How to Get a Business Loan for a Start-up in India

Corporate Finance

Starting a business is not an easy task. It takes a lot of hard work, dedication, and planning. One of the most important aspects of starting a business is obtaining the necessary financing. This can be difficult, especially if you are looking for business loans for a start-up in India. 

In this blog post, we will discuss how to get a business loan for your start-up in India. So, whether you are just starting out or you have been in business for a while, read on to learn more!

Who is Eligible for Business Loan in India?

A person or a group of people coming together to start a business venture with the objective to make a profit may require a business loan. A business loan is a type of finance availed by business entities to start or expand their business operations. Any business, whether small or big; private or public; home-based or office-based; can avail of a business loan. 

There is no restriction on business size or business type for availing of business loans in India. Like the working capital finance in India, business loans are also availed by business firms to maintain their day-to-day business activities.

Here are the requirements for working capital loan eligibility:

  • Indian citizenship

The business owner, as well as the company, should be Indian citizens to avail of a business loan in India.

  • Permanent residence

The business owner should have a permanent address in India. This is one of the basic working capital loan eligibility criteria. The bank or lender will verify this during the KYC process

  • Age limit

To be eligible for a working capital loan, the business owner’s age should not exceed 65 years at the time of loan maturity. The minimum age to acquire a business loan is 21 years.

  • Aadhaar and PAN cards

You will need to provide your Aadhaar and PAN cards when applying for a business loan in India. The lender will use these documents to verify your identity and business ownership.

  • Bank statement for last 6 months

One of the most important requirements is your bank statement for the past six months. This will show the lender how much money has been coming into your business and what kind of financial shape it is in. If you can prove that your business is doing well financially, then you will have a better chance of getting approved for an instant business loan.

  • Proof of Ownership of Business

Proof of ownership of a business is an important requirement to show that you are the business owner. The easiest way to do this is by providing business registration documents from the Ministry of Corporate Affairs (MCA). These documents will list your business name, registered address, and other important information.

  • Signature Proof

The signature proof is a vital document that provides the lender with your signature, which will be used to verify your identity and loan application. In order to obtain signature proof, you’ll need to provide the lender with two forms of identification. A government-issued ID and a utility bill. Once you have these documents, you’ll need to sign them in front of a notary public.

How Can Start-ups Avail a Business Loan in India?

There are a few things you need to take care of before applying for a business loan for new business, they are:

  • Credit Score:

A good credit score will help you in availing of a business loan at a lower interest rate. If you have a low credit score, try and improve it by repaying your debts and EMIs on time. You can also check your credit report for any errors and get them corrected.

  • Business Plan: 

Lenders will want to see your business plan to understand how you plan on utilizing the loan amount. Prepare a detailed business plan highlighting your business goals, revenue model, etc. You can take help from financial experts to create a full proof business plan.

  • Financial Statements:

 Lenders will also ask for your business’s financial statements for the past few years. These statements will help them understand your business’s financial health and its ability to repay the loan amount.

How Can You Avail the Loan for Business?

It is quite easy to avail of a business loan in India. You just have to approach a bank or any other financial institution with your business plan and required documents. The financial institution will analyse your business plan and decide whether to give you the loan or not.

If you are planning to start a new business, then working capital finance is the best option for you. With this type of loan, you can easily get the necessary funds for your business. Moreover, it is also easy to repay the loan amount as it has flexible repayment terms.

The Bottom Line

There are a few things you need to know in order to get a business loan for your start-up in India. The most important thing is to have a clear understanding of what you need the loan for and how you plan to repay it. You should also be aware of the different types of business loans available and the eligibility requirements for each one. 

With this information, you’ll be able to apply for a business loan with confidence and increase your chances of getting approved.