13 Options To Secure A Small Business Loan for Startups in India

New company owners can use company credit cards, business loans, and crowdfunding to start or expand the business. Start up loan for new business assists with the financial needs of a new company. You can use the proceeds from business start-up loans towards working capital, purchasing equipment, materials, and buying or constructing retail space.

How do you apply for a Small Business Loan?

application for small business loans

You’ve got the goal in mind while starting your business, but where do you begin? The first thing required for the smooth processing of your business finance is your credit score. You can be in a much better spot for financing your business with a good credit score. The next step is to define what kind of start-up funding you would want.

You need to know what the lender will be searching for before collecting paperwork for your company. It’s also a good time now to pick a preferred creditor with whom you want to proceed for availing a loan for startups in india. This is not to suggest that you can’t be the right choice for certain banks or credit unions. But it makes sure that you’re doing your due diligence.



13 Options To Get A Start Up Loan for New Businesss in India

small loan for startups in india

India has recently been described as the world’s only genuinely emerging market at the moment. The country’s SME drives a major portion of this growth. Recognizing the significance of the growth of the SMEs, some new schemes have been launched by the government to guarantee a small loan for startups in india.

Here are the top thirteen business loan schemes in India that you can use to finance your small business:


1. MSME Business Loans in 59 Minutes

business loan in 59 minutes

The ‘MSME Business Loans in 59 Minutes’ is probably the most popular company loan scheme right now. Loans under this scheme are provided for financial assistance and to promote the production of MSMEs in the region.

Remember, you can use this scheme for business finance of up to 1 crore. It takes 8-12 days for the actual process to end, although acceptance or rejection is given within the first 59 minutes of the submission. It’s a refinancing scheme under which the funds will be sponsored by five approved public sector banks.


2. MUDRA Loans

pradhan mantri mudra yojana- start up loan for new business

The Government of India initiated MUDRA loans for providing business finance to micro-business units. This scheme is issued on the pretext of ‘paying the unfunded’ loans. Since small businesses and startups are often left to their own modes to finance their enterprises, this concept of low-cost credit for such enterprises has been developed.

In general, micro or small enterprises operating in the manufacturing, trade, and services sectors are issued a loan for startups in india under this scheme.


3. Credit Guarantee Fund Scheme for Micro and Small Enterprises

credit guarantee scheme


This scheme helps to provide a start up loan for new business in india to SMEs without any collateral. Under this scheme, the entrepreneurs can get working capital loans of up to 10 lakhs.


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4. National Small Industries Corporation Subsidy

Marketing Assistance Scheme

NSIC subsidy offers 2 forms of financial benefits for small businesses: Marketing Assistance and Raw Material Assistance. You can purchase both Indian and imported raw materials with the help of raw material assistance scheme. Also, you can use funds under the marketing assistance framework to improve the marketing and sales effort of your business.

The NSIC focuses primarily on financing small and medium-sized businesses that wish to improve or expand the quality and quantity of their production.


5. Credit Link Capital Subsidy Scheme

capital subsidy scheme - start up loan for new business in india

This scheme helps SMEs to improve their productivity through technology upgrades. In terms of technological upgrades, you can conduct various organizational processes, such as development, marketing, supply chain, etc. The Government’s goal, through the CLCSS scheme, is to reduce the cost of manufacturing goods and services for small and medium-sized enterprises.

Also, this enables the startups to remain competitive in terms of prices in local and foreign markets.


6. Sustainable Finance Scheme

Sustainable Finance Scheme- start up loan for new businessIn this scheme, support is available for companies operating in the green energy, renewable energy, and non-renewable energy categories.


Led by SIDBI, it aims to help the value chain of a project for cleaner production, energy efficiency, and sustainable growth.


7. Coir Udyami Yojana

coir udyami yojana- small business loan

The primary objective of this scheme is to build coir units throughout India. This Coir Board oversees this scheme which provides loans up to Rs 10 Lakh. The interest rate is equivalent to the base rate. The total credit fund does not exceed 25% of the total project cost. You can use this loan if you’re a sole proprietorship, joint corporations, private or public limited company.


8. Development Scheme by NABARD

nabard scheme- start up loan for new business

National Bank for Agriculture and Rural Development focuses on providing refinancing to lending institutions in rural areas.

One can use this scheme for the promotion and growth of agriculture, housing, small industries, handicrafts, and village industries.


9. Standup India

stand up india- small business loans for new businesses

In April 2016, the Government of India initiated the Standup India program. It is led by India’s Small Industries Development Bank (SIDBI). You can use these loans for trading, manufacturing, or service delivery.

This scheme facilitates bank loans upto 1 Crore in case of a greenfield enterprise. It provides composite start up loan for new business between INR 10 Lakh and INR 1 Cr to cover 75% of the project, including the term loan and working capital.


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smile scheme- loan for startups in india

Make in India Soft Loan Fund for MSMEs was launched in August 2015. This loan is led by India’s Small Industries Development Bank (SIDBI). New companies operating in the services and manufacturing sector may apply for this program.

The expansion, modernization, technological improvements, of established companies or other initiatives can also be covered. The aim of this scheme is to provide MSMEs with soft loans on relatively easy terms, in the form of quasi-equity and term loans, in order to meet the debt-to-equity ratio needed for the growth of new MSMEs.


11. Bank Credit Facilitation Scheme

nsic credit facilitation scheme- small business loan

The National Small Industries Company runs the Bank Credit Facilitation Program. The aim of the scheme is to follow the MSME units’ credit requirements. NSIC has made an agreement with various banks to be a part of this scheme.


12. 4E -End to End Energy Efficiency

energy efficiency scheme

This scheme was introduced in September 2016 to offer comprehensive options for a loan for startups in india.

It is led by the SIDBI. MSME start-ups in the manufacturing or services sector who have been operating for at least three years and have earned cash income for the past two years are qualified for the loan.


Your company needs to undergo a comprehensive energy audit (DEA) process through a technical consultant for this scheme. The auditor has to accredited by the Bureau of Energy Efficiency. The key goal of this scheme is to introduce energy-saving initiatives for Indian industries on an end-to-end basis. Also, it helps start-ups to seek funds for second-hand equipment purchases.


13. Stree Shakti Package

Stree-Shakti-Package-start up loan for new business

The Stree Shakti Package is provided in India by most branches of the State Bank of India and focuses on providing women entrepreneurs a business loan.

The biggest benefit of this start-up business loan for women is that you can get loans up to Rs. 5 lakh without any protection.

In addition, banks made some concessions, such as a reduced interest rate in the event of a loan exceeding Rs. 2 lakh. But, the main downside of this loan is that it is only open to women who hold a 51 percent or greater share in the business.


Final Words

Startup India logo

Starting a business may be the hardest part for entrepreneurs. Also, locating a lender from whom to borrow can be challenging.

But it is not impossible to get a good quality startup loan.

When you’re looking to borrow, do your homework and due diligence and be prepared for various documentations. Remember, It can be a daunting path to get approval for a start-up business loan. However, you should drive it with positive intention to get the job done.

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