A startup business loan in India is meant to support the financial hurdles of a new business. Startups and micro industries require funding to grow and manage the business. As a result, the business will thrive in the market. At the initial stage startups don’t have access to the funds in the market. Therefore governments have taken a step to provide funds and promote these industries. Startup business loans in India can be used towards things like working capital, the purchase of equipment, machinery, supplies, inventory, and furniture, and the purchase of construction equipment, etc.
What are the Criteria for Startup Business Loans in India?
Get a Startup business loan from a bank or a financial body to raise capital or expand your current business. The applicant should meet the requirements of the lenders. A few requirements are the applicant profile and documents. Below are some points:
1. Applicant Profile
The personal background of the applicant will be verified. If the Applicants have criminal backgrounds this will make them ineligible or delay the process. The age limit of the applicant should be 21 to 65.
2. Business background:
Outline the goals and the objectives of the business should be clear. The firm should not be five years old and it should be reregistered as 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 Finline.
4. Financial statements:
Submit all the financial projections like balance sheets, profit and loss statements, and cash flow statements.
5. Legal documents:
Applicant should submit all the legal documents to prove the legality of the business.
6. Collateral:
Some government loans are collateral-free, also they help the applicant get more amount.
What are the documents required to take 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, Aadhaarcard
- Income Statement – Proof of stable income to be provided
- Bank Statements – The last 6 months’ bank statement to be submitted
- Photos – 2 copies passport size.
- Financial statements audited by a CA for the past 2 consecutive years
- IT returns for the last 2 consecutive years
What are the Government Loans for Startup Businesses in India?
If the applicant has all the above requirements ready, they need to identify the appropriate scheme offered by the government of India for entrepreneurs. Some of the popular schemes offered by the government of India for startups and MSMEs are as follows:
1. Credit Facilitation Scheme
This scheme is handled by the National Small Industries Corporation (NSIC). They target to meet the credit needs of the MSME units. The NSIC partnering with various banks to provide loans to the MSME units. The repayment tenure will range from 5 years to 7 years, with the possibility of extending it up to 11 years.
2. Pradhan Mantri Mudra Yojana (PMMY)
The Micro Units Development and Refinance Agency (MUDRA) launched PMMY in 2015. It aims at offering loans to all kinds of manufacturing, trading, and service sector activities. The loan categories under MUDRA are – Shishu, Kishor, and Tarun. The loan amounts range between Rs.50,000 and Rs.10 lakh.
3. Credit Guarantee Scheme
New and existing MSMEs engaged in service or manufacturing activities, excluding educational institutions, agriculture, retail trade, Self Help Groups (SHGs), etc., qualify for this. You can borrow up to Rs. 200 lakh under this scheme.
4. Startup India
This scheme extends loans to enterprises in manufacturing, trading, or services. Loans ranging between Rs.10 lakh and Rs.1 crore can be availed. You can repay the loans taken under this scheme within seven years.
5. Sustainable Finance Scheme
This scheme offers loans to industries that deal in green energy, renewable energy, technology hardware, and non-renewable energy. The government started this scheme to offer sustainable development projects.
About Finline!
Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline will help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Also all public and private sector banks working in India accept our project report. Click to create your report.