There are several options available to you
Collateral free bank loans for Indian startups if:
- Collateral Free Loan is available for startup businesses if they are fulfilling the below conditions;
- It should be a private limited company and should have SME/SSI registration.
- The extent of financing of the project cost: 10% of promoters, 20% from investors (Angel funds, VCs, individuals).
- Types of a loan – Term loan or a working capital aid will be granted.
- Term loan is for a maximum period of 7 years and maximum moratorium period of 3 years.
- The loan is covered under CGTMSE scheme.
Also check out 25 Bank loans for your startup in India
Specific schemes for Indian startups: If the Indian goverment is giving so many opportunities, why not use them:
- India Aspiration Fund – Venture Fund
This is the fund announced by the new government, and you can check more details on a link provided.
URL: Govt. Launches India Aspiration Fund & Make in India Loans for Indian Startups, SMEs; Allocates Rs.12000 Cr - 10K startups – 10,000 Startups | A NASSCOM Initiative
It is a NASSCOM initiative and has been doing a fantastic job in linking all stakeholders of Indian startup ecosystem. - SIDBI (Small Industries Development Bank of India) This scheme is mainly assigned for small and medium scale industries. And if your industry is small or medium size then you can apply for this scheme.
- Startup Village
It was funded by public and private sector and not-for-profit initiative. Incubated many startups till now. Started with Kochi, Kerala and has plans to start more such villages soon in other states.
URL: The Top 20 Startup Incubators In India - NSIC (National Small Industries Corporation)
NSIC is a Government of India initiative under Ministry of Micro, Small and Medium Enterprises (MSME). NSIC has been functioning to accomplish its mission of encouraging, supporting and nurturing the growth of small industrial firms and industry related micro, small and medium enterprises in the country.
Also check out
Eligibility criteria for startup schemes
- It must be an entity registered/incorporated as a: Private Limited Company or Registered Partnership firm or Limited Liability
- The Age of company must not exceed five years
- The annual turnover of company or business must not exceed Rs. 25 crore. (in any financial year)
- The startup must be working towards innovation, development or commercialization of new products or services are driven by technology.
- The Startup must aim to develop and commercialize:A new product or service or means; orA significantly improved existing product or service or process that will create or add value to customers or workflow.
- The Startup must not merely be engaged in: Developing products or services which do not have potential for commercialization; or Undifferentiated goods or services; orProducts or services with no or limited incremental value for customers
- The Startup must not be formed by dividing, or reconstruction, of a business already in existence.
- The Startup has received certification from the Inter-Ministerial Board, set-up by DIPP to validate the innovative nature of the firm.
Key points for getting bank loans for Indian startups
- Make a right pitch with Detailed Project Report (DPR)
- Business Plan
- Get a copy of CIBIL report with score
- Get together some essential financial statements like ID proof, Address proof, Bank statement, and latest ITR. (Income, Balance sheet, profit & loss information)
- Prediction of expected operations (Growth, ROI, Expansions, etc.).
- Any other specific documents needed by respective bank
For more information check out:
Good luck with your startup, Follow your dreams and make them come true.
Related QuestionsMore Answers Below
BHUMI HALDER, Founder and CEO of moneymaya.in. I am a Banker by Profession.
Updated Nov 3, 2016 · Author has 176 answers and 510.1k answer views
There are many Banks in India which are funding the startup or Business in India. It's mainly because of Mr.Prime Minister of India, Shri.Narendra Modi. You must have heard about his campaign Make in India. Mr.Modi wants to have startups in every district and every blocks in India. Read below for details:
Also Read : Cent Trade - Business Loans from Central bank of India
Cent Sahyog-Another Business Loan from Central bank of India
May Also Read: SBI Business Loans
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Joydeb Dasgupta, studied at University of Calcutta
Answered Jul 25, 2016 · Author has 3.7k answers and 1.9m answer views
After you are done with setting up your unit ( registration part), and obtaining relevant licenses and clearances, you can approach a Bank. The Bank will need a DPR ( Detail Project Report), which will forecast every detail of your business; Your product, your marketing strategy, your business projections including financial projections ( 3 to 8 years), depending on whether you ate applying for only working capital or term loan or both. You should also mention whether your unit is eligible for any Government subsidy.
