Mrs. Kulkarni was a simple housewife whose delicious home-baked cakes and cookies were a favorite among her family and housing-colony people. Soon, encouraged by her well-wisher, she decided to start her own small-bakery business. However, since her husband was the sole earning member in the family, she faced a major hurdle in her entrepreneurial dreams due to the lack of funds. This was when she turned to a business loan to fund her bakery dreams.
There are several budding entrepreneurs like Mrs. Kulkarni, for whom, the lack of funds acts as a major hurdle in fulfilling their business dream. However, with several loan lender offering affordable business loan options, it is now extremely easy to get startup business loans.
Need a Business Loan for StartUps? Here is how to get a Startup Business Loan
1. Explore your options
Banks are not your only option for getting a loan. You can easily avail business startup funding from non-banking financial institutions, venture capitalists, or crowdfunding. All these different loan providers offer different interest rates for their business loans. Most of them have their loan application process as well as the features offered under their business loan, advertised on their websites. You can go online and check these websites to compare these loan options and choose what best suits your business needs.
2. Check your business loan eligibility
Once you have chosen a loan provider, make sure you check whether you fill their eligibility criteria for granting a business loans. Different loan lenders dictate different eligibility criteria for granting a business loan. For instance, following is the business loan eligibility criteria:
For salaried employees-
- The borrower must be a citizen of India
- The borrower should have 3 years of experience as a salaried person
- The borrower must be between the age of 25 to 55 years.
For self-employed individuals:
- The borrower must be a citizen of India
- The borrower must have a business experience of minimum 3 years
- The borrower must be between the age of 26 to 66 years.
3. How to Apply For a Business Loan?
Once you check all the eligibility criteria for the loan lender, the next step is the application process. Most business loan providers offer online portals for the loan application process. Following are the steps you can follow for online application of start-up loans-
Step 1: Fill the online loan application form
Step 2: Specify your loan details such as loan amount, interest rates, loan tenure, etc.
Step 3: Once you submit the form, your business loan application will be assessed by the loan representative. If all the documents are in place, your loan application will be accepted.
Step 4: Once your loan gets approved, you can use the business loan for a number of reasons such as buying raw materials, stocking inventory, marketing of products, paying worker wages and other business needs.
Types of Start up Loan
Credit Guarantee Fund Trust for MSEs (CGTMSE)
Credit Guarantee Fund Trust for MSEs (CGTMSE) is a government initiative that aims at providing financial aid to medium and small enterprises. To implement the CGTMSE scheme, the MSME and Small Industries Development Bank of India (SIDBI) has established a trust under the Credit Guarantee Fund Scheme. As a part of this scheme, small startups can avail a collateral-free business loan up to Rs. 10 lakhs. However, to avail an amount of between Rs. 10 lakhs and Rs. 1 crore, borrowers are required to pledge collateral and provide ample security for the same. The funding under CGTMSE is financed by banks and Non-Banking Financial Institutions (NBFCs).
Equipment financing helps small businesses finance the purchase of business-related equipment. This type of loan is self-secured, wherein the purchased equipment acts as the collateral for the loan. Therefore, if you happen to default on the equipment loan by any chance, the lender will have complete authority to seize the purchased equipment to compensate for their loss. With the help of equipment financing, you can obtain 100% financing for buying the equipment.
With leading financial institutions, you can avail equipment financing through a hassle-free online application process. Simple eligibility criteria, quick approval, and instant disbursal of the loan amount are some of the added advantages of equipment financing.
MUDRA stands for Micro Units Development & Refinance Agency. It is a government-initiated scheme that offers funds to small businesses across the country.
The financing under MUDRA loans is provided public and private sector banks, small banks, rural banks, scheduled banks, and other co-operative societies. The Mudra loan is categorized under three schemes that are mentioned below:
Sishu Loans – Rs. 50,000
Kishor Loans- Rs. 5,00,000
Tarun Loans – Rs. 10,00,000
Planning to start your own business? Avail the collateral-free Bajaj Finserv Business Loan available on Finserv MARKETS. Our exclusive loan offerings are tailor-made to suit all your requirements. Finserv MARKETS guarantees 3-minute approval on your loan request, while offering exclusive access to Financial Fitness Report and flexible repayment options.
Also, get to know about what is SME Loan.
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