If you have a start-up of your own, the most challenging question that usually arises is where does one get the initial capital from? Should it be from friends and family? Or Venture Capital? Every start-up requires a corpus to scale and be able to reach a wider audience. Getting a traditional business loan is comparatively the easiest option to obtain an initial investment for a start-up.
While availing a business loan from banks or NBFCs, a start-up needs to fulfil certain criteria to be eligible for a business loan. Also, certain documents need to be produced at the time of availing a loan such as a detailed business plan, financial statements, potential growth projection, and returns of the venture.
Loan for start-up s can be obtained by enrolling into various schemes introduced recently by the government to boost the start-up ecosystem and the entrepreneurial spirit in the country. The amount of loan for a start-up will vary based upon the type of scheme, size and nature of the enterprise, duration, etc.
There are several types of business loans introduced recently by the government to lend a helping hand to the upcoming start-up s. Following are some of the loans available for start-up s in India:
1. MUDRA schemeMUDRA scheme was introduced by the government in the year 2015 and is amongst the most popular start-up schemes. The acronym MUDRA stands for Micro Units Development Refinance Agency. It is categorised under the three loan schemes or slabs named as Shishu, Kishor, and Tarun respectively.
Under Mudra Shishu scheme, a micro-business can avail a loan up to Rs 50,000. Whereas under Mudra Kishor scheme, interested businesses are eligible to avail loan between Rs 5 Lakh-10 Lakh.
2. Credit Guarantee SchemeCredit Guarantee Fund Trust for Micro and Small Enterprises (CGFTMSE) scheme is applicable for micro-businesses operating in manufacturing and service activities but excludes retail trade, agriculture, and self- help groups. This scheme offers a credit facility to first-time entrepreneurs. 85% of credit facility for loans up to Rs 5 Lakh
3. Coir Udyami YojanaCoir Udyami Yojana offers specialised credit schemes for businesses in manufacturing and sourcing of coir. The banks will support 10% of the project not exceeding Rs 10 lakhs. Additionally, working capital for one cycle, not exceeding 25% of the project cost will also be provided under the scheme. The amount of credit available will be 55% of the total project cost.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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