The bank will process your loan application, check your credentials, make assessment of the viability of the project and then take a decision. Make sure you have no default reference against you or other Partners in cibil, then your loan proposal will most likely get rejected.
You are expected to contribute 25% of the Project cost and Bank will finance maximum upto 75%. However, the Bank may ask you to increase your stake ( margin) because its a new exposure for them.
In today`s volatile credit situation, Banks are most certainly going to ask for tangible co lateral security. It can go up to even 125% of loan granted in certain cases.The time taken for processing the proposal will vary between 30 to 60 days, depending upon the quantum of loan, since there are several tiers your proposal may have to pass through.
If your requirement is less (say upto Rs 10 lakhs) you may try loan under Mudra scheme. There are also certain Government schemes where you can get up to Rs 100 lakhs without security.
Banks processing of loan are a bit cumbersome and it may help you to get in touch with a consultant. They are good at preparing Bankable proposals for a fee.
for any specific query you may contact: pharmacon334@gmail.com.
Amrita Agarwal, works at Self-Employment
Answered Jul 14, 2017 · Author has 1.2k answers and 435.6k answer views
You can get a loan for your startup in India from bank or NBFC.
Here are some tips for your startup business loan.
Business loans are one of those many procedures where the business owners tend to lose control of their patience when it comes till the execution part of the procedure. They are time-consuming, need a lot of documentation work and the correct approach to gain the confidence of the lender that the business model will not fail. Moreover, there are multiple ways a business can be funded. But, following are some simple tips and tricks that an owner can follow to find him walking on the best way to get a business loan. Thus, it is not a tough procedure if the following steps are followed.
·
BE PRECISE WHY THE MONEY IS NEEDED
It is like one of the fundamental responsibilities of the business owners to give the statement of every single penny borrowed from the lender or the bank for the business loan. Unless the business owner is clear on what he wants to achieve with the money borrowed he cannot establish confidence in the mind of the lender or the financial institution. Also, when the business owner gives the statement of every single penny to the lender that what he is going to do with the money the lender also gets an impression of how much support he can avail to the borrower from the bank.
If the clear description of the utilisation of money is given then it shows that the owner of the business is clear in what he wants to achieve and won’t spend the money on other things which can cause wastage for the resources of the business and to him also. It also shows he is very much focused. Thus, being clear about the utilisation of the money is the first step towards a healthy business loan funding from the lender.
·
FIND THE CORRECT LOAN TO FUND YOURSELF
Yes! Many people fail to find the correct loan and get into an enigma by the various options displayed in front of them by the financial institutions or the lenders. The nature of the loan is defined by the nature of the business. For instance, if you’re in a business where the cash turn cycle is quick and your margin is quick you can go for a short term loan where you’re confident about the payback of the loan amount to the lender in a short span of time.
Also, if the nature of the business is too long where the cash turn cycle is slow then go for a long-term business financing. This helps you to get the business loan approved as well because you know your needs and the bank doesn’t see the need of a collateral against the business loan you’re opting for as it is safe. If the correct loan is taken to fund the business then the chances are the loan gets paid before the due date. This also gives a window for the lender to do future borrowing of further credit from the lender or the financial institution due to the good credit established in the first deal.
·
FIND THE MOST OPTIMUM LENDER FOR YOU
The best way to get a business loan is to find the correct lender as well as the correct loan for your business. If you get the correct deal with the wrong lender it can lead to many of the consequences like you will not be able to receive an extension of a day on your payment or additional value as well as monetary incentives on your business loan or the less amount EMI on the loan. Thus, having the right lender along with the right loan is necessary. If you miss on the correct lender even the loan that you’re looking for might be served to you, not in the manner you might have expected it to be.
CHECK BEFORE APPROACHING THE FINANCIAL INSTITUTION/ LENDER
There are some things to be kept in mind before approaching the lender. Before making a contact with the lender you must first of all check from your end that everything is perfect and there is no need for the last minute hassle. You must be very well prepared with your business idea or business plan along with the other documentation demanded by the lender for the purpose of keeping transparency in the deal. If the documentation is well prepared it gives a clear impression in the mind of the lender that the borrower is genuine.
