The holiday season’s upon us and with it often comes extra stress, rushing around, and a sense of feeling overwhelmed. But as the new year approaches, it can also be a time for creating fresh starts. When it comes to your livelihood, finding a way to finance your small business can also be overwhelming at best, and sometimes downright daunting. However, just like you may be getting ready for the new year on a personal level, now is also a great time to get the ball rolling on funding your new venture. With that comes staying on top of all the options, trends, and resources surrounding small business financing.

How Much Does It Take?

Before determining how to go about financing your business, it’s important to have a concept of how much capital it takes to start a business, as that can impact where you choose to seek finance. One survey done by the Wells Fargo Small Business Index reported that $10,000 is the average amount of startup money required by a small business owner. However, other surveys, such as the Kauffman Firm Survey, indicate that the number is much higher – closer to $80,000.

While these numbers help to give insight into what to expect, the amount of capital needed to start up will vary greatly depending on the type of business, industry, size, etc. The Small Business Administration (SBA) recommends a few simple tips to help calculate your start-up costs. Once you’ve analysed your potential expenses and capital expenditures, assessed your assets, and allocated your costs, you’ll be able to calculate your startup cost using this starting costs estimate calculator, offered by entrepreneur.com.

Small Business Financing Options

There are many options available for small business owners to explore, from traditional to slightly out-of-the-box:

• Bootstrapping

  Even though funding your small business out of pocket – or bootstrapping – may potentially be the most challenging financing route, it doesn’t mean that a significant portion of U.S. entrepreneurs doesn’t explore this option. In a recent study by BlueVine, results show that 75{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} of American small businesses rely on personal finances as their primary source of small business funding and 83{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} have put at least some of their money into their companies

• Alternative Lending

  If financing your business with your money isn’t an option, you’ll need to plan on borrowing the money, and there are a variety of ways to obtain a small business loan. Emerging over the last several years are alternative lending companies that can offer quicker and smaller loans through a simple online application process.

• Traditional Bank Loans

  Although big banks are known for a high rejection rate and an extensive application process, bank loans remain a viable option for small business lending – and approval rates are up, as we’ll take a look at it below.

• Raising Capital

  Venture capitalists and angel investors can be a successful path to take for the right kind of business. However, keep in mind that it will require a very well thought out business plan, strong financial projections, and a lot of passion for your business.

• Crowdfunding

  A newer form of financing a small business, crowdfunding offers a method of raising money without having to pitch to a team of investors. And while there are certainly success stories out there, crowdfunding has yet to become the go-to option for businesses. According to a survey done by Manta in March 2015, only around 2 percent of business owners surveyed expressed that they had ever used a crowdfunding platform.  However, it could be worth looking into if other avenues have been exhausted.

According to Biz2Credit’s recent Small Business Lending Index report, approval rates at banks and institutional lenders recently reached all-time highs with the approval rate for small business loans from big banks at 23.5{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} in October (up from 23.4{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} in September). Institutional lender approval rates also rose to a new high of 63.1{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} in October. For small banks, the approval rates have remained stagnant, at 48.7{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616}, and alternative lender loan approval rates declined to 59.5{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616}.

For SBA loans (specifically the most popular type, the SBA 7(a) loan) the approval rates are relatively low and require stellar credit. In a report by the SBA, approval rates from 2015 were broken down by gender, ethnicity, and location. For minority-owned businesses, the approval rate was 29{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} versus 57{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} for white-owned businesses, 71{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} for male-owned businesses as opposed to 29{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} for female-owned, 67{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} existing businesses versus 33{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} new businesses, and 17{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} rural versus 83{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} urban.

While there are many aspects of starting a business that will undoubtedly overwhelm you, don’t let securing small business financing be one of them. Armed with the knowledge to get started, use the upcoming season as the perfect excuse to get the ball rolling on funding your business.

Primary Keyword: small business financing

Variants: financing for your small business, small business finance options,  securing small business financing, surrounding small business financing

Antonyms/Synonyms: small business loan, small business loans, small business lending, business lending options, Crowdfunding, traditional bank loans,  alternative lender loan

References:

https://www.sba.gov/sites/default/files/2014_Finance_FAQ.pdf

https://www.sba.gov/blogs/how-estimate-cost-starting-business-scratch

http://www.crowdfundinsider.com/2016/11/92352-biz2credit-reports-small-biz-loan-approval-rates-big-banks-institutional-lenders-continued-surge-october/

https://www.fundera.com/blog/small-business-statistics

https://www.sba.gov/sites/default/files/aboutsbaarticle/SBA_Lending_Statistics_for_Major_Programs_as_of_01-15-2016.pdf

http://www.businessnewsdaily.com/8703-current-state-small-business-financing.html

What Monsoons Might Have To Do With Your Start-up’s Productivity?

Some might assume that the 21^st-century urban entrepreneur is free from the vagaries of nature. Some might assume that, apart from the agro-industry, no one really needs to care about the eccentricities of the weather and least of all Internet start-ups. They would be categorically wrong.

Monsoons have a surprisingly strong and unquestionably harmful impact on start-ups’ productivity.

Rain, rain, go away

Quite simply, the monsoon rains and storms damage the rather vulnerable infrastructure that is used to maintain the Internet connections.

Without an Internet connection or at least a reliable one, start-ups struggle to keep up their operations. Most transactions and data keeping and updating are online. These vital operations become difficult without the Internet.

How important is the Internet to Indian start-ups?

Start-up companies in India are increasingly being based on the Internet.
Popular examples include PepperTap, CommonFloor, and UrbanLadder. In fact, even if the core of their work doesn’t relate to the Internet, they at the very least heavily rely on the Internet for most of their operations.

