Banking & Insurance

How to get guaranteed startup business loans from the Indian Government?

Guaranteed startup business loans

India is known to house a larger number of startups as well as micro industries. During the past few years, the rapid advent of unicorns has been significant. However, it becomes challenging to obtain access to required financing when your business might be in the early stages -especially for startups. Moreover, the MSME sector of the country offers limited access to the formal concept of lending for business organizations. This is when you can consider getting a startup business loan from the Indian Government.

With the rapid rise of several small businesses across India, the Indian Government has decided to roll out a number of government schemes for loans for startups. It is, therefore, important to know how to get guaranteed startup business loans from the Indian Government. The loan schemes by the Government of India offer access to the desired financing while further promoting startups and MSMEs. 

Leading Features & Benefits of Startup Business Loans by the Indian Government

When you apply for a startup business loan through the Indian Government schemes, here are some pointers to consider:

  • Instant Disbursal of Loan: If all the documents of your business are accurate, the credit amount will instantly get disbursed to the bank account.
  • Interest Rates Depending on the Credit Score: If your business maintains a decent credit history, you can easily get access to startup business loans at reduced interest rates.
  • Flexible Tenures for Repayment: You have the option of choosing the tenure according to your preference or convenience towards repaying the loan amount through easy installments. 
  • Minimal Documentation: You are only required to upload some important documents when you apply for the loan. 

Top Government Schemes for Startup Business Loans

#NABARD or National Bank for Agriculture & Rural Development

NABARD serves to be a development bank. The primary focus of the organization is the rural sector of the country. It is regarded as one of the most important financial institutions in the nation. NABARD holds the responsibility of developing small-sized industries, rural industries, and others. NABARD also offers access to social projects and innovations as it partners with multiple organizations for several innovative projects for soil and water conservation as well.

#CGS or Credit Guarantee Scheme

The Government of India came up with CGS or Credit Guarantee Scheme towards strengthening the credit delivery system while facilitating financing to the startups and MSME sector. Existing and new MSMEs in service or manufacturing facilities -excluding fields like agriculture, SHGs (Self-help Groups), and retail trade, can apply for loans via CGS. 

The leading lending institutions that primarily extend this type of loan scheme are private sector banks, public banks, regional rural banks, associate banks, and others. The MSME scheme by CGS for startup entrepreneurs is available with a myriad of benefits -including facilities for a working capital loan for up to INR 100 Lakhs for every borrowing, term loan, and so more. 

#PMMY or Pradhan Mantri Mudra Yojana

The MUDRA or Micro Units Development & Refinance Agency was introduced in 2015. The scheme is aimed at providing loans to all types of service, trading, and manufacturing sector facilities. PMMY offers access to startup loans under three distinct categories -Tarun, Kishor, and Shishu loans. 

Any individual or business -right from shopkeepers to artisans to machine operators, can look forward to availing of the MUDRA loan.

  • Tarun: Loans above the amount of INR 5 Lakhs and up to INR 10 Lakhs
  • Kishor: Loans above the amount of INR 50,000 and up to INR 5 Lakhs
  • Shishu: Loans up to the amount of INR 50,000

#Stand Up India Scheme

This scheme is helpful in facilitating bank loans for startups between the amount of INR 10 Lakh and INR 1 Crore to at least one ST/SC application or one lady borrower for every branch of the startup towards building their business. 

Businesses falling under the eligibility criteria of this scheme are manufacturing, trading, or service industries. The individuals are expected to possess a decent credit history for applying for loans under this scheme.

Conclusion

As a startup owner, are you skeptical about applying for business loans? You can also consider the lucrative option of revenue-based financing by Velocity. Here, you can offer investors some percentage of the ongoing gross revenues of your company in return for the money invested by them. No equity dilution, no long wait times.

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