If the lender finds out something about the documentation i.e. naïve or exaggerated then he may begin to lose confidence over the borrower and can decrease the loan amount while the disposal or higher the interest rates or even cancel the loan process. A good documentation signifies confidence as well increases the probability of getting the loan from the lender. This also makes it clear in the mind of the lender that the deal which is going to be executed is not of a fake business model or a fraud in nature and the borrower is genuine.
LOOK AT THE ALTERNATIVE FINANCING FOR SHORT TERM NEEDS
You must always be open to the options when it comes to financing your business. If one lender refuses you then you can always turn to the other lenders for the financing of the business. The business needs to be financed by line of credit loans, instalment loan, unsecured loan or some other form of a business loan to fund its business. When the alternative options are compared about financing the business for the short term needs it also leads to the increase in the risk while opting for something as the chances of getting return are low. So, one must have a proper plan when it comes to the business loan or other options cannot be so convenient when it comes to funding a particular business loan.
Well, here are a few tips and tricks through which cracking a business loan cannot be a tough job for an entrepreneur. Just make sure there are no loopholes while you propose your plan. Also, pitch it like it’s the best!
or you can go for personal loan for your startup business
USES OF PERSONAL LOAN
- The first use of the personal loan is that personal loan can be used to fund your business in many ways such as the initial capital. For instance, if you have enough resources to prove that you will be able to pay back the bank then the banks’ give you instant approval on the personal loan as well as the funding of your personal loan.
- Banks also provide personal loans to startups to fund their research and development of a particular product based on the product concept and the product design and other aspects. If the product looks well and good the banks give instant approval.
- The banks also fund the startups for their inventory. For instance, if you are in the business of a particular commodity where you need to maintain inventory on a large scale, then the banks assist you on the funding of producing more and maintaining inventory for the product based on the nature of the product.
- Also, one of the uses of personal loan financing is the bank gives a personal loan to the businesses for buying machinery and equipment for the business as well. For instance, if you want a business loan for your financing of equipment the bank may not approve instantly. But, for a personal loan the probability of your loan increases.
Thus, it becomes easy to gain a personal loan due to the higher eligibility of a business loan. The versatility of uses of personal loan for a business makes it more favourable for the entrepreneurs to opt for it as it is easily available.
ELIGIBILITY
There is less eligibility benchmark for the personal loan as compared to business loan. In a business loan, the entrepreneur has to be ready with the documents such as the business plan, the turnover rate of the business, the pace of the business, the financial statements which decide the eligibility of business to get a business loan which is hard to pass. While in personal loan, the banks look at the creditability of the owner of the business i.e. the CIBIL score and the CIBIL report, the personal assets of the owner and the income of the owner. So, the eligibility criteria are favourable for the entrepreneurs which allow them to opt for the personal loan.
ADVANTAGES OF PERSONAL LOAN for Business
The personal loan has got many advantages to it when it comes to the funding of the startup. Some of them are as follows:
- The first advantage of personal loan for the startup is the low-interest rate of the personal loan as compared to the business loan. Every entrepreneur by the end of the day wants to earn more from his business. So, if the interest rate on the debt is low, it allows the entrepreneur pay less EMI which results in more profit.
- The second advantage of the personal loan is the quick availability of the personal loans for the business. The personal loans are easily available which ensures the business owner that the requirement of quick funding can be fulfilled with the help of a personal loan.
- The third advantage of the personal loan is an unsecured loan. Most of the times the personal loans are unsecured in nature which allows them to be collateral free which is beneficial for the business in many ways. For instance, if the bank borrows a personal loan instead of the business loan then if the business again needs an immediate funding requirement it can sell the asset and liquidate the money out of it.
- The fourth advantage of a personal loan is the less documentation process required at the time of borrowing the loan. For instance, if a startup looks for a business loan as a funding option from the bank the eligibility benchmark is high due to the requirement of documents from the business for which startups are unable to qualify. Whereas, in the context of personal loan, the personal credit of the owner is considered which is easy to qualify if the owner has a white collar when it comes to credit.
- Lastly, the personal loan has less processing time which allows the funding to be flexible for the business. The business can allocate the funds quickly to the required departments which decrease the lead time of the business for a turnover.
