How to choose the best Startup business loan?

People can avail of a Startup business loan from a bank or a financial institution in order to raise funds to start a new business for their own or expand their current business. The bank and NBFCs charge the rate of interest that will depend on the loan amount you availed and the repayment tenure. The interest rate of the business loan is up to 21% per annum for 5 years of loan tenure on the loan amount.

Details of business loan

Interest rate

Up to 21% p.a.

Loan amount

Up to Rs. 75 lakh

Processing fee

Up to 6.5% of the loan amount + GST

Loan tenure

Up to 5 years


Key features of startup business loan

      The startup business loan does not require any collateral or security.

      It offers business loans with easy and flexible repayment tenures.

      The funds are swiftly disbursed to the borrower’s bank account.

      Minimal documentation is required to avail of a startup business loan.

      The lender charges an interest rate that will depend on the borrower’s credit history.

Startup business loan by the Indian Government

There are more than thousands of startups in India at present who have access to many private equity and debt funding options. Additionally, the Micro, Small, and Medium Enterprises (MSME) sector in India only has limited access to formal credit that is why the Indian Government decided to roll out startup business loan schemes for MSMEs and startups.

Some notable startup business loan schemes

        Bank credit facilitation Scheme:

This business loan scheme is headed by the National Small Industries (NSIC), and it is targeted at meeting the credit needs of the MSME units. The user can apply for the loan for the repayment tenure of the scheme starting from 5 years to 7 years.

        Standup India Scheme: 

This scheme has launched in April 2016 and was headed by SIDBI, and this may extend to enterprises in manufacturing, trading, or services. In the Standup India scheme, the loan amount is starting from Rs. 10 lakhs up to Rs. 1 crore. The repayment of loan approval could be a minimum of seven years while the maximum moratorium period is 18 months under this scheme.

        Sustainable Finance Scheme: 

This scheme is also headed by the SIDBI and aims to offer loans to industries that deal with green energy, renewable energy, technology hardware, and non-renewable energy. The government has launched this scheme with an intent to offer to support- cleaner production/energy efficiency and sustainable development projects. 

        Pradhan Mantri Mudra Yojana (PMMY)

This scheme has launched in 2015 and it is headed by the Micro Units Development and Refinance Agency (MUDRA). The main aim of this scheme is to offer loans to all kinds of manufacturing, trading, and services sector activities. The individuals get an offer under three categories during this loan – Shishu, Kishor, and Tarun with the amount starting from Rs. 50,000 up to Rs. 10 lakhs. The Mudra loan can be availed by shopkeepers, vegetable vendors, machine operators, repair shops, and more.

        Credit Guarantee Scheme (CGS):

This loan can be availed by both new and existing MSMEs for service or manufacturing activities but it is not included as educational institutions, agriculture, retail trade, Self Help Group (SHGs), etc. This loan scheme offers Rs. 200 lakhs headed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

Bank and NBFCs offer startup business loans

Name of the lender

Interest rate


15.75% p.a. onwards

Bajaj Finserv

18% p.a. and above

TATA Capital

19% onwards

Fullerton India

17% p.a. to 21% p.a.


Eligibility criteria for startup business loan

The eligibility criteria of startup business loans may vary from lender to lender but the generic ones have been listed below:

        The age of the borrower should be a minimum of 21 years while the maximum age should be 65 years.

        The borrower must be a citizen of India.

        Borrowers should have a business plan. 

Documents required for startup business loan

      Submit 2 copies of passport size photographs

      Proof of identity: PAN card, passport, Aadhaar card, the utility of bills, voter’s ID.

      Age proof should be passport and PAN card

      Submit bank statements for the last six months

      Proof of income: Income tax returns and salary slips

How to apply for a Startup business loan?

Some essential ways that will guide you in applying for a startup business loan are as follows:

        Visit the official website of the lender of your choice.

        Then, apply it online by filling up the form and submit the required documents.

        You can also contact the lender’s customer care and request assistance for applying for a startup loan.

Bottom line:

In the startup business loan, the equipment is applied by startup business users. Before applying for the loan read the mentioned guidelines and the list of banks - that will help you to select the startup business loan to fulfil your financial requirements. You can also check the banks and NBFCs details like HDFC Bank, Bajaj Finserv, Tata capital, etc. through their official websites.

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