MUDRA card, which is like a credit card, which you can use to purchase raw materials and meet your other expenses. Shishu, Kishor and Tarun are three categories of loans available under the promising scheme. Small Industries Development Bank of India (SIDBI) also offers business loans to MSME sector. If you comply with the eligibility criteria, Government funding option is the best. You just need to make yourself aware of the various Government initiatives.