The startups that are just in the beginning stage might have to use the collateral for the personal loan for getting funding. Well, for the entrepreneurs who don’t have time to get funding from the banks for the personal loans there is the solution for them as well. Finance Buddha, a leading company in the business of providing loans from the leading banks in India such as Axis Bank, HDFC Bank, Induslnd Bank and more can help you out with your funding with additional benefits such as the lowest interest rates and processing fees. Also, there is a hassle free documentation process which allows the business owner to focus on other things.
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hi
pmegp is a central govt Scheme for only new entrepreneurs who want to start there manufacturing or service business… its a subsidy Scheme
subsidy will be from 15% to 35% of total approved project cost
owners contribution will be 5% to 10% of total approved project cost
i have availed this loan for my project in banglore
- Get ready with the project you want to do
- prepare a project report on it
- identify the place where you want to start you project
- apply online application in kvic website
- there will be an interview process by kvic/dic/kvib chosen nodal agency
- before interview talk to banks who is ready to give loan to your project
- get a communication letter from bank and submit in interview
- if your project is selected it will get forwarded to bank
- submit all required (asked) documents to bank
- bank will process the application and they will do inspection of your project place
- bank will sanction the loan.. get sanction later from bank and submite in kvic/kvib/dic
- get EDP training
- submit EDP training training certificate to kvic/kvib/dic and bank
- your subsidy will be sent to bank by govt.
every process/agency/bank has its own operation method
Eligibility
Implementing Agencies
Area of project
documentations are very important to get subsidy
for any further information please call me 7406576767
or email me raghu.pr19@gamil.com
i will help you
Importent Notes :-
- Be aware of fraud financing agency (specifically from delhi ) many people called and informed me about they have given money to thees fraud agency's
2. Do not give money to any agents or brokers (hence it is a online process will not work like that)
3. Interest rates will be same as reguler business loan depending on banks 9%to 12% (NOT 4%)
4. Subsidy is max 35% not more than that
5. Max loan amount under pmegp is 25 lakhs not more than that
6. Your own contribution to the project will be 5% to 10% which should be deposited to your business current account in your bank do not give this money to any agents or brokers or financial agency
7. Consultant your bank or kvic / dic/ kvic for any financial advice
8. Do not share your documents with any 3rd party they will miss use it
Originally Answered: How do I get a business loan from a bank?
Which country? Please give more details such as nature of business, quantum of loan etc.
UPDATE:
Banks do give collateral-free loans. I think the following scheme is still in operation.
Government launched the Credit Guarantee Fund Scheme for Small Industries on 30th August, 2000 with a view to alleviating the problem of collateral security and impediment to flow of credit to Micro and Small Scale Industries (SSI) sector.
Under the CGTMSE Scheme the trust extends guarantee upto Rs.100.00 lacs per borrower for credit facilities sanctioned without collateral or third party guarantee. The loans sanctioned under Govt. Sponsored schemes are also covered under the scheme.
The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSME unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 75 / 80/ 85 per cent of the credit facility.
For more info, please see the following links:
Frequently Asked Questions
Page on www.msmementor.in
Basically, the collateral requirement is met by the Scheme of GOI. Best of luck.
UPDATE:
Banks do give collateral-free loans. I think the following scheme is still in operation.
Government launched the Credit Guarantee Fund Scheme for Small Industries on 30th August, 2000 with a view to alleviating the problem of collateral security and impediment to flow of credit to Micro and Small Scale Industries (SSI) sector.
Under the CGTMSE Scheme the trust extends guarantee upto Rs.100.00 lacs per borrower for credit facilities sanctioned without collateral or third party guarantee. The loans sanctioned under Govt. Sponsored schemes are also covered under the scheme.
The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSME unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 75 / 80/ 85 per cent of the credit facility.
For more info, please see the following links:
Frequently Asked Questions
Page on www.msmementor.in
Basically, the collateral requirement is met by the Scheme of GOI. Best of luck.
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Jaysheel Dani, studied at University of Illinois at Urbana-Champaign
Answered Oct 15, 2014 · Author has 171 answers and 184.6k answer views
Originally Answered: How do I get a business loan from a bank?
If you are starting your own business, it is better to first invest some of your own money, or money from your relatives, friends etc. Once you have made good progress in your business (revenues coming in; "good progress"" is very subjective) you should approach Venture Capitals or try for seed funding.
