For the growth of any business, funding is often a very important milestone. SMEs often rely on Bank/NBFC funding, However, without collateral or credit history (min 3 Years), raising funds becomes a pain. 

In order to create assets in the industry, we need to grow our business, and for us to grow the business, we need funds. When we start the business, we generally do not have funds. Nor do we have any assets to pledge against a loan.

Many entrepreneurs are stuck in this vicious circle. Many businesses and ideas die before even starting. I have read about and spoken to many successful entrepreneurs, most of them did not have any capital when they began.

What they had was a will to succeed, almost all of them say the same thing.

"Funding is never a problem if your intentions are good and you are willing to give no matter what it takes."

With so many different avenues of funding opening in the current scenario, lack of funding is just an excuse.

Let me give you a golden tip!!!

The Best Form of Funding is your PROFIT!

Profits can be used to fund business growth, invest in a new business idea, or even pay back debts. Start-ups spend their initial profits on reinvesting in the business to expand the customer base and raise more profits. 

Proper planning and funds management ensures that the funds are not wasted on initiatives with a poor return on investments.  

How were you able to solve the funding problem in your business? 

Or are you still trying to figure it out?

This article was contributed by our expert Tanuj Keswani 

Frequently Asked Questions Answered by Tanuj Keswani 

Q1. What are the types of funds in a business?

The primary sources of funds are retained earnings, debt capital, equity capital, Preference Share Capital, Business Bank Loans, Debentures, and External Commercial Borrowing.

Q2. What is typically the largest source of money for a new business?

The most basic and primary source of funds for any company is Retained Earnings.

Q3. Business loan vs funds from retained earnings: Which is more suitable for your business?

The benefits of retained earnings are that you do not owe anything to anyone, and it is an inexpensive form of financing. But, at the same time, it may not be cost-effective.

While business loans can expedite your business’s growth without diluting your equity. It also has disadvantages like the extensive application process, loss of assets if you fail to make payments.