Keywords: business loan, business loan online, business loan mobile app
Starting a business is an exhilarating venture, but it can also be uncertain. Securing funds for business activities can be challenging. With banks and other financial institutions scrutinising previous financials for steady revenue or profits before disbursing business loans, it becomes difficult for new startups without a financial history to generate funds.
However, this should not discourage startups from exploring the various financing options. In today’s dynamic financial landscape, it is becoming easier for up-and-coming businesses to meet their funding requirements. This article shall guide you through the different loan sources available to startups.
Government Schemes for Business Loans
India is seeing a monumental rise in micro, small and medium enterprises (MSMEs); however, traditional lenders hesitate to grant funds in the early stages. To ensure ease of business in the nation, the Government has developed various startup business loan schemes.
- The Pradhan Mantri Mudra Yojana (PMMY) scheme, launched in 2015, provides loans to secondary and service sector businesses. From artisans to local vendors, all fall under the purview of this scheme. It is governed by the Micro Units Development and Refinance Agency (MUDRA). You can avail a collateral-free MUDRA loan from microfinance institutes, commercial banks or NBFCs, ranging from ₹50,000 to ₹10 lakhs under this scheme.
- The Small Industries Development Bank of India (SIDBI) has made credit availability easier for small businesses. The SIDBI directly lends business loans to MSMEs and startups without channeling them through banks. Moreover, the interest rates on these loans are significantly lower than those offered by banks.
- You can opt for the Credit Guarantee Fund Trust for Micro and Small Enterprises or the CGTMSE scheme if you want a more considerable credit amount. Eligible MSMEs of the service and manufacturing sectors can get up to ₹ 10 crore under the Credit Guarantee Scheme of CGTMSE.
Loans through Mobile Apps
Business loan mobile apps are the new revolution in startup financing. With them, you can get instant loans of lakhs of rupees at your convenience at competitive interest rates..
- Documentation has become paperless, minimal, and simplified, with advantages like e-KYC, proactive customer support, and auto-fetch features.
- Accessible interfaces and advanced algorithms significantly speed up the loan application and approval processes. Once approved, the loan can be disbursed within 24 to 48 hours.
- Loan applications can be made from anywhere and at any time with the power of mobile apps, so you do not have to worry about repeatedly visiting bank branches.
- Business loan mobile apps offer unmatched flexibility. Subject to your eligibility, you can choose the amount of loan, tenure, and repayment schedule.
Bank Loans for New Businesses
Many banks offer specially designed loans for startups and new businesses without audited financials. As long as they meet the eligibility criteria and have relevant documents in order, various public and private sector banks can offer loans to MSMEs and startups.
- Bank loans have structured repayment terms. They are paid back with interest through Equated Monthly Installments (EMIs). The interest rate is subject to variation from bank to bank and based on loan type.
- The general requirements for securing a startup business loan from a bank are as follows:
- The applicant must be at least 21 years old and at most 65 years old.
- The applicant needs to be an Indian citizen.
- The startup should be a sole proprietorship, partnership, company or an LLP with a comprehensive business plan.
- Bank enable you to get more significant funding with high-value loans. To avail them, you should be thorough with documentation and maintain a good credit score. Loans from banks are no longer the hassle they are thought to be; facilities like business loan online and digitisation have changed the world of financing.
Conclusion
Lack of financial history is not a roadblock for startups. They can rely on various sources to finance their business activities, establish their venture and eventually scale their enterprise. From the government and the banking system to mobile apps, securing funding for your startup dream is getting simpler than ever.
Bajaj Finserv strives to assist you in your startup journey with its easy business loan online. Whether you wish to boost your working capital, expand or digitise your business, or make significant investments, you can focus on achieving your goals without worrying about the finances.