How a Self Employed Professional Can Fund a Business

There are many types of loans that a business may tap into when looking to raise funds for your self established business. But, in case of a self-employed professional, there are very limited options to go through. You may need a good amount of funding when you are at your initial stage of the business, once your business starts working well, you will not face any crisis related to working capital to smoothly run your dream business. You require an adequate amount of money to fuel your business till the end when you start generating profit out of it. Getting a business loan from any bank or financial institution may be a big challenge for you and chances of getting its approval are really thin. Such situations in the life of a self-employed professional may cause trouble for his/her running business. To provide some relief to those budding entrepreneurs,

Here are some different ways to collect fund for your business:

1. Put in use your Surplus Savings

Initially, to fund your business requirement you may use your extra saved amount to grow your business. Investment of your surplus amount into your own business is known as Bootstrapping. This method is one of the best ways to raise funds for your own established business because at that time your business is at the grassroots level and you may not be able to present your idea in front of others to get funding for yourself.

2. Personal Loan

This is one of the best ideas to fund your business. Personal Loans are the easiest ways for a self-employed individual to consider to meet his fund requirements. Before lending you a personal loan, lenders will check your credit history and your ability to repay. It is important to note that you cannot raise too much amount (generally around Rs. 20 lakh) for a tenure of 12-60 months. The rate of return on a personal loan is generally higher but is collateral free. Along with that, most personal loans get processed quickly and if you are in need of urgent funds.

3. Overdraft Facility

A self-employed professional may also undertake a facility of overdraft also to raise funds. An overdraft allows you to get some extra funds on your ongoing loans with your previous lender. It is generally granted to those individuals only who have a good repayment history in the past. It is a kind of an unsecured or multipurpose loan hence can be used for any purpose of the borrower.

4. Fund From Government Schemes

One may also get a business loan from government schemes also to raise funds for your business. Currently, there are plenty of schemes available which ensures the funding to give your business a boost. MUDRA Yojana, which is a government scheme helps entrepreneurs to fund their business. One can get a business funding of up to Rs. 10 lakh under this scheme.

5. Getting a Business Loan

A person running sole proprietorship business may opt for a business loan. A traditional bank may not lend you because you have just started running your new business, one may take help of fintech lenders other than banks which help the newly started business to easily avail an online business loan which is collateral free. But make sure that the interest rate charged by them is slightly higher compared to traditional lenders.

Self-employed professionals require a good amount of funds to grow their business. They may face lots of hurdles while raising funds to fuel their business requirement. Other than getting a business loan from fintech lenders, they may also choose the above-mentioned options to raise the funds for their business.