Without the Internet, it is very hard to imagine that India would have such a budding and lively start-up culture.

Are there any solutions?

Well, theoretically, yes. Practically? Not so much.

Most start-ups use either underground fiber networks or overhead cables. These structures are quite vulnerable to damage due to the rain and monsoons. In fact, even the lightest of stormy weather could cause power cuts in some areas.

And because of these power cuts, the transmitters that relay Internet signals don’t work. The solution would be to invest in a leased line Internet connection.

What is a leased line connection?

Well, to avoid going into recondite engineering definitions, suffice it to say that a leased line is much more resilient to monsoon weather.

With a leased line, the bandwidth that the client has asked for is reserved solely for the client’s use. That is, the connection is dedicated. Moreover, the hardware design is such that it just isn’t harmed by rain or storms.

Then what’s the problem?

The problem is, that leased line connections cost too much money. At least, from the point of view of start-ups.

By definition, start-ups function on initially low reserves of capital money. They don’t have a lot to invest.

And leased line connections can cost up to and more than ten times the amount they are paying for with the other connections, depending on the speed and reliability they desire. These costs can understandably be prohibitive to the start-up founders.

The Money Problem

For start-ups, lack starting capital and need to invest in the latest technology present a daunting conflict. Many start-ups fail because of lack of investment, and/or poor technological infrastructure. Examples include Shubhamilana.com, SASLAB Technologies, HashTag – to name a few.

Is The Grass Greener On The Other Side?

Unfortunately, the urban, hopeful Indian entrepreneur isn’t the only one hit by the rains. Another important victim is the rural, hard-working farmer.

The unpredictability of the weather combined with a lack of information about sustainable modern farming methods causes untold misery to farmers who depend on the rains for their daily bread.

Other URLs:
http://scroll.in/article/733519/startups-in-bengaluru-have-another-nightmare-monsoon-rains
http://www.forentrepreneurs.com/why-startups-fail/
http://www.hso.co.uk/leased-lines/leased-line/what-is-a-leased-line-an-expert-explains
http://monsoon.yale.edu/monsoon-affects-economy-health-in-india/

LSI Keywords: agro-industry, technological infrastructure, modern farming methods, latest technology, unpredictability of the weather

Almost a year later The London Stock Exchange welcomed Housing Development Finance Corporation (HDFC) into the UK stock market. They’ve raised Rs.3000 crore because of it.

NTPC also raised Rs.2000 crore from bonds dedicated to supporting alternate power sources and solutions.

This is just two of the bonds entirely worth 1 million USD the Indian Prime Minister Narendra Modi issued in the UK last year.

So, What Is A Masala Bond?

Before this concept, it was only common
for companies with foreign currency earnings to delve into international stock markets and diversify their portfolio of investors.

Foreign investors meant profits from stocks being in a different currency so; there was the conversion charge as well as a large part of your stock now riding on the economy of another country.

This meant that if the price of the INR fell, companies would have to put in more rupees to meet say, the same price in Euros.

It’s a loss-making strategy to depend on too many variables, and every company recognized that, so it was a rarely opted for choice for Indian companies.

It was only common for companies with foreign currency earnings to delve into international stock markets and diversify their portfolio of investors.

These bonds bridge the gap between the currency exchanges.

With this, stock buyers buy in INR, no matter where they’re buying from. It works out cheaper for investors as well as Indian companies.

With the stock dependent of the value of INR alone, business is steadier and can flourish under an expanded buying market.

Benefits of Bonds

They’re Rupee Denominated – Since most foreign investments come in a different currency, a stock will depend on the currency fluctuation of other countries. This is an added risk.

With bonds, investors pitch in using INR and help make our currency an international one.

• Big Returns, For a Lesser Price – For a foreign investor to buy stocks in INR works out best; for both the company and the investor.
• Companies like NTPC, HDFC, Indian Railway Finance Corporation (IRFC), Adani Transmission, Shriram Transport Finance have all begun to put out international stocks and are making big bucks from it.
• Additionally, it’s about 200 basis points lower in cost for companies when foreign investors buy their Masala bonds.
• Safe and Secure – The RBI issues Masala Bonds and only allows foreign persons who have cleared the Financial Action Task Force’s examination to decide that the investor is not of malicious intent like an international money launder and a beneficiary for any terrorist organization.

This keeps the company-investor relationship a close one, even if they’re miles apart.

How Does It Benefit India as A Nation?

Masala Bonds help in roping in international investors and divert all eyes to the Indian stock market.

This sort of attention compels advice and feedback that is useful to companies so that they may increase their market value and the investor’s capital
gain.

If other nations invest in the long-term stability of the Indian Rupee, both intellectually and financially, it helps boost INR to international standards
and increase in value.

It is in India’s best interest to spread its stocks out to the world, so they can find value and give value to our economy and helps us grow into a
superpower.

Sources:
http://www.thehindubusinessline.com/opinion/columns/masala-bonds/article7194362.ece
http://economictimes.indiatimes.com/markets/bonds/http://www.thehindu.com/business/https://advisesure.com/blog/what-are-masala-bonds-and-its-benefitshttp://economictimes.indiatimes.com/markets/bonds/who-invested-in-hdfc-masala-bonds/articleshow/53402954.cmshttp://indiafa.org/masala-bonds-an-innovative-financial-instrument/https://www.quora.com/How-masala-bonds-works-and-what-are-its-returns
http://www.thehindu.com/business/Industry/masala-bonds-the-flavour-of-the-moment/article7930287.ece

LSI Keywords: bonds, stock market, investor’s capital gain, investors, currency, market value of the rupee, stocks, Indian Stock Market