sources for financing

Sources of Financing for Women Starting a Business

When it comes to finding sources of financing for a business, it does not come as much of a surprise that women who want to start a business face more hurdles in collecting finance. Since women have not been conventionally witnessed to have built businesses, many lenders shirk at the idea of investing in a company owned by a woman. There are a lot of other conventions and psychological barriers that women face on their way to the entrepreneurial world. However, specific schemes have been formulated specially to help provide financial support to women entrepreneurs in the form of loan for women to start a business. Mentioned below are a few sources of finance that women can use to fund their business.

Crowdfunding:

Crowdfunding provides you with the option of exploring different types of financial resources to which you have access too. These types of resources are debt, donation, and equity. Although crowdfunding can take plenty of time and patience for it to work out, it certainly an option to be considered essential for your business.

Public donations:

Sources of financing also may include donations which allow you to raise finance without procuring the liability to pay it back. It is mostly in public interest makes one avail donations. Hence, you would have to create a well-structured plan for your business idea and pitch it to the public. If it is usher’s interest, then you can create a portal online through which you can receive donations through a trusted source.

Equity funding:

It also a form of public financing, but here the crowd owns a share in your company’s profits in the way of equity. Shareholders who hold a considerable portion in your company’s capital have the right to be informed as well as take part in the decision making of your business.

Procuring Debt:

Debt loaned to your business with the expectation of receiving interest. They are not liable to wait until your business has turned a profit. Hence, it is a permanent commitment on the part of the person responsible for paying the debt. It can be beneficial for raising temporary funds which can be later paid off.

Financing through the use of Government sources:

Another great option to fund your business as a woman is to make use of the funds created by the Government to help women start or expand their business. The Government of India has come up with various types of loans for small business for ladies. Under these schemes, the loan value is usually very high, but the rate of interest on the loans are kept low. No collateral security has to be pledged against the credits as well. The main aim of the Government is to make funds readily available to women and under suitable conditions. The terms and conditions of the loans are also on the soft side.

Small business loans are available in plenty, but the ones formulated by the Government are on the more convenient side. It is advisable to apply for such investments as the most significant advantage is not having to pledge collateral security. Moreover, low rates of loan interest reduce your financial burden by a considerable amount.

Making use of your funds:

No matter how hassle-free and convenient applying for a government formulated, the loan is, the best method of funding your business will always be to use your funds. Loans for women to start the company are still loans and involve a future burden of payment of interest and repayment of principal. To avoid this burden, try and save up for your business venture. Seek financial help from close friends and family. Keeping you free from the pressure of having to pay back someone and help you concentrate on business.

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