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Startup Business Loan

Startup business loan

Many entrepreneurs with great business ideas are unable to start their businesses due to a lack of funds. Money at the right time is one main factor that decides the start and the future of a business. However, when new entrepreneurs start, they discover that money becomes the major hurdle. The universal solution to this is nothing but a startup business loan. You borrow a startup loan to help you start operating your business, but like every loan, you have to pay it back.

A startup business loan facility offered by banks or other financial institutes to new businesses or can be used for various purposes such as purchasing equipment, furniture, raw materials, or paying for expenses incurred to set up a business such as purchasing or leasing a building, etc,. 

How do you choose a business startup loan?

 A startup loan can be extremely difficult to obtain. The main reason is simply the fact that banks do not want to take risks. Obtaining a startup loan often requires a lot of patience, effort, and determination. The maximum amount of startup business loan you can get depends on your business, its turnover, profitability as well as your credit history. Before choosing a startup business loan consider the interest rate, repayment terms, and policy, application fees, etc.

What are the different types of Startup Business Loans?

Startup business loans are classified into two:

1. Short Term Working Capital Loan

It is known as a short-term working capital loan or a line of credit. People use it to pay salaries or other expenses. There is no need for collateral for this loan. Also, it gives an initial interest-free period. The business can utilize this loan amount for its day-to-day operational costs. It will help you to run the business activity without any hindrance of the fund.

2. Long Term Loans

Long-term loan or equipment financial loan, used to fund the expansion or growth of the business, funds the expansion or growth of the business. This loan is available for a longer period. It would require the business as collateral. People use it for purchasing heavy or expensive machinery, inventory, long-term expenses, etc.

Also know: Business Loan Schemes for Startups In India
What are the Features and Benefits of a Startup Business Loan?

Startup loans are different from other financing loans for established companies and have various benefits and specific features.

1. Flexibility: It allows the business owner to concentrate on growth rather than just worry about repayment. It offers flexible repayment tenures for startups 

2. Collateral: No collateral is required as startup loans are unsecured business loans.

3. Availability of Funds: Lenders ensure swift disbursal of the fund as soon as your loan is approved.

4. Tax Benefit: The new entrepreneurs will get three years of tax relief.

5. Compared with venture capital, the bank’s rate of return is fixed at a nominal interest rate.

Must read: Best Low Investment Business Ideas
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.

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How to get Startup Business Loan in India?

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?                                                     
  1. Identity Proof – Passport, PAN card, Aadhaar card, driver’s license, or voter ID
  2. Address Proof – Electricity bills, telephone bills, Passport, Aadhaarcard 
  3. Income Statement – Proof of stable income to be provided
  4. Bank Statements – The last 6 months’ bank statement to be submitted
  5. Photos – 2 copies passport size.
  6. Financial statements audited by a CA for the past 2 consecutive years
  7. 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.

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Which are the Best Low Investment Business Ideas?

Not all the business require huge capital to start with. Putting your business ideas into reality and making them happen is the hard side. Entrepreneurs struggle to find investments and ideas to kick start their business.

Governments encourage individuals to start businesses. As well as they introduced several startup schemes to support the entrepreneurs with low investment business ideas. Here is a list of low investments business ideas you can start.
1. Pets Care Shop

Imagine getting paid to walk someone’s dogs. As the pet industry is growing, it can be profitable to start a business with low investment.

What you’ll have to do:

Walk and play with pets people love. However, while traveling for holiday or business, they are unable to take their pets along. Hence, people look for services that will care for their pets while they are away. If you are well versed in handling pets, this is a great business you may consider. Again, this is a small business that requires low investment.

2. Travel Agency

If you hold the capabilities to plan the perfect vacation along with the best accommodation and services in the given budget, starting a travel agency can be a great business idea in India for you.

What you’ll have to do:

· Plan and execute travel packages according to customer needs

· Fit customer needs within the budget

· Book tickets and hotels for the customer.

3. Pickle Business

Pickles are a traditional food item in India and are extremely popular. You will find at least one variant of pickle in every Indian household. Thus, if you want to start small, a pickle business is a safe and easy option.

Key points:

Apart from the Indian market, Indian pickles are greatly in demand abroad as well.

