Finance your Business

e needs money to make money. Finance is the lifeline of business. A business firm requires finance to commence its operations, to continue its operations and for its expansion and growth. There must be continuous flow of funds in and out of business. Sound plans, efficient production and marketing are all dependent on smooth flow of finance. Hence, a financial plan needs to be prepared, which indicates the requirements of finance, sources for raising the finance and the application of funds. Financial planning for starting a business begins with estimating the total amount of capital required by the firm for the various need of the business. Capital requirement would include investment capital and working capital.

The financial plans of an enterprise should be formulated by taking into consideration the following factors :-

• The financial objectives of the company

• Nature and size of the business

• The image and credit-worthiness of the enterprise

• Growth and expansion plans

• Capital market trends

• Government regulations

•Government grants and subsidies that may be available

Reserve Bank of India has laid down

• Guidelines for lending to MSMEs and for assisting MSMEs.

• Financing needs for MSMEs – a Guide


A number of schemes of the Central and State Governments that you may apply are available hereunder:

• MSME schemes of the Government of India

• MUDHRA scheme through CommercialBanks

• Government of Tamil Nadu schemes like UYEGP, NEEDS and other MSME schemes

• Schemes for BC/MBCs from TABCEDCO as from NBCFDC

• Schemes for SC/STs from TAHDCO with refinance for schemes

• Schemes for Minorities from TAMCO as Scheme 1 or Scheme2 from NMFDC

• Various other forms of capital sources for MSMEs include short and long term capital.

• Small Industries Development Bank of India

• Tamil Nadu Industrial Investment Corporation


Some sources of debt finance (long term and working capital) for MSMEs are:

• MSME schemes of Commercial Banks (for both subsidy and non-subsidy loans)

• SME division of State bank of India,

• Indian Bank MSME ,

• SME Indian Overseas bank

• Canara bank SME division


Equity is invariably required as promoters contribution or margin money. However, there are further sources of equity funding available for

New businesses

• Angel Investors

• Incubators

• Venture Capital for MSMEs

Existing MSME businesses with a track record

• Listing and IPOs on BSE SME Exchange

• NSE SME Exchange