5 Sources of Capital for F&B Businesses in 2024 (Must Know!)

Seeking business capital is a crucial first step in starting a business. Because without capital, you will find it difficult to start your culinary business. Business capital can be obtained from various different sources, such as personal funding, loans from financial institutions or cooperatives, as well as investments.

To better understand how to easily obtain business capital, you must read this article to the end. Of course, the methods below can be tried if you need capital to start your culinary business, whether small or medium scale.

1. Personal Funds

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The first source is usually relied upon by people who want to start a culinary business without bothering themselves with specific documents as loan prerequisites. This business capital is known as personal funds. Personal funds used as capital in culinary business can come from various sources.

Some sources of business capital from personal funds include:

• Personal savings;
• Sale of personal assets;
• Profits from other businesses or investments;
• Retirement or pension insurance funds, if you intend to start a business after retirement;
• and others.

Business capital sources from personal funds are chosen by 51% of SMEs across Indonesia according to a survey conducted by Modalku Group as of 2023. One thing to ensure is that you must set aside emergency funds to be prepared in case something happens to your culinary business.

2. Loans

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In addition to business capital from personal funding, you can take out loans as an option for funding your culinary business. There are already various types and forms of loans that can be used as business capital.

Sources of loans can come from relatives, parents, friends, banks, or other institutions that provide loan services for business capital. Banks also offer various forms of loans for business funding. Such as loans that are collateral-free (KTA) to other installment loans.

From similar sources, the number of business owners and SMEs taking out loans from banks is 31%, and from financial technology companies is 10% of the total 977 respondents (Modalku, 2023).

3. Investors

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When discussing business capital, you might also think of something similar, namely getting a capital injection from investors. Investors will provide funds in an agreed amount, which will be used as capital to start or continue your F&B business.

Business capital obtained from investors is different from capital obtained from loans. While loan capital must be repaid in an amount equal to a certain interest within a certain period, capital from investors will be repaid with an additional percentage share of the profits from product sales.

This indicates that investors also have responsibilities for any losses that may occur. While lenders will not bear any losses incurred by you as the owner of an F&B business.

Currently, SME entrepreneurs have a better chance of finding investors compared to before. However, only 3% of SMEs receive funding from investors (Modalku, 2023) even though there are quite a few channels that open opportunities for funding, such as ANGIN (Angel Investment Network Indonesia).

4. From Consumers

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You might wonder if it's possible to obtain business capital from consumers who are actually the target market for our business? This is not impossible if your F&B business uses a pre-order (PO) system that allows buyers to pay first before receiving the goods.

Types of businesses that use capital from consumers include souvenir jastip (jasa titip) businesses; snacks, frozen food, birthday cakes, etc.; to businesses that require upfront payment or down payment.

Businesses with such systems usually only require relatively small amounts of capital, which can be done independently. Because the range of customers and specific time frames are limited.

5. SME Support Programs

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Another way to obtain business capital is through SME support programs. Many conventional banks, ministries, or financial institutions provide business capital assistance programs for SMEs. Including the ESB Capital program facilitated by ESB.

ESB Capital serves as a platform for culinary business actors to obtain business capital up to 500 million rupiahs more easily. This program has collaborated with several trusted institutions registered with the OJK. The application process is easy and has relatively low interest rates.

As an owner of an F&B SME, you can try this ESB Capital program provided you first use ESB products, such as ESB POSLite for a period of 6 months. This is to see positive business developments so that ESB can provide valid data and recommend your business to partners.

Those are some sources of business capital that you can consider to start or develop your F&B business. Let's plan the development of your culinary business together with ESB, The Culinary Business Expert.