You can start this business at your home with a small capital and earn great.

4. Paper and Jute Bags

We know that environmental protection and awareness have increased considerably over the past decade. And people realize just how harmful non-biodegradable plastic bags are to the environment.

As a result, eco-friendly bags and packaging made from paper and jute have become popular. Paper and jute bags can be used in pack shopping items, food items, medical items, jewelry, and also as handbags.

As well as Government wants to reduce the use of plastic, they are promoting paper and jute bags. Paper bag-making business can be started small scale with low investment. Paper bag-making machines would cost around Rs 3 lakh -8 Lakhs, however, they involve more manual work and labor.

With a world moving to ban plastic, a jute and paper bag manufacturing business is a good choice. The jute bag-making process is simple and promoted as eco-friendly products and go-green initiatives from the government.

5. Idly Dosa Batter Business

The south Indian communities love Idli and Dosa and are now popular across India. Likewise, not everyone can prepare the batter required for making these dishes. The batter requires a proper blend of rice and cereals.

As fast foods have become a part of our life so have Packaged Idli and Dosa batter, with most stores stocking several packets for their customers. To set up an idly dosa batter manufacturing unit from home or a small premise is fairly inexpensive.

Government supports small business by providing grants and subsidies. Startup business loans are applicable for small business units. Applicants can approach banks for financial aids with proper documents.
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Loan Schemes

Mukhymantri Yuva Swarojgar Yojana, MMYSY

The state government of Chhattisgarh is inviting applications under the Mukhyamantri Yuva swarozgar Yojana(MMYSY). Under this scheme, the state government provides financial assistance to such youth who want to set up their own businesses. Therefore, such aspiring youth who are seeking for jobs but cannot find one and thus, want to do their own business, can get a loan up to a maximum of Rs 25 lakh by applying to the department as per rules. Applicants can get information by contacting the District Industries and Trade Center of their district.

What are the Benefits of Mukhymantri Yuva Swarojgar Yojana(MMYSY), Chhattisgarh?
  • The main benefit of this MMYSY scheme is to provide youth with their own livelihood and provide employment to the people through MSMEs. 
  • The Chhattisgarh state government provides loans up to Rs 10 lakh for any service business
  • Rs 2 lakh for small business 
  • and up to Rs 25 lakh for setting up manufacturing industries.
  • The beneficiaries of this scheme are also given a loan waiver of 10 to 25 percent.
What are the Eligibility Criteria for Mukhymantri Yuva Swarojgar Yojana(MMYSY), Chhattisgarh?
  • Candidates should have at least passed 8th from a recognized institution.
  • The prescribed age of the applicant should be 18 years to 35 years to avail this scheme.
  • SC, ST, OBC, Women, Disabled, Entrepreneur and Naxalite affected family members and retired soldiers will get 5 years relaxation in age criteria. 
  • The annual income of the applicant’s family should not exceed Rs 3 lakh.
  • Applicant should be a permanent resident of Chhattisgarh.
  • The applicant should not be a loan defaulter of any national bank, financial institution and co-operative bank. 
What are the Documents Needed for Mukhymantri Yuva Swarojgar Yojana(MMYSY), Chhattisgarh?
  • Aadhar Card
  • Caste Certificate 
  • Business plan/Project report
  • Photograph of the applicant
  • Income certificate
  • Bank passbook
  • Residence Certificate
  • Ration Card
  • Self-Declaration Form  
  • Mobile no. 
How to apply for Mukhymantri Yuva Swarojgar Yojana(MMYSY), Chhattisgarh?

Visit the following website to know more about the scheme 

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Loan Schemes

What is Pavala Vaddi MSME Scheme Andhra?

The Andhra Pradesh government (Ministry of Finance) launched the Pavala Vaddi MSME scheme. Aiming to provide interest subsidies on bank loans earned by self-help groups in the state. The scheme aims to lower the cost of starting new micro and small businesses in the state, particularly food processing businesses. This scheme covers all loans made by banks as part of the SHG Bank Linkage Program.

