Start-ups have proven to be critically significant contributors for developing countries like India over time. It is typically because they aid in the growth of the economy through creation of job opportunities, increased market competition, and introduction of innovative ventures.
However, start-ups require substantial funding during the initial years to purchase inventory, develop and market products, hire skilled employees, and such other crucial investments. Entrepreneurs can consider the following options for availing startup business loans.
Pradhan Mantri Mudra Yojana
Within this scheme, small and micro enterprises can avail loans up to Rs.10 lakh. Based on their financial requirements, organisations can opt for financing under either of the three different Mudra categories – Shishu, Kishore, and Tarun.
Under Shishu, one can avail financing up to a quantum of Rs.50,000. Funding under the Kishore category is available between Rs.50,000 and Rs.5 lakh. On the other hand, an individual requiring funding above Rs.5 lakh but up to Rs.10 lakh can opt for Tarun category loans.
Credit Guarantee Scheme (CGS)
Credit Guarantee Funds Trust for Micro and Small Enterprises was an initiative launched by the Government of India to address one of the major issues faced by new and existing enterprises – which is non-availability of a start-up business loan at low interest rates.
Under this facility, eligible candidates can avail both collateral-free financing for working capital that helps a business stay agile and a term loan up to a value of Rs.100 lakh.
MSME business loans for start-ups in 59 minutes
This initiative aims to automate and digitise the start-up business loan approval procedure to shorten the time involved in raising funds for new enterprises. Entrepreneurs can get sanctioned for loan value ranging from Rs.1 lakh to Rs.5 crore within 59 minutes via this scheme.
Furthermore, borrowers can experience the freedom and flexibility of applying with multiple lenders according to their preference. Apart from this, borrowers can also apply online for a business loan with NBFCs and get approved for the same within a few minutes.
SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)
This scheme focuses on providing a business loan at competitive interest rates and quasi-equity loans to new MSMEs operating in services and manufacturing sectors. Apart from start-ups, existing organisations can also apply for credit under this scheme for up-gradation of technology, expansion of operation, modernisation, and the likes. Businesses can avail up to Rs.10 lakh for purchase and upgradation of equipment and up to Rs.25 lakh for other funding purposes under this scheme.
Under this scheme, women entrepreneurs and members from scheduled caste or scheduled tribes can avail credit between Rs.10 lakh and Rs.1 crore for a start-up Greenfield enterprise. Each branch of all scheduled commercial lenders is required to provide loan to at least one member from the above groups.
Additionally, in case of enterprises, a member from scheduled caste, scheduled tribe or a woman entrepreneur should hold 51% of shares and controlling stake to be eligible for credit under this scheme.
Apart from these options, start-ups which have already been operating for a few years can avail business loans from financial institutions at competitive interest rates. Besides favourable rates, NBFCs such as Bajaj Finserv also extend additional features such as pre-approved offers to applicants who have already fulfilled specific eligibility parameters.
These offers, which accelerate the application procedure by eliminating hassles, can be availed on several credit products such as business loans, personal loans, credit cards, etc. Individuals can quickly check their pre-approved offers by entering nominal information like their name and contact information.
There are several reasons why one should use a business loan for a business expansion project. One advantage is that since these are unsecured credits, borrowers will not have to mortgage any business asset or otherwise while availing these loans. In addition to this, an applicant has to meet only nominal eligibility criteria and submit a few documents such as income proof, age and identity proof, business vintage proof, etc. to get approved for a start-up business loan. You can easily apply for this loan to expand your startup or online business without any hassle.
Similarly, entrepreneurs can consider other schemes such as Credit Guarantee Scheme, Stand-up India, SIDBI Make in India Soft Loan Fund for MSMEs, etc. For availing funds for both new and existing enterprises. They can also consider applying via the platform of MSME Business Loans for Start-ups In 59 Minutes to raise start-up business loans quickly.
However, firms and organisations that are not eligible to avail funds under this scheme can consider alternative options such as business loans at competitive interest rates offered by the best NBFCs. Such financial institutions also extend other features and benefits such as high loan value without any collateral, nominal eligibility parameters, documentation, etc.