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Startup Business Loan

Startup business loans can be availed by Micro, Small & Medium Enterprises (MSMEs) from a bank, non-banking financial company (NBFC) or any other financial institution to fund business commencement, set-up, or expansion of a current business. Start up loans for new businesses usually come at interest rates of 16% p.a. onwards.

Updated:

Start up Business Loan Detail

Interest RateUp to 21% p.a.
Loan AmountUp to Rs. 5 Crores
Loan TenureUp to 11 years
Processing FeeUp to 6.5% of the sanctioned loan amount + GST

Startup Business Loans Features and Benefits

Following are the key features and benefits of startup business loans:

  • You don’t need any collateral or security to avail of a startup business loan.
  • Startup business loans have flexible repayment tenure.
  • The documentation requirement for business loans for startups is minimal.
  • The funds are instantly disbursed to the bank account of the applicant.
  • The applicable business loan interest rate depends on the applicant’s credit history.

Start Up Business Loan by Indian Government

Currently, with about 60,000 startups India has the third-largest startup ecosystem in the world. However, getting funding when the business is in its early stage can be very challenging. Also, the MSME sector in the country has limited access to formal credit. For this reason, the Government of India rolled out startup business loan schemes catering to the needs of startups and MSMEs.  
Following are some of the most popular schemes of start up business loan by indian government:

Bank Credit Facilitation Scheme

This business funding for startups is headed by the National Small Industries Corporation (NSIC). It is targeted at meeting the business credit requirements of the MSME units. The NSIC has partnership with various banks for providing loans to the MSME units. This loan can be repaid in a tenure ranging between 5 years and 7 years. However, in special cases, the tenure can be extended for up to 11 years. 

Pradhan Mantri Mudra Yojana (PMMY)

This scheme was launched in 2015 and is headed by the Micro Units Development and Refinance Agency (MUDRA). It aims at offering business loans to all kinds of businesses in manufacturing, trading, and service sectors. This MSME loan for startup scheme offers loans ranging between Rs. 50,000 and Rs. 10 Lakhs under three main categories i.e. Shishu, Kishor, and Tarun. Artisans, vegetable vendors, machine operators, shopkeepers, repair shops, etc. can avail these loans to start a new business.

MUDRA Loan

MUDRA Loan for startup offers loans up to Rs. 10 Lakhs at affordable interest rates under Pradhan Mantri Mudra Yojana (PMMY) without any collateral. The repayment tenure for a MUDRA loan is up to 5 years and it comes with zero processing fee. There is no limit on the minimum loan amount that can be borrowed under this scheme. The interest rate starts from 7.30% and may vary from lender to lender, depending on the applicant’s eligibility and business requirements.

Credit Guarantee Scheme (CGS)

This scheme is headed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This MSME loan for startup business can be availed by new as well as existing MSMEs are involved in the service or manufacturing sector (excluding retail trade, educational institutions, agriculture, Self Help Groups, etc). A loan amount of up to Rs. 2 Crores can be borrowed under the scheme.

Start Up India

Start Up India scheme or SIDBI loans for startups promotes new ventures or initiatives.  
Start Up India facilitates bank loans between Rs. 10 Lakhs and Rs. 1 Crore to startups. Startup loan by government provides varius benefits to startup businesses like Single Window Clearance with mobile application, 80% reduction in patent registration fee, friendly Bankruptcy Code to ensure 90-day exit window, elimination of red tape, self-certification compliance, and so on.

Stand-up India Scheme

Stand Up India Scheme is a type of government startup loans that aims at promoting entrepreneurship among SC/ST and women entrepreneurs in India. This scheme is a part of Start-up India and facilitates two entrepreneurial projects, one for each category (women and SC/ST) of entrepreneurs per bank branch.  
Under this scheme, financial aid is provided through SIDBI with an initial amount of Rs. 10,000 Crores. A credit guarantee system under the National Credit Guarantee Trustee Company (NCGTC) would also be implemented, which acts as an operating agency for financial aids.

Sustainable Finance Scheme

This scheme is headed by the SIDBI (Small Industries Development Bank of India). This scheme is known for offering best small business loans for startups and aims at providing loan to industries deal in in renewable energy, green energy, technology hardware, and non-renewable energy. The Indian government started this scheme with an aim to offer support to the entire value chain of cleaner production or energy efficiency and sustainable development projects.

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The psbloansin59minutes.com is a digital platform tht provides you access to business loans for establishing a business. Based on the eligibility criteria and other requirements of the borrower, a loan amount of up to Rs. 10 Lakhs can be availed under the Mudra Loan scheme, and Rs. 5 Crores under the MSME loan scheme. Borrowers can also apply for a personal loan of up to Rs. 20 Lakhs, a home loan of up to Rs. 10 Crores, and an auto loan of up to Rs. 1 Crore under this scheme.

