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. As 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 loan 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 BusinessLoans 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. Few requirements are the applicant profile and documents. Below are some points to be noted:
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 sheet, profit and loss statement, and cash flow statements.
5. Legal documents:
Applicant should submit all the legal documents to prove the legality of the business.
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 voters 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 Business in India?
If the applicant is ready with all the above requirements, next is to identify the appropriate scheme offered by the government of India to the 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 targets 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 be between 5 years and 7 years, it can be extended up to 11 years.
2. Pradhan Mantri Mudra Yojana (PMMY)
PMMY launched in 2015, headed by the Micro Units Development and Refinance Agency (MUDRA). 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 ranging between Rs.50,000 and Rs.10 lakh.
3. Credit Guarantee Scheme
For new and existing MSMEs that are involved in service or manufacturing activities but excludes educational institutions, agriculture, retail trade, Self Help Groups (SHGs), etc. Up to Rs.200 lakh can be borrowed 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. The repayment of loans taken under this scheme can be done in 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.