How To Get A Startup Business Loan In India?

A startup company loan in India is intended to help young businesses overcome financial challenges. Startups and micro industries require money to expand and maintain their operations.

What are the eligibility criteria for startup business loans in India?

A startup company loan from a bank or financial institution might help you raise funds or expand your present business. The candidate should meet the lender’s requirements. A few prerequisites include the applicant’s profile and documentation. Here are a few points:

1. Applicant Profile

The applicant’s personal background will be verified. If the applicants have a criminal past, they will be ineligible or the process would be delayed. The applicant’s age should be between 21 and 65.

2. Business Background

The aims and objectives of the firm should be clearly defined. The company should be less than five years old and reregistered as a private or partnership.

3. Business Plan/Project Report

A detailed and elaborate business plan should be submitted. It will give the lender a detailed overview of the startup idea. Get a perfect business plan/project report with Finaxis.

4. Financial Statements

Submit all financial projections, including balance sheets, profit and loss statements, and cash flow statements.

5. Legal Documents:

The applicant must supply all legal documentation to show the legality of the business.

6. Collateral:

Some government loans need no collateral and allow the applicant to obtain a larger loan amount.

What documents are necessary for obtaining a Startup Business Loan in India?

Identity Proof: Passport, PAN card, Aadhaar card, driver’s license, or voter ID.
Address proof: electricity bills, telephone bills, passport, Aadhaar card.
Income Statement – Proof of stable income must be presented.
Bank Statements – Submit the last six months’ bank statement.
Photos: Two passport-sized copies.
Financial statements audited by a CA for the past two consecutive years.
IT returns for the last two straight years.

What are the government loans for start-up businesses in India?

If the applicant meets all of the standards listed above, they must identify the relevant plan offered by the government of India for entrepreneurs. Some of the popular initiatives sponsored by the government of India for startups and MSMEs are listed below:

1. Credit Facilitation Scheme

This program is managed by the National Small Industries Corporation (NSIC). They aim to address the financing needs of MSME units. The NSIC has partnered with numerous banks to give loans to MSME firms. The repayment period will range from 5 to 7 years, with the option of extending it to 11 years.

2. Pradhan Mantri Mudra Yojana (PMMY)

The Micro Units Development and Refinance Agency (MUDRA) established PMMY in 2015. It intends to provide loans to all types of industrial, commercial, and service-related enterprises. MUDRA’s loan categories include Shishu, Kishor, and Tarun. The loan amounts range from Rs.50,000 to Rs.10 lakh.

3. Credit Guarantee Scheme

This applies to both new and current MSMEs engaged in service or manufacturing operations, with the exception of educational institutions, agriculture, retail trade, Self Help Groups (SHGs), and others. You can borrow up to Rs. 200 lakh using this arrangement.

4. Startup India

This initiative provides loans to businesses that manufacture, trade, or provide services. Loans of between Rs.10 lakh and Rs.1 crore can be obtained. You can return the loans obtained through this arrangement within seven years.

5. Sustainable Finance Scheme

This program provides loans to businesses that deal with green energy, renewable energy, technical hardware, and nonrenewable energy. The government established this program to provide sustainable development projects.