Startup Business Loan Eligibility

The start up loan eligibility criteria differs from one lender to another. Following are some generic startup business loan eligibility criteria:

  • The applicant should not be aged below 21 years when applying for the new business start up loan the maximum age should not be above 65 years when the loan matures.
  • The applicant should be an Indian citizen.
  • The applicant must have a well-drafted business plan.
  • The concerned startup must be a sole proprietorship, partnership firm, private/public limited company or a limited liability partnership.
  • The applicant should have a credit score of 750 or above.
  • The applicant should not have any previous loan defaults with any lender.
  • The total turnover of the business should not be more than Rs. 25 Crores.

Documents Required for Startup Business Loans

You will need the following documents to apply for a small business loans startup:

  • Duly filled application startup loan application form. 
  • Recent passport-sized photographs.
  • KYC documents of the applicant as well as co-applicants including Passport, Aadhaar Card, Voter ID Card, PAN Card, Driving License, and Utility Bills.
  • Self-drafted Business Plan.
  • Bank statement of the last 12 months.
  • Last 1 year’s Income Tax Return.
  • Business address proof as well as PAN Card.
  • Business Incorporation Certificate.
  • Any other document as required by the lender.

Banks Offering Startup Business Loan

Following are some of the best banks that offer instant business loan for startup:

Lender’s NameRate of Interest
HDFC BankStarting from 15.75% p.a. onwards
Kotak Mahindra BankStarting from 17% p.a. onwards
Fullerton India17% p.a. to 21% p.a.
TATA CapitalStarting from 19% p.a. onwards

HDFC Bank's Key Features

  • Loan amount available of up to Rs. 40 Lakhs (Rs. 50 Lakhs in select location).
  • Rate of interest starting from 15.75% p.a.
  • A processing fee of 0.99% of the sanctioned loan amount will be levied by the bank.
  • Repayment tenure of 1 to 4 years.

TATA Capital Key Features

  • Loans amount available between Rs. 5 Lakhs to Rs. 75 Lakhs.
  • Rate of interest for this start up financing starts from 19% p.a.
  • A processing fee of up to 2.50% of the sanctioned loan amount plus GST will be levied by the bank.
  • Repayment tenure of 1 to 3 years.

Kotak Mahindra Key Features

  • Rs. 3 Lakhs to Rs. 75 Lakhs startup business loan without collateral available.
  • Fund against credit card receivables (FCCR) also available up to Rs. 3 Crores.
  • Processing fee up to 2% of the loan amount plus applicable taxeswill be charged.
  • Repayment tenures of up to 4 years available.

Fullerton India Key Features

  • Unsecured business loan for startup up to Rs. 50 Lakhs can be availed.
  • Repayment tenure of up to 5 years is available.
  • The processing fee is up to 6.5% of the loan amount plus applicable GST.

Startup Business Loan FAQs

Is a credit score mandatory to avail business loan?

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Yes, you must have a credit score of at least 650 or above to avail a business loan.

What is the lowest rate of interest for a startup business loan?

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Currently, IDFC FIRST offers the lowest rate of interest for a startup business loan at 12% p.a. interest rate.

Can a 20 year boy apply for a startup business loan?

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Yes, the age of the applicant should be between 20 to 65 years to apply for a startup business loan.

What are the types of startup business loans?

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There are broadly two types of sartup business loans offered by lenders, i.e. term loans and working capital loans. All startup business loan schemes fall under any one of these categories. Term loans can be used for expanding your business, purchasing machinery, and launching a new project. These loans can come with repayment tenure of 1 year and 10 years. Working capital loans are short-term loans that have to be paid back within a year time and can be used for rent payment, salary payment of employees, stocking up inventories, eand so on.

What is the maximum amount we can avail for a startup business loan?

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You can avail a maximum MSME startup loan of Rs. 5 Crores under a startup business loan. The maximum loan amount available depends on the lender and other factors like annual turnover of the company, applicant’s credit history, etc. 

Do we need to discuss our business plan to avail startup loans?

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Yes. Most lenders require a well-drafted business plan when applying for a startup business loan. Make sure that your business plan is well executed and detailed with the feasible business objectives. The business plan must clearly state how the loan amount is going to be used.

How to avail startup business loans if my credit score is not good?

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Some banks may provide you small business start up loans even on bad credit. However they may offer these loans at a higher interest rate for shorter loan tenure. In addition, they will also ask you to bring in a guarantor/co-applicant with a good CIBIL score.  

How many start up business loans by the Indian government?

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There are multiple government-offered startup business loan schemes. The most popular schemes are as mentioned below:

  • Startup India Scheme
  • Standup India
  • Mudra Loan under PMMY 
  • Bank Credit Facilitation Scheme 
  • psbloansin59minutes.com

Does SBI offer startup loan?

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Yes, you can avail of SBI startup loan under various schemes like Stand Up India, Simplified Small Business Loan, machinery loan for startup, Surya Shakti Solar Finance, startup loan for new business SBI, and so on.