Getting funds for a private company is no less than running a marathon. It becomes all the more difficult to arrange monetary funding in case of a startup. Hence, if you are seeking financial aid for your private company, we have listed a few funding options that you can consider.
Kinds of Funding Options for Private Companies
Every private company requires funding at some point in time, especially during their growth phase. They need funds to invest in research and development programs, production facility, promotion, inventory, and so on, to expand their existing businesses. However, unlike the public sector, private companies do not have the backing of government institutions. As a result, they have to explore multiple funding options for the growth of their organizations. Here, in this article, you’ll know about the top two ways through which you can acquire funding for your private company.
1. Friends and Family
It is nearly impossible to get a business loan in the early stages of a privately held startup company. Moreover, it is not always wise to use your personal resources to finance your business. Hence, one of the best options here is to take the help of your family, relatives, and friend circle to get the funding. Try to divide the required amount into small segments, and ask your near and dear ones to help you. However, make sure to return their due amounts once your business is running well and earning a fair profit.
2. Opt for Loan against Property
As mentioned above, it is difficult to get a business loan for a private company, especially in the early stage, when you require funding the most. In such a case, it would be best to opt for a loan against property (LAP). In contrast to other forms of loans, it is relatively easier to get such a loan. Here are a few significant benefits of LAP:
- Easy approval process: As LAP is a secured form of a loan, the approval process is quite easy. So, you can get your loan sanctioned pretty quickly, and take advantage of the current market opportunities.
- Low-interest rate: Thanks to the collateral and secured nature of LAP, you will find the loan against the property interest rate on the lower side. If you have a reasonably good credit score, applying for LAP makes a lot of sense.
- Flexibility in repayment: With LAP, one can opt for a comparatively longer repayment period, between 10-20 years. That gives the borrowers enough time to expand their businesses as well as repay the due amount. Besides, the borrower can also opt for the EMI option to return the loan amount. One can even pre-pay the amount without facing any penalties.
- You will remain the owner of your property: In case of loan against property, the borrower continues to remain the owner of the property throughout the loan tenure. However, in a worst-case scenario, the borrower has the option to sell the property and settle the loan amount.
Both the above options are effective ways to fund your private business. If you need relatively smaller funding, you can consider borrowing the amount from your dear ones. Meanwhile, you can opt for LAP if you need a larger amount. The lower loan against property interest rate and flexibility in repayment make LAP a better option.