Based on the present scenario, sometimes it is actually difficult for the Financial Institutions to grant finance to the Startups. There are various factors which is to be determined by these institutions before financing the startups.
The word “Startup” itself is one of the reason due to which there are difficulties in getting financial supports to the business. There are many other challenges faced by these startups such as:
1. Having an innovative business ideas- as business ideas or objectives are so innovative that there is no surety in earning profit or maintaining the stand in the market.
2. Security- Startups have less assets and investments to keep the same as a security against loan given by these institutions.
3. Credibility- Mostly, the owners of startups are new in market and so they have less credibility to get loans from financial institutions.
4. Business Plan – If bank or financial institution is not satisfied by the proposal and business project then it’s difficult to get through the loan requested by the startup.
However, now government is very much aware about the needs of the startups and promoting the innovative ideas of the entrepreneurs which helps the companies to get funding from the specified institutions. Hence, there are both pros and cons about the funding raised by Startups. However, it is commonly said that “At the initial stage every well known company was Startup before reaching to the heights in their business”.
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