Funding for your self-employed business? Here’s what you should do
As a self-employed professional, a paycheck from your client is often the only source of your income. And if that happens to delay for any reason whatsoever, there’s a chance of your entire budget going for a toss. 
The above phenomenon isn’t something new to the self-employed professionals. You deal with it practically every month. And the struggle is real. Hence, looking for external funding opportunities to become your sole option. However, acquiring external funding for your self-employed business requires deliberation and careful thought. If you don’t weigh in all the factors, you might end up piling unnecessary debt which you could have avoided. 
The first step towards funding your business is doing comprehensive research. Here are some of the things you need to consider before funding your self-employed business.

•    Determine your cash flow
Self-employed individuals might often have sporadic income regimes if you don’t have a set of retainer clients that you service. This means the income received every month will tend to fluctuate based on various factors.However, before you go for external funding, determine the average monthly income you earn. Factor in all your sources here. Once you have a clear picture of that, focus on your various expenses and costs you incur monthly. Be sure to pay yourself too and factor in that as well. This will give you a comprehensive idea of where your business stands financially and how much funding you might need. 

•    Capacity to repay
Your cash flow also helps you to determine how much of a loan you can afford. This is extremely crucial when it comes to repaying the debts you are about to take. You can either go in for an unsecured personal loan where you avail funds of up to Rs. 20 lakh for your various expenses. Or if you have an asset, you can also avail a Loan against Property which is a secured loan and you can avail up to 60% of the market value of the property. 

•    Evaluate borrower’s character
Borrower’s character is something every lender is very sceptical about. As a self-employed individual, you know how difficult it is to convince lenders to trust you with their funds. You need to demonstrate an exceptional professional character every time you approach them. This is characterised by your reliable and extensive client list, your balance sheets, proof of business, your annual income, etc. If you have partners or directors, their credibility is also accessed before approving a loan. 

•    Check your credit history
Self-employed individuals with an exceptional credit history are more likely to get their desired funding as compared to those in debt. This includes having a high CIBIL score of 750 and above, repaying the present debts (personal as well as professional) on time, avoiding defaults during payments and regularly checking and correcting discrepancies in your credit report, if any. Remember, since you are not employed elsewhere, your positive credit history is your biggest ally in getting funding for your business. 

· •    Look at collateral-backed loan options

Collateral-backed loan options can mean two things. It could either be based on fixed assets or current assets. If you consider fixed assets as collateral, you can avail a loan against gold you possess. This allows you to avail a loan of up to 75% of the value of gold. This amount can go up to Rs. 20 lakh with no hidden charges associated with it.

If you are loan options through your current assets, you can avail the Loan against Securities from HDB. This allows you to not just get the required funding for your business but also retain the collateral without having to liquidate it.A loan of up to Rs. 50 lakh can be availed to facilitate your needs. These can be availed against NSC, KVP, insurance policies and bonds subject to the terms and conditions.

 •   Consider personalised loan options

If you plan to buy equipment for your business, you can consider a host of equipment loan services from HDB. Rather than looking just at a personal loan or business loan as your only options, you can even explore other business-specific loan products. For example, you can avail a commercial vehicle loan that finances for a host of commercial vehicles across segments to cater to your automotive needs. Similarly, if you are in the construction business, you can avail a construction equipment loan for the entire range of construction equipment that can take your business to the next level.

Hence, as a self-employed individual, there are multiple ways in which you can fund your business. However, you need to weigh the pros and cons carefully and make an informed decision. You need not always just consider the business loan as the only option. Explore the wide catalogue of products from HDB and then choose the one that suits the best for you.

•    Look at collateral-backed loan options
Collateral-backed loan options can mean two things. It could either be based on fixed assets or current assets. If you consider fixed assets as collateral, you can avail a loan against gold you possess. This allows you to avail a loan of up to 75% of the value of gold. This amount can go up to Rs. 20 lakh with no hidden charges associated with it. 
If you are loan options through your current assets, you can avail the Loan against Securities from HDB. This allows you to not just get the required funding for your business but also retain the collateral without having to liquidate it.A loan of up to Rs. 50 lakh can be availed to facilitate your needs. These can be availed against NSC, KVP, insurance policies and bonds subject to the terms and conditions. 

•    Consider personalised loan options
If you plan to buy equipment for your business, you can consider a host of equipment loan services from HDB. Rather than looking just at a personal loan or business loan as your only options, you can even explore other business-specific loan products. For example, you can avail a commercial vehicle loan that finances for a host of commercial vehicles across segments to cater to your automotive needs. Similarly, if you are in the construction business, you can avail a construction equipment loan for the entire range of construction equipment that can take your business to the next level. 

Hence, as a self-employed individual, there are multiple ways in which you can fund your business. However, you need to weigh the pros and cons carefully and make an informed decision. You need not always just consider the business loan as the only option. Explore the wide catalogue of products from HDB and then choose the one that suits the best for you.