Business Loan

Top Advantages and Disadvantages of Startup Business Loans In India


When you begin a startup, it is one of the best feelings in the world. Several like-minded individuals collaborate on a shared idea that can shake up the entire industry. But there is a lot of difference between having an idea and turning it into reality. Enough funds are vital to get the startup venture off the ground and help it grow. Like most startups, you might also face a lack of funds at some point. You must look for a source of funds, and this is where a business loan can come to your aid.

Many banks and NBFCs offer startup business loans that help startups with their money needs. Startup business loans can be secured or unsecured based on the amount you need. You can use the loan amount only for business and related activities. The loan tenure for such loans can go up to 8 or 10 years. There are many advantages and disadvantages to applying for startup business loans. Read on to learn about them and make an informed choice.

How to Apply for Start-up Business Loans?

Many banks and NBFCs offer startup business loans. If you want to apply for a business loan as a startup, then here are the steps you must follow:


  • Log on to the website of the lender or a suitable mobile app.
  • On the home page, visit the business loan section.
  • Here you will find the link for startup loans. Click on it.
  • There can be multiple startup business loans available. Select the best option.
  • Here you will need to enter basic details like the business’s name, vintage, ownership, and other vital information.
  • You may also need to upload some papers like licenses and registrations.
  • Click on the submit button. The lender will process the application and revert if more papers are required.
  • If they approve your profile, they will send an email confirming it.
  • You will need to sign the loan agreement, provide cancelled cheques, and other essential documents related to the business and partners/directors.
  • After the process is complete, the money will be sent to your account. You can use it according to your business needs.


  • Contact the branch office of the lender and connect with the business loans department.
  • Ask them about the various startup loans that are on offer.
  • After understanding all the loan types, select the best business loan for your needs.
  • They will give you several forms, which you must fill out and sign. Then you must also provide the vital documents that they need to process the application.
  • After you apply, a rep will come to your premises and verify the details. Make sure you have all the documents with you.
  • Then, they will process the application. If you meet the lender’s rules, they will approve the loan.
  • The money will be sent to your account in a few hours, and you can use it for your business needs.

Advantages of Startup Business Loans

Here are some of the benefits that you can get with startup business loans:

  • High-value loans: You can get high-value business loans to meet all your needs for money to pay daily expenses and create assets.
  • Long Tenure: Many lenders offer 8–10 years of loan tenure for startup business loans. This will ensure you get an EMI amount you can easily pay without stressing your finances.
  • Easy Process: Most lenders follow an online process for this business loan. You only need to provide some basic papers to process the loan. In most cases, it takes between 7 and 10 days to complete this process. Many lenders will offer their help in the process if you require it.
  • No Security Needed: You can apply for this business loan even if you do not have any security to offer the lenders. Most lenders offer high-value unsecured business loans that will give you enough money to take care of your business needs.
  • Flexibility: While you must use a business loan for the company’s needs, there is no limit on how you can use this money. There is a lot of flexibility regarding how you can use the money for your start-up.
  • No Venture Debt: When you can get a business loan from a bank or NBFC, there is no need for you to apply for venture debt. This ensures that you do not need to give a share of your company to get the money to grow.

Disadvantages of Startup Business Loans

Here are some of the issues that you can face with startup business loans:

  • High interest rate:  Most startup business loans come with high interest rates as they are unsecured. You will have to pay high EMIs right from the next month. This can stress your finances in this crucial growth stage.
  • High EMIs: The loan tenure for such loans is capped at around ten years, and the interest rates can be high. You must be ready to pay high EMIs for your startup business loan.
  • False sense of security: Easy access to a business loan can give you a false sense of security, and you might take out a high-value loan when you do not need it. This can lead to wasteful expenses that you cannot afford.

Startup business loans are very useful for new startups needing urgent money to grow and expand. It is essential, though, that you select the best lender for your business loan. Piramal Finance is a leading NBFC in India that offers high-value business loans at low-interest rates. Contact their experts to discuss your needs and get the best loan offer for your startup. You can also read their blogs and articles to learn more about other loan options.