Your start-up can only work out if you implement it. However, most ideas don’t make it to the market due to a lack of funds. If you are going through the same issue, you can opt for a business loan and get started with your idea.
India is an emerging country in terms of Small and Medium Enterprises (SME), which contributes 30% of its total GDP. But turning these start-up ideas into reality isn’t an easy process. You need to plan well and gather funds to implement those plans. This is where the primary issue lies. If you are in the beginning phase of your business, you must know how difficult it is to get a few lakhs to establish your business correctly. But not to worry because here are a few ways in which you can quickly get a loan for your start-up in India. For any of these loan methods, one can use a business loan calculator to see the amount they can withdraw from the lender. So they can plan accordingly. There are various government schemes, NBFCs and & private lender’s schemes available for the entrepreneurs who want to establish thier new business.
Different Schemes Available in India for Small Start-Up
As the Indian government knows the significance of start-ups for its economy, it has made several schemes to fund them. A few of them are:
- Credit Guarantee Fund: This is the most interesting plan for first-time entrepreneurs because it doesn’t include any guarantee. One can simply approach a CGTMSE lender and opt for a certain loan amount. Therefore, it is the easiest way to start a new business. You can get up to INR 10 lakhs under this. If you need a larger amount, you will need to provide the lender with some security.
- MUDRA Yojna: Micra-Units Development and Refinance Agency (MUDRA) is a government-based organization that provides small businesses with funds. There are three divisions of it – Shishu (INR. 0-50,000), Kishore (INR. 50,000-5,00,000), and Tarun (INR. 5,00,000-10,00,000).
- Equipment Financing: This is a suitable loan scheme for enterprises that work on heavy equipment. They can keep these pieces of equipment as collateral with the lender and take funds in return. The benefit of the guarantee is that lenders offer lower business loan interest rates on these. Plus, you can obtain some tax advantages.
- MSME: This is a fast processing loan where you can borrow up to INR. 1 crore. The fascinating factor here is that the loan approval or denial is provided to you within the first hour of application. If the loan gets approved, you will have to wait for 8-12 days to receive your funds. The lender will require bank statements, GST, Income Tax, and other documents of your business verified by the government professionals. The interest rates you receive depends on your business type and your credit score.
There are a few other schemes that can be explored as per the requirements of the business. Plus, you must fall under the specific criteria mentioned by the lender. For example, there is an age limit of 21-65 for applying for a loan. If you don’t fit into this age range, you won’t be able to opt for the loan.
It doesn’t means that you can’t opt for the loan, you can also get business loan for startup by availing it from private lender and NBFCs. The loan process & eligibility are specified by the lender very clearly.
Installment Business Loans
This can be considered as a section of personal loans. Apart from that there are various lenders & financial institutions & NBFCs which can provide you with a certain amount of loans as required by the borrowers at specific interest rates without any guarantee upto some limit. However, it does have a drawback. You don’t get a high amount of funds under the unsecured category. In case you need larger amounts and lower business loan interest rates, you will need to provide your lender with some sort of security. So, borrowers can avail loan with collateral security.
Another crucial factor here is that you and your business need to satisfy the eligibility requirements and have all the sufficient documents specified by the lender for the loan procedure. You can consider a business loan calculator to check the same which is available on the lenders websites. Thus, installment business loans are most suitable when your business needs instant funds, or are planning to expand it.
There are several and multiple ways of opting for funds for your small, medium business for its startup or growth of existing business. But you first have to get dedicated to your idea and plan it out. Once you know how much amount will be needed then you can apply for the loan.