How To Get Finance For An Education Start-Up
The business opportunities in the education industry are massive. Governments of most countries in the bid to advance their country ensure that they invest massively in the education sector. Starting an education business is in trend nowadays. This trend is an ideal chance for entrepreneurs wishing to invest in the education system. But, education business requires a lot of investment towards the construction of state-of-the-art classrooms and other learning spaces, infrastructure building and maintenance, technology and tie-ups with foreign institutions, hiring the best teachers and instructors, etc. For this, you might need to have a capital for your business. Let us look at some of the finances available for education business in India.
Small Business Administration Loan
If you are planning to start a small-scale education business you can opt for small business administration loan. The SBA is a federal government agency that provides financial assistance to new and existing businesses. Offices exist throughout the country to assist small businesses. Cash flow is the primary consideration for a loan. Owners with 20 percent or more ownership must personally guarantee the loan. Because there are three SBA loan programs, contact a local office or lender before completing an application to determine the plan best for your company.
SBI School Plus
The State Bank of India (SBI) offers School Plus, which intends to help in building educational institutions, maintain or upgrade their services and facilities. You can get the SBI School Plus under 2 kinds of loan – Working Capital Loan and Term Loan. This loan can be taken for any of the following reasons:
Buying land for building or playground
Construction of school building or auditorium
Starting the mid-day meal scheme
Repair or renovation of existing building
Establish, expand, renovate or modernise educational institutions
Buying computer, laboratory or sports equipment
Buying furniture or fixtures
Buying books, software, and other training material
A private loan is another option edupreneurs can adapt to finance their education business. Execute a loan note that defines the loan amount and terms, including the interest rate. This document becomes a business record that might affect business profit and taxes.
Personal Credit Card
Although it is best to separate personal and business transactions, you might consider using your personal credit card to start up your education business. Keep records of business-related charges to your credit card. This funding might build equity in the business. However, you might elect instead to reimburse yourself from future revenue.
Venture Capital Investors
Generally, venture capital investors provide funds to early-stage start-up companies in exchange for company shares. These investors are interested in industries with high-growth potentials, such as information technology. The education industry in India is growing rapidly and holds an important place in the global education industry. So, you can consider venture capital investors to provide funds for your education business. Normally, venture capital investors provide funds to a company. These investors require a business plan that demonstrates the probability of success.
Micro-loans are small loans available to small businesses. These loans can be applied toward working capital, purchasing inventory or buying office supplies. As with other types of bank loans, microloans have interest rates and require collateral from the borrower.
Venture Capital Financing
Venture capital is money given to companies by investment firms or individual investors known as venture capitalists. Only a small percentage of start-up companies with high growth potential receive this type of funding as the venture capitalists are highly selective about where they plant their money, so if you think your education business has the potential of high growth you can opt for this type of funding. Venture capitalists want to see their investments grow, so they may expect to sit on the company’s board or share ownership in the company to have a say in the business’s financial decisions.