Business Loan for Startups

Startup businesses have come to make a lasting mark in modern times. A growing number of aspiring entrepreneurs are moving ahead and establishing successful ventures. This has led to the creation of a favourable space for startups in India as financial institutions have made it easier to get financing. 

Today, a majority of lenders offer business loans for startups that give these aspiring entrepreneurs the financing they need to get their ventures off the ground. The funding can be used to fulfil all the requirements of establishing the business. 

To learn more about startup loans, read on.

Features and Benefits of Business Loans for Startups

Startup business loans offer a host of benefits that make it a favourable choice to get your business up and running. The top benefits include:

• Flexibility: Startup business owners look for flexibility in their financing. As such, flexibility is one of the top benefits of a startup loan. For new business owners, it enables them to concentrate on the growth of the establishment. The business loan for startups offers flexible repayment terms and tenure.

• Quick Availability: Delays with accessing capital, especially for startups, can deter growth as it can lead to lost opportunities. With startup business loans, however, the loan amount is accessible much more quickly as many lenders disburse the amount in just a few days.

• Unsecured Loan: Presenting a high-value asset is often difficult when securing capital for a new business venture. An unsecured business loan for a startup enables access to funds without the need for collateral.

• Hassle-Free Documentation: The documents required to apply for small business startup loans are minimal, and the simple process ensures that young entrepreneurs receive the funding without much hassle.

Eligibility Criteria of Business Loan for Startups

To apply for a startup loan, you must meet the following eligibility criteria:

• Be an Indian citizen

• Be between 21 to 65 years

• Have a CIBIL score of at least 700

• The business must have a vintage of at least 2 years

• The business must meet the minimal annual income terms 

You can check your startup business loan eligibility with the help of the Business Loan Eligibility Calculator

Keep in mind that the above eligibility criteria may vary depending on the lender you apply with. Check the lender’s website before applying to ensure that you meet all the criteria. 

How to Apply for a Startup Business Loan

To apply for business loans for startups, follow the steps given below: 

• Step 1: Navigate through the Bajaj Markets home page.

• Step 2: Click on ‘Loans’. You will be redirected to a page with multiple options. Click on ‘Business Loan’ and fill up the application form.

• Step 3: The lender will contact you to assist and understand other related aspects.

• Step 4: The loan application is then evaluated before it is approved.

Once the application process is complete and clear, expect the funds to be deposited into your account within no time.

Documents Required for Startup Business Loan

Here are the documents needed to apply for a business loan for startups:

• Proof of Identity like Aadhaar card/driving licence/PAN card/passport/voter’s id

• Address proof such as Aadhaar card/passport/utility bills/lease agreement

• ITR form in addition to certified copies with details such as income computation, balance sheet, and Profit and Loss (P&L) statement for the last 2 years

• Bank statement for the last 6 months

• Sole Proprietorship Declaration or authenticated copy of Partnership Deed

• Certified copy of Memorandum and Articles of Association

Business Loans for Startups by the Indian Government

Being the third largest ecosystem for startups, India has more than 77,000 startups.  Some of these startups have financing through means other than startup loans. This includes access to private equity and other financing sources like crowdfunding. 

However, accessing these resources for funding may be challenging for a venture in its infancy. As a result, the Government of India (GoI) announced setting up business financing initiatives for startups. 

Additionally, SIDBI (Small Industries Development Bank of India) has directly started financing MSMEs and startups at affordable interest rates. Listed below are some of the top schemes/initiatives launched by the GoI.

Pradhan Mantri Mudra Yojana (PMMY)

This scheme offers an MSME startup loan classified as MUDRA (Micro Units Development and Refinance Agency). Financial institutions, including regional rural banks, MFIs and NBFCs, can offer this loan.  Traditional or regional craftsmen, vegetable sellers, machine operators, store owners, service firms, etc., can all apply for a Mudra loan.

The startup loan amount ranges from ₹50,000 to ₹10 Lakhs and is categorised as Shishu, Kishor, and Tarun, depending on the loan amount. Moreover, women business owners can avail this loan at discounted interest rates, making the loan more affordable.

• Sustainable Finance Scheme

Started to support the ventures that work towards sustainable development and clean, energy-efficient operations, the scheme is also run by SIDBI. As such, an entrepreneur working towards sustainability through their venture can apply for these startup loans. Under this scheme, you can get financing of up to ₹1.5 Crores with a repayment tenure of up to 6 years. 

• Credit Guarantee Scheme (CGS)

As the name suggests, the scheme aims to extend credit and financing to the MSME sectors. Established and emerging MSMEs engaged in service or manufacturing operations can apply for this MSME loan for startup business. 

However, businesses engaged in Self Help Groups (SHGs), agribusiness, academia, retail, etc., avail financing under this scheme. Under this plan, run by the CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises), you can avail up to ₹2 Crores as a loan.

• Standup India

The primary aim of this scheme is to offer business loans for startups headed by women and people belonging to the SC/ST category. Standup India Under this scheme, you can get financing of up to ₹1 Crore. However, to qualify for this scheme, you should have a greenfield enterprise. This means that it should be a first-time venture in the trading, manufacturing, and service sector. 

Apart from the above, there are other government schemes that offer an MSME loan for startup business. These schemes include:

• Financing through NABARD (National Bank for Agriculture and Rural Development)

• Startup India Scheme

• Bank Credit Facilitation Scheme

• Udyogini

• Coir Udyami Yojana

Be sure to check the details of the scheme before applying to ensure that you get seamless access to the funds you need.

Business Loans for Startups From Banks and Financial Institutions

Here’s a list of the partner lenders on Bajaj Markets that offer Business Loans for Startups:

Disclaimer: The rates mentioned above are subject to constant change. You must always check with the lender before applying. The final interest rate applicable to you will also depend on factors such as your repayment tenure, age, monthly income, and CIBIL score.

Things to Consider When Applying for a Startup Loan

Entrepreneurs seeking loans for startups need to consider the following provisions:

• Provide a precise estimation of the available working capital.

• Create a clear, thorough, and workable business plan.

• Your business plan should be able to explain where you intend to spend the funds.

• Include a summary of the company's aims and objectives.

• Provide a graph of expected profits and expansion of the venture.

Before applying under any scheme or with any lender, carefully assess the terms and conditions of the loan. This will enable you to understand which is the best deal and ensure the growth of your venture. Visit the Bajaj Markets website to compare small business loans for startups and apply with ease.