What are the Benefits of Pavala Vaddi MSME Scheme AP?
  • The interest rate charged by qualifying micro and small enterprises to the financial institution or banks on the term loan availed. It will be reimbursed to the concerned financial institution or bank on a half-yearly basis. With a maximum limit of 9% under the Pavala Vaddi scheme.
  • The Pavala Vaddi scheme offers benefits to self-help groups and MSMEs in the form of interest subsidies on bank loans.
  • Benefits will be available to qualifying beneficiaries for a duration of five years under this programme.
  • The scheme allocates the benefit in the form of interest repayment in excess of 3%. Irrespective of bank interest rates, and excludes penal interest, liquidated losses, and other payments made to the bank.
What are the Eligibility for Pavala Vaddi MSME Scheme AP?
  • Only qualifying new units will be granted assistance. If they repay their principal and interest loan payments on time and on budget.
  • New micro and small business units established in Andhra Pradesh other than the Municipal Corporation boundaries of Visakhapatnam, Vijayawada, and Hyderabad shall be eligible to avail the benefit of the scheme. 
What are the Documents needed for Pavala Vaddi MSME Scheme AP?
  • Photograph of the applicant
  • Aadhar card
  • Project reports/Business Plan
  • Registration no. of the concerned unit 
  • Utility/electricity bill
  • PAN Card

In the above list, a Business plan also known as a project report is a crucial document when applying for a bank loan. The bank uses this document to analyze the overall feasibility, risks, financial viability, and potential of a project. Also, a well-crafted and convincing project report increases the chances of loan approval. With Finline you can craft a compelling project report in less than 10 minutes. That too in your language. All public and private sector banks working in India accept our reports. Click to create your project report.

How to apply for the Pavala Vaddi Scheme?

Visit the following website to register and learn more about the application process of the scheme and then log in by selecting the Pavala Vaddi button after registration

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Loan Schemes

Kudumbashree Micro Enterprise Development

On August 27, 2020, Chief Minister Pinarayi Vijayan declared the Kerala Athijeevanam Keraleeyam Scheme. The state government will utilize its CM Local Employment Assurance Programme (LEAP) to execute this scheme. Kudumbashree Micro Enterprise development programme is proposing to introduce the Kerala Athijeevanam Keraleeyam Project. Altogether 50k people are expected to benefit from the Kudumbashree Micro Enterprise development programme. The Kerala Athijeevanam Keraleeyam Scheme includes the KMEDP as a key component. This will result in the establishment of 3,000 individual businesses and 2,000 group businesses. Until then, Kudumbasree members and their families would not be able to start their own businesses. More than ten thousand people will gain from the scheme.

What are the Benefits of the Kudumbashree Micro Enterprise Development Programme?
  • Loans of up to a maximum of Rs. 2.5 lakh shall be granted for individuals to set up their own venture.
  • Venture and groups can avail the benefit of up to 10 Lakh
  • The youth will be provided with appropriate training in the skills needed for the job.
  • Free of cost training will be provided.
What are the Eligibility for the Kudumbashree Micro Enterprise Development Programme?
  • The applicant must be a permanent residents of Kerala state
  • The age of the applicant must range between 18 years to 35 years.
  • Applicant should hail from a poor family
  • Applicants belonging to Scheduled Tribe (ST) and differently-abled categories will get a 10-year age relaxation
What are the Documents needed for the Kudumbashree Micro Enterprise Development Programme?
  • Aadhar Card
  • Identity Card
  • Business Plan/Project Report
  • Ration card
  • Residence certificate
  • Income certificate
  • Passport size photo
  • Mobile number
  • Differently-Abled Certificate (if applicable)
  • Caste Certificate (if applicable)

In the above list, a Business plan also known as a project report is a crucial document when applying for a bank loan. The bank uses this document to analyze the overall feasibility, risks, financial viability, and potential of a project. A well-crafted and convincing project report increases the chances of loan approval. With Finline you can craft a compelling project report in less than 10 minutes. That too in your language. All the public and private sector banks working in India accept our reports. Click to create your project report.

How to apply for the KMEDP?

Visit the following website to fill out the application form and choose the KMEDP component of the Athijeevanam Keraleeyam Scheme.

