Government grants, business loans, investor funding, and international capital — explained by business type and growth stage, so you know exactly which options are right for your situation.
Check Your Eligibility
Funding instruments are financial tools that businesses use to raise capital. These instruments can be classified into two broad categories:
Debt-Based Funding: Where businesses borrow money and agree to repay it over time, typically with interest. Equity-Based Funding: Where businesses offer ownership shares or equity in exchange for capital. These funding sources can come from government schemes, private investors, or international funding sources, depending on the nature and stage of the business.
Funding instruments can be categorized into three broad types: Government Funding, Private Funding, and International Funding. Each of these categories includes different instruments tailored for specific business needs.
Non-repayable funding from central and state schemes — SISFS, RKVY, Genesis Fund (₹490Cr for tech startups), MSME subsidies.
Term loans and working capital from scheduled banks with CGTMSE or MUDRA collateral-free options for eligible businesses.
Equity investment from registered VCFs and AIFs for startups that can grow fast and are targeting large markets.
Early-stage equity from HNIs and angel networks — ideal for pre-revenue or seed-stage businesses needing mentorship alongside capital.
Flexible debt options from NBFCs for businesses that may not meet traditional bank criteria — faster processing with competitive rates.
Foreign venture capital and institutional investor routes for startups targeting global markets, subject to FEMA and RBI regulations.
Non-refundable grants are financial assistance provided by government bodies that do not need to be repaid. These grants are typically provided for projects that drive innovation, research and development, or initiatives like green energy adoption or export promotion. Eligibility: Both Private Ltd and LLP companies can apply, as long as their projects align with the specific grant's focus. Key Considerations: These grants come with strict compliance and reporting requirements. The business must show how the funds are used according to the grant's terms.
Debt-based funding comes in the form of loans or credit facilities provided by public sector banks or financial institutions. It is one of the most common forms of funding for small and medium-sized businesses. Eligibility: Both Pvt Ltd and LLP companies qualify. The bank assesses the company's creditworthiness, collateral, and business plan before approving the loan. Examples: Term Loans, Overdraft Facilities, Cash Credit, Mudra Loans (in India).
This funding instrument involves government-backed funds or schemes (often Fund of Funds) that invest in high-growth potential businesses in exchange for a stake (equity). These funds rarely invest directly but fund other Venture Capital (VC) or Private Equity (PE) funds. Eligibility: Primarily for Private Ltd companies, as they can issue equity shares to investors. LLPs cannot issue equity and are typically excluded from pure equity investment schemes.
| Criteria | Details |
|---|---|
| Equity Funding (VC, Angel, PE) | Private Ltd Company: Excellent Access (Can issue shares/equity) | LLP: None/Extremely Limited (Cannot issue equity) |
| Debt Funding (Bank Loans, NBFCs) | Private Ltd Company: Good Access (Based on credit score, collateral) | LLP: Good Access (Based on credit score, collateral) |
| Grants/Government Schemes | Private Ltd Company: Good Access (Based on project/innovation) | LLP: Good Access (Based on project/innovation) |
Private funding is sourced from non-government, domestic sources. These instruments include both debt and equity-based options.
International funding instruments involve capital sourced from outside the domestic jurisdiction, targeting companies with high scalability potential.
a. Foreign Venture Capital (Against Equity): Foreign VC funds invest in high-growth Private Ltd companies, similar to domestic VCs but based outside the country. These investors bring not just money, but also global networks and expansion expertise. Eligibility: Strictly for Private Ltd companies. Raising funds from international VCs requires compliance with FEMA (Foreign Exchange Management Act) and other regulations related to Foreign Direct Investment (FDI).b. Institutional Investors: Large international financial entities like Private Equity (PE) funds, pension funds, or sovereign wealth funds invest in established Private Ltd companies showing strong profits and market leadership. Eligibility: Primarily for Private Ltd companies. PE funds take large stakes and aim for business restructuring before an eventual exit. External Commercial Borrowings (ECB) are also available, which both LLPs and Pvt Ltd companies can access, subject to regulatory compliance.Startups and small businesses often need a variety of funding instruments to finance their operations, growth, and innovation. Some of the most common instruments include: Government Grants (non-refundable grants for specific projects like green energy or exporting), Bank Loans (debt financing through public sector banks or private financial institutions), Venture Capital (equity financing for high-growth startups), and Angel Investment (capital from individual investors, often in exchange for equity).
Evaluate your business stage, sector, structure (Pvt Ltd vs LLP) and capital requirement.
Identify eligible grants, loan schemes and investor categories — with pros and cons for each.
Prepare applications, business plan, financials and any required compliance documents.
Submit to the right portals and stakeholders, track status and respond to queries.
Evaluate your business stage, sector, structure (Pvt Ltd vs LLP) and capital requirement.
Identify eligible grants, loan schemes and investor categories — with pros and cons for each.
Prepare applications, business plan, financials and any required compliance documents.
Submit to the right portals and stakeholders, track status and respond to queries.
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Starting Or Expanding Your Business? Contact Us For Expert Consultancy On Company Registration Or Migration And Access India's Top MSME Funding Schemes.
We will be happy to address your queries over a call.
Connect with us toll-free for expert guidance and support
