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Fincash » Business Loan » Loans for New Business

Loans for New Business by Top Banks in India

Updated on February 17, 2024 , 35550 views

Business loans for new business are highly sought-after by both small-scale as well as large-scale businesses out there. You can avail the startup business loan from some financial body or a Bank in India for raising funds to start your business or even expand the ongoing business.

Loans for New Business

In such a scenario, the interest rate that will be charged by the bank or institution would depend on the total amount of loan that you have availed for and the loan repayment tenure. Here's an overview of interest rates (per annum) offered by top banks in India on loans for new business -

Bank Interest Rate
Bajaj Finserv 18 percent onwards
HDFC Bank 15.7 percent onwards
TATA Capital 19 percent onwards
Kotak Mahindra At the bank’s discretion
Fullerton India 17 percent to 21 percent

Business Loans for Startups in India

There are thousands of startups all across the country. Most of these startup organizations have access to a myriad of debt funding and private equity options. However, it appears to be a challenging task to ensure proper funding when the business happens to be just an idea or is under the conceptualization stage. At the same time, small, micro, and MSME (Medium Enterprises) sector in India only tends to have limited access to the formal credit. This is the reason why the Government of India has laid out the revolutionary business loans for new business or startups in the country for MSMEs & startup organizations.

The SIDBI (Small Industries Development Bank of India) has also started lending to MSMEs and startups in the country on a direct Basis rather than channelizing the same through multiple banks. There are several options for government loans for new businesses in India. The overall interest rates on the types of new business startup loan tend to be lower than the one provided by the banks.

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MSMEs & Startup Schemes by Government of India

Some of the most famous schemes that are provided by the Government of India for MSMEs and startups are:

1. Bank Credit Facilitation Scheme

Supervised and headed by the NSIC (National Small Industries Corporation), the given scheme is aimed at fulfilling the respective credit needs of the startups and MSME units. The NSIC is known to partner with several leading banks of the country for providing business loans to new businesses or MSMEs. The overall repayment tenure of such loans is known to be around 5 to 7 years. However, in special cases, it could even extend to 11 years.

2. PMMY (Pradhan Mantri Mudra Yojana)

The given scheme was conceptualized in the year 2015. The given scheme is known to be headed & supervised by the MUDRA (Micro Units Development & Refinance Agency). The scheme is aimed at providing loans to all types of trading, Manufacturing, and service-related activities. The scheme provides loans under three major categories –Tarun, Kishor, and Shishu. The overall loan amount is known to Range from Rs. 50,000 to Rs. 10 Lakh. The PMMY Mudra Loan can be availed by vegetable vendors, artisans, machine operators, repair shops, and so more.

3. CGS –Credit Guarantee Scheme

The given loan can be availed by both new as well as existing MSMEs that might be involved in the manufacturing or service industries. However, this type of business loan is known to exclude retail trade, educational institutions, SHGs (Self Help Groups), and agriculture sector. The borrowers can look forward to applying for a loan amount of around Rs. 200 Lakh under this scheme. The given scheme is known to be headed and supervised by the CGTMSE (Credit Guaranteed Fund Trust for Micro & Small Enterprises).

4. Startup India

The given scheme was introduced in the year 2016. The scheme is headed and supervised by SIDBI. The given scheme helps in extending business loans to startups or organizations involved in the trading, services, or manufacturing Industry. Under the given scheme, the loan amount of around Rs. 10 Lakh to Rs. 1 crore can be availed. The loan repayment is known to be done after 7 years. At the same time, the maximum period for moratorium is allowed for 18 months.

5. Sustainable Finance Scheme

The given scheme is also headed & supervised by SIDBI while Offering loans to the sectors that are involved in non-renewable energy, renewable energy, green energy, and technology hardware. The government of India launched the given scheme with the aim of offering support to the complete Value Chain delivering cleaner production or energy Efficiency along with sustainable development projects.

Line of Credit

A business loan for a startup or MSME in India is a type of line of credit. Moreover, it is known to work in the similar manner as that of the credit card. However, the card remains tied to the business of the individual rather on the respective personal credit.

Documents

  • Identity proof –Aadhar card, PAN Card, passport, voter’s ID card
  • Address proof
  • Income proof
  • Financial documents –at least years of ITR
  • Proof of business ownership

Eligibility

  • Applicant should be 21-65 years of age
  • Must provide proof of business
  • Also, should provide all relevant documents for verification

Tips to Keep in Mind for New Business Loans

  • Have a detailed business plan in mind
  • Outline the respective goals of the business to the loan provider
  • Provide the accurate estimation of funds
  • Specify the users of startup loans

FAQs

1. I do not have a business idea? Can I take up startup loan?

A: You need to have a well-planned business idea and its process of execution before applying for this loan.

2) Will I be charged while applying for startup loan?

A: No. You will not be charged anything for the same.

3) How long does the application process take?

A: The application process can take anywhere between 24-48 hours for verification.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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