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The Government of India has come up with a few arrangements to provide startups with the boost they require regarding startup business loans. The Government start-up loans were set up to help businesses grow and benefit the Indian economy. The Micro, Small, and Medium Enterprises (MSMEs) can avail of a loan from the following Government schemes:
National Bank for Agriculture and Rural Development (NABARD), headquartered in Mumbai, found its way into the world on July 12, 1982, and is governed by the Ministry of Finance. The development of small-scale industries, cottage industries or any other similar rural project falls on the shoulder of this organization. The rural sector of India is the principal focus of this development bank. It is among the most important financial institutions in the nation. By collaborating with numerous organisations on numerous creative projects and water and soil conservation schemes, NABARD not only meets the financial needs of the rural sector but also provides for social innovations and projects. The features of NABARD are:
The National Small Industries Corporation (NSIC) is responsible for meeting the MSME units’ credit needs. To finance MSME units, the NSIC scheme has partnered with several banks. The scheme’s loan repayment period is between 5 and 7 years, although it can be increased to 11 years. The loan repayment period varies depending on the startup’s profitability. This start-up a business loan by the Indian Government has the following features:
Launched in 2015, Pradhan Mantri Mudra Yojana (PMMY) is managed by the Micro Units Development and Refinance Agency (MUDRA). This scheme aims to provide loans for various manufacturing, trading, and service sectors. Anyone can apply for a Mudra Loan, including craftsmen, shop owners, and machine workers. The three types of loans offered by PMMY are Shishu, Kishor, and Tarun loans. Through these interventions, the MUDRA loan program provides incentives:
To improve the credit delivery system and ease financing for the MSME sector, the government introduced the Credit Guarantee Scheme (CGS). You can apply for CGS if you are a new or existing MME in the manufacturing or service sector; this excludes retail commerce, agriculture, Self-Help Groups (SHGs), and training institutions, to name a few. Public, private sector, foreign, regional rural, SBI, and associate banks are the critical lending institutions that provide this program. Benefits of this MSME program for business owners include term loans and working capital loan options up to INR 1 crore per borrowing unit. This start-up business loan by the Indian Government has the following features:
Stand Up India is one of the best small business loans for startups and helps at least one SC or ST person and at least one woman borrower in every branch. They obtain bank loans between INR 10 lakh and INR 1 crore to grow their businesses. The standup scheme is open to manufacturing, service, or trading companies. An SC/ST or female entrepreneur must own at least 51 percent of the shares in non-individual businesses. The applicant should not have any payment defaults with banks or other financial institutions and should have an excellent credit history. This scheme has the following features:
This program is supervised by SIDBI, which intends to finance companies that deal in green energy, renewable energy, technical hardware, and non-renewable energy. The Government developed this program to promote projects for sustainable development, energy efficiency, and clean production throughout the entire value chain.
The Coir Udyami Yojana was created to aid in the development of Coir businesses in a subsidy scheme introduced by the Government of India. The Coir Board also launched the Coir Udyami Yojna scheme to assess micro and small-scale industries in the coir industry. Banks will fund capital expenditures through a term loan to satisfy the need for working capital. The bank can also provide composite loans to finance projects, which combine working capital and Capex. This program is open to any MSME startups engaged in processing coir that has registered under the Coir Industry (Registration) Rules, 2008. Banks would finance projects with a working capital requirement of up to Rs 10 lakh every cycle but not more than 25% of the total project cost. The credit amount would be 55 percent of the entire project cost after the owner contributes 5 percent, and the 40 percent margin money has been subtracted from the beneficiary’s limit of Rs 10 lakh. This startup business loans scheme has the following features:
The Government’s primary focus area is still export promotion. The Marketing Development Assistance (MDA) Scheme, running through the Department of Commerce, supports the following activities in light of the current macroeconomic situation, which places a focus on exports. It facilitates the various measures being undertaken to stimulate and diversify the country’s export trade:
This startup loan for new businesses gives Mudra and MSME loans in 59 minutes, the Government developed a new website, the PSB Loans in 59 Minutes Portal. Within an hour, loans requested through the PSB Loans Portal will be processed. The loan will be disbursed to the applicant’s firm in the following seven to ten working days after approval. On the PSB loans platform, business loans can be approved for up to INR 5 crore. Loans for working capital or term loans are both possible. Loans can be offered with or without collateral. The loans have interest rates that begin at 8% and go up.
Startup loans for a new business can be sponsored by banks apart from the Indian Government. Some of the banks that offer the best small business loans for startups are:
It provides loans up to INR 40 lakhs or 50 lakhs based on the startup’s location. The repayment tenure is four years, and the processing fee of 0.99% is levied on the loan amount.
The loan amount ranges between INR 50,000 – INR 75 lakhs with a processing fee of 2.50% plus GST of the total loan amount. The repayment tenure is three years.
This bank offers your startup a loan of up to INR 75 lakhs with an interest rate influenced by the loan amount, tenure of repayment, etc. A processing fee of 2% plus GST of the total loan amount will be charged, and the repayment tenure will last up to 5 years.
As a provider of startup loans for a new business, this bank offers up to INR 50 lakhs with a five-year repayment tenure. However, the processing fee is 6.5% plus GST of the total loan availed by you.
SBI allows a person to take a loan of an amount ranging from INR 10 lakhs to INR 25 lakhs with a repayment tenure of up to 5 years. The whole process costs INR 7,500.
ICICI Bank charges a processing fee of 2% plus GST on a loan taken by you. The loan amount can go up to INR 2 crore with a repayment period of 1 to 7 years.
A startup business loans application requires you to remember the following points:
Each lender has a different set of eligibility criteria for a startup loan for a new business. The borrower must meet the following eligibility criteria to qualify for these loans:
The documents required for startup business loans can be sized up into a list as mentioned below:
A start-up business loan by the Indian Government has the following benefits and benefits:
You can apply for your startup business loans by following the subsequent steps:
You can get a business loan from a bank or financial body to start your business. The rate of interest charged by the financial institution will depend on the loan amount availed by you and loan repayment tenure.
The Government of India offers various types of loans for startups to bloom. You must opt for a loan that caters to your startup needs.
The borrower should be an Indian citizen between the age of 21-75, and they must have a CIBIL score of more than 750 along with a sound business plan that has been operational for at least two years. These are some of the requirements for a startup business loan, varying from lender to lender.
A person can avail of a maximum amount of INR 1 crores as a startup business loan.
HDFC Bank, TATA Capital, Kotak Mahindra Bank, and State Bank of India are banks offering offer business loans for startups in India.
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