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Home | Advertisement | Everything You Need To Know About Startup Business Loans Everything You Need to Know About Startup Business Loans Explore various business loans in India tailored for startups, small businesses, and MSMEs. By Telangana Today Published Date - 16 April 2025, 01:30 PM Startup loans empower entrepreneurs with capital for growth, with options ranging from Rs50,000 to Rs 5 Crores across government and private schemes. New Delhi: Startup loans supply vital capital to meet initial expenses, extend operations, and cover day-to-day requirements for new businesses.
Financial avenues such as government schemes, private bank loans, and other fundraising methods cater to various business needs. Exploring these loan options and knowing about the loan eligibility criteria, repayment terms, and the right time to borrow can empower entrepreneurs to make well-informed decisions. Read further to learn about the various options for startups to kick-start their journey with business loans.
Startup Business Loans in India Startup loans in India are available for new ventures across industries. From government schemes to private sector funding, some of the options are given below – Startup India Seed Fund Scheme (SISFS) This scheme offers financial assistance for startups with proof of concept, prototype development, product trials, market entry, and commercialisation. Eligible startups can receive grants of up to ₹20 Lakhs for validation activities and investment of up to ₹50 Lakhs through convertible debentures or debt-linked instruments for market entry and scaling up.
To be eligible, a startup must be recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) and incorporated not more than two years before the application. The startup needs to have a business idea that is commercially viable and can be scaled. In addition, the core product or service of the startup must deploy technology to solve the chosen problem.
Pradhan Mantri Mudra Yojana (PMMY) The PMMY scheme grants loans up to ₹10 Lakhs to non-farm income-generating activities in manufacturing, trading, and services. The loans have three categories based on funding requirements: Shishu : Loans up to ₹50,000 for startups in their initial stage. Kishor : Loans between ₹50,000 and ₹5 Lakhs for business operations that have started but need extra funds for expansion.
Tarun : Loans between ₹5 Lakhs and ₹10 Lakhs for those business activities that have been running successfully and need higher funding for expansion. Tarun Plus : Loans between ₹10 Lakhs and ₹20 Lakhs for business expansion. Eligible borrowers include all individuals, proprietary concerns, partnership firms, private limited companies, etc.
, working for income generation. Additionally, the applicants must not have defaulted on any bank or financial institution and should have a satisfactory credit track record. Udyogini Scheme The scheme offers subsidised loans to aspiring women entrepreneurs, particularly from rural and backwards areas.
Eligible women can obtain loans of up to ₹3 Lakhs to start a business in the approved small-scale industries. The government offers a subsidy of up to 50% of the loan amount for women of the Scheduled Caste and Scheduled Tribes categories and 30% for the General category. Eligibility criteria include being a woman between 18 and 55 years old with a family income of less than ₹1.
5 Lakhs. This income criterion does not apply to widowed or disabled women. SIDBI Loans The Small Industries Development Bank of India offers a range of financial products to promote micro, small and medium-sized enterprises (MSMES.
Among these is the General Purpose Term Loan, which funds business expansion, technology upgradation, modernisation, etc. The minimum amount of loan under the scheme is ₹10 Lakhs. Eligibility requirements are a debt-to-equity ratio not exceeding 3:1 and a promoter’s contribution of at least 33% for new projects.
The maximum tenure for a loan under this scheme can go up to 8-10 years with 18 months of moratorium. Under the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) The scheme gives collateral-free credit to Micro and Small Enterprises. Eligible borrowers can avail themselves of loans up to ₹5 Crores with guarantee cover ranging from 75 to 90% of the sanctioned amount, depending on the loan size and borrower category.
Under this scheme, both new and existing Micro and Small Enterprises engaged in manufacturing or service activities (with some exclusions) can apply. Sustainable Finance Scheme of SIDBI This scheme provides financial assistance to projects engaged in sustainable development activities like energy efficiency and cleaner production. MSMES engaged in operation for 3 years with cash profits for the last 2 years can apply for loan assistance up to ₹1.
5 Crores. The energy efficiency or cleaner production projects must follow their units’ environmental and social management standards. Coir Udyami Yojana This credit-linked subsidy scheme is for individuals and firms setting up coir units.
The scheme covers projects with a cost of up to ₹10 Lakhs, plus one cycle of working capital, which should not exceed 25% of the project cost. There is a 40% subsidy from the government, 55% of the project cost can be raised through a bank loan, and the remaining 5% is the beneficiary’s contribution. The eligible beneficiaries include an individual, a company, a self-help group, or a registered institution.
PSB Loans in 59 Minutes Existing MSMES with GST registration and at least 6 months of bank statements are eligible for immediate capital loans from public sector banks. The Indian government has brought together different banking services so that MSMES can get infrastructure and automobile loans under the same scheme. The lenders under this scheme issue loan approval within 59 minutes for loans ranging from ₹10 Lakhs to ₹5 Crores.
Loans for Startups Provided by the Private Sector Some private sector lenders offer business loans in India. The amount of loan offered, interest rates, and repayment period differ from one financial institution to another. Eligible startup companies may receive loans from ₹3 Lakhs to ₹5 Crores, or even higher, without collateral.
Conclusion Startup loans empower entrepreneurs by providing the capital to turn ideas into successful businesses. With many funding options, startups can choose financing options that best fit their industry and growth strategy. The right loan can energise growth, innovation, and long-term sustainability.
By evaluating each financing option, startups can lay the groundwork for their prosperous and stable existence. Tags : startup, MSME, business loans, India, entrepreneurship, SIDBI, PMMY, women entrepreneurship, sustainable finance, credit guarantee Follow Us : Tags Business Loans startup Related News Startup Financial Planning – A Founder’s Guide International Startup Festival 2024 to focus on strategic solutions & provide support to grassroot innovators Hyderabad startup helps Karnataka coffee exporter achieve EU deforestation compliance NCLT asks Byju’s to consider extending rights issue closure date.
