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.
|Interest Rate||Up to 21% p.a.|
|Loan Amount||Up to Rs. 5 Crores|
|Loan Tenure||Up to 11 years|
|Processing Fee||Up to 6.5% of the sanctioned loan amount + GST|
Following are the key features and benefits of start up business loans:
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 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 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. Also, Check Mudra Loan Eligibility Criteria in detail.
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.
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.
The start up loan eligibility criteria differs from one lender to another. Following are some generic startup Business Loan Eligibility Criteria:
You will need the following documents to apply for a small business loans startup:
Following are some of the best banks that offer instant business loan for startup:
|Lender’s Name||Rate of Interest|
|HDFC Bank||Starting from 15.75% p.a. onwards|
|Kotak Mahindra Bank||Starting from 17% p.a. onwards|
|Fullerton India||17% p.a. to 21% p.a.|
|TATA Capital||Starting from 19% p.a. onwards|
Get Kotak Mahindra Bank Business Loan up to Rs. 2 Crore online at interest rate starting from 16% p.a.
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Yes, you must have a credit score of at least 650 or above to avail a business loan.
Currently, IDFC FIRST offers the lowest rate of interest for a startup business loan at 12% p.a. interest rate.
Yes, the age of the applicant should be between 20 to 65 years to apply for a startup business loan.
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.
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.
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.
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.
There are multiple government-offered startup business loan schemes. The most popular schemes are as mentioned below:
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.