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Check list for MSME Loans upto Rs.10 crore

The following is the Check list for MSME Loans up to Rs.10 crore:

  1. Proof of Identity: Aadhaar Card / Voter’s ID Card / Passport / Driving License / PAN Card /Signature identification from present bankers of proprietor, partner of director ( if a company)
  2. Applicant should not be a defaulter in any Bank/Financial Institution
  3. Proof of residence: Aadhaar Card / Recent telephone bills, electricity bill, property tax receipt/Passport/voter’s ID Card of Proprietor, partner of Director (if a company)
  4. Memorandum and Articles of Association of the Company / Partnership Deed of partnership firms, etc.
  5. Proof of Business Address
  6. Assets and liabilities statement of promoters and guarantors along with latest income tax returns.
  7. Rent Agreement (if business premises are on rent) and clearance from pollution control board if applicable.
  8. SSI / MSME registration / Udyog AADHAAR Memorandum, if applicable.
  9. Projected balance sheets for the next two years in case of working capital limits and the period of the loan in case of a term loan.
  10. All the properties offered as primary and collateral securities require copies of lease deeds/title deeds.
  11. Certificate of incorporation from RoC in case of a company (CIN No. and DIN no. of directors)
  12. Bank Account details wherever applicable (with details of outstanding in case of existing loans /limits)
  13. GSTN No., if applicable.
  14. Credit Rating details and report, if available
  15. ZED rating, if available.
Check list for MSME loans with exposure above 25 lahks.
  1. Profile of the unit (includes names of promoters, other directors in the company, the activity being undertaken addresses of all offices and plants, shareholding pattern, etc.
  2. Last three years’ balance sheets of the Associate / Group Companies (if any).
  3. Project report (for the proposed project if term funding is required) containing details of the machinery to be acquired, from whom to be acquired, price, names of suppliers, financial details like capacity of machines, the capacity of utilization assumed, production, sales, projected profit and loss and balance sheets for the tenor of the loan, the details of labour, staff to be hired, the basis of assumption of such financial details, etc.
  4. Manufacturing process if applicable, the major profile of executives in the company, any tie-ups, details about raw material used and their suppliers, details about the buyers, details about major competitors and the company’s strengths and weaknesses as compared to their competitors, etc. The checklist serves as an indication and is not exhaustive. Depending on the local requirements in various places, you can make additions as necessary.

In the above list, a Business plan also known as a project report is a crucial document when applying for a bank loan. The bank uses this document to analyze the overall feasibility, risks, financial viability, and potential of a project. Also, a well-crafted and convincing project report increases the chances of loan approval. With Finline you can craft a compelling project report in less than 10 minutes. That too in your language. All public and private sector banks working in India accept our reports. Click to create your project report.

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Project Report Tool for Financial Professionals

Perfect project report tool for Chartered Accountants, Company Secretary, Tax consultants, Advocates/Attorneys.

Finline is the first online platform tool to create project reports for bank loans. With Finline professionals can create a perfect report within a very short time. The application will help create a company profile, business profile (we provide sample content), and financial projections more easily. While inputting the financial fields, the application will automatically create the profit and loss, cash flow, and balance sheet for certain years in the future. At the same time, the application will provide the financial ratios based on the financial sheets and suggest the firm’s viability in the long run.

Important ratios covered in inline report are DSCR, Current ratio, Quick ratio,Interest coverage ratio, Debt equity ratio,TOL/TNW , Return On Capital Employed, Net profit Sales Percentage, Gross profit Sales Percentage, BEP in % of installed capacity, BEP in sales.

Major sections in Finline reports are as follows

  • Project at a glance
  • Feasibility Ratio of the project
  • Project Feasibility graph
  • Introduction
  • Scope of the project
  • Promoter(s) details
  • Location, Land, Building & Utilities
  • Product/services & process
  • Raw materials / Consumables
  • Plant & machinery/equipment
  • Market Potential & Strategy
  • Manpower requirements
  • Project Cost
  • Working Capital Computation
  • Annual Sales / Revenue
  • Total Monthly Expense
  • Application of Fund
  • Means of Finance
  • Profitability Statement
  • Cash flow statement
  • Balance sheet
  • Repayment of Term loan
  • Debt Service Coverage Ratio
  • Depreciation
  • Break Even Point
  • Assumption
  • Conclusion

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  • Sample text contents to use
  • Save, duplicate any number of reports
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