6 Sources of Additional Business Capital for MSMEs to Develop Business

Modal often become a major obstacle, not only for those who want to start a business, but also MSMEs who want to develop a business. However, now there are many choices that can be taken to get capital to start a business. Some of these options include:

bootstrapping

Source of capital bootstrapped is a source of business capital that comes from personal funds. By using your own savings, you can start a business and rely on profits or business profits for other operational activities. Not only does it come from savings, personal funds can also come from selling personal assets for business capital.

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Although personal funds tend to be limited, by using personal sources of funds you have full control over your business. You can focus your focus on business development only and don't need to think about how to return or pay capital money.

Venture Capital

Venture Capital is an institution consisting of individuals and corporates that specifically provides capital for start-up businesses. Individuals in venture capital pool their funds to fund startups that need capital in the form of investments.

To get capital from venture capital, you need to go through several assessment processes from venture capital. One thing that needs to be done is to submit a business plan. Venture capital will review the proposed business plan and decide whether your business is eligible for funding or not.

Peer-to-peer (P2P)

Peer-to-peer lending is an institution that provides lending and borrowing services through an online platform. In choosing a p2p institution, make sure that the institution already has a permit and is supervised by the OJK. The platform will bring borrowers of funds together with lenders, then a detailed verification will be carried out. Some examples of p2p lending are Investree, Danamas, and Acceleration.

angel investor

Term angel investors usually attached to individuals who are usually willing to provide capital loans for MSMEs and startup. Get angel investors tends to be more difficult because of its individual nature so you need a broad relationship. But that doesn't mean it's impossible. You can start expanding your relationships and searching angel investors with the same interest and industry background.

MSME Financing Program

The importance of the contribution of MSMEs to the Indonesian economy has prompted the government to launch a funding assistance program for MSMEs. Two examples of programs that have been implemented are KUR and LPDB loans.

People's Business Credit (KUR) is a government cooperation program with various banks in Indonesia to provide financing or venture capital to MSMEs. KUR reaches MSMEs with a maximum capital requirement of IDR 500 million, working capital loans and investment loans.

The Revolving Fund Management Agency (LPDB) is an institution established by the Ministry of Cooperatives and MSMEs to provide loans to MSMEs with relatively low interest. This is done so that MSMEs have higher competitiveness in national and global markets.

Online Loans

In the current era of digitalization, the process of borrowing and borrowing can be done more easily online. MSME players can take advantage online loan to increase their business capital. Its convenience is shown through the requirements and fast disbursement process. However, don't just be tempted by its convenience. You also need to prepare the right business plan to avoid payment arrears. If the borrower is in arrears, it will affect his credit score and business reputation.

Those are some sources of capital that can be taken into consideration for MSMEs who want to increase capital. Every choice taken certainly has its own consequences and challenges, make sure you have done an analysis and prepared a detailed business plan before applying for a loan.