The reason is banks usually do not give out loans for start ups. Banks prefer to give loans to businesses that have a steady cash flow (to service their interests).
Let assume that you do take a loan from the bank, the interest payments to the bank will most probably be monthly / quarterly / semi -annual. If your business does start making money soon (I am talking about income, not revenues), it would be much wiser to reinvest that money in the business rather than use it to make interest payments to the banks.
Please refer this question:
For a startup, how is investment through VCs different from taking a loan from a bank?
The reason is banks usually do not give out loans for start ups. Banks prefer to give loans to businesses that have a steady cash flow (to service their interests).
Let assume that you do take a loan from the bank, the interest payments to the bank will most probably be monthly / quarterly / semi -annual. If your business does start making money soon (I am talking about income, not revenues), it would be much wiser to reinvest that money in the business rather than use it to make interest payments to the banks.
Please refer this question:
For a startup, how is investment through VCs different from taking a loan from a bank?
Originally Answered: How do I get a business loan from a bank?
listing u few steps which may help for india:
1. Get ur credit score from CIBIL.com. Better d score better r d chances.
2. Prepare ur detailed business plan. Bank wants complete clarity abt all risk factors as well as opportunities.
3. Show willingness to offer other assets (house, LIC etc.)as collateral security. This only reflects ur commitment towards ur project.
These basic home work can get u audience from many banks thereafter all depends on ur project.
all d best:-)
1. Get ur credit score from CIBIL.com. Better d score better r d chances.
2. Prepare ur detailed business plan. Bank wants complete clarity abt all risk factors as well as opportunities.
3. Show willingness to offer other assets (house, LIC etc.)as collateral security. This only reflects ur commitment towards ur project.
These basic home work can get u audience from many banks thereafter all depends on ur project.
all d best:-)
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You should first get your start up registered under the Start Up india Government initiative. And if you fulfill a few conditions your entity shall be tax free for 3 years along with a big horde of additional benefits. On receiving the Start up recognition certificate, you can easily approach a Bank for loan as this certificate is an indication that your entity is either creating/improving a new/existing product/processs or has a business which is scalable and able to generate wealth and employment
Indian Govt banks like SBI and semi Govt Banks like Kotak Mahindra, Bank of Baroda, Union bank and numerous more gives business funding to new businesses for expending their business and operations. For the most part not to begin a business but rather to another business (a half year - 1 year tenure). Be that as it may, more often than not they dismiss application on account of their perplexing danger administration framework.
Other choice is getting small business funding from private financial companies like Lendingkart. These NBFCs are giving business credits at aggressive financing interest rates as well as their procedure requires least paper works and in this way makes them more effective and quick.
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Anuj Aggarwal, Experienced in loan financing, financial model
Answered Aug 7, 2016 · Author has 444 answers and 230.9k answer views
1. As general understanding, banks give loan on something tangible business. But not an idea. Generally startups are an idea on which venture capitalists, Angel investors etc. Give funds.
2. Banks also ask for margin I.e. Borrower contribution.
3. There are different forms of other credit lines which can be developed, which may be fruitful in your case also.
Manish Hada, 7 years of startups and business strategy experience
Answered Mar 23, 2016 · Author has 494 answers and 136.4k answer views
Here is a step by step process for the startup.
The first step is to prepare a pitch (usually called aDetailed Project Report). This should all details about the startup – the businessmodel, the promoters’ background, revenue model, sales figures, traction sofar, growth rate, market size and other estimates. Return on Investment is thekey factor considered here.
Then you should identify bank having schemes for startup. Knowwhich banks lend for which purpose. For instance, some banks fund to buildproducts, some based on receivables, some for growth, some for R&D etc.Analyse which bank will be suitable for your needs.
Finally, you can fill in the forms and present your pitch.
My Blog: learnings from entrepreneurship
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Mekala Krishnaveni S, works at Tech Startups in India
Answered Sep 30, 2016 · Author has 580 answers and 700.8k answer views
Amit Kumar, MBA Finance, Marketing (2011)
Answered Sep 1, 2017 · Author has 196 answers and 45k answer views
According to a recent study, over 94% of new business fail during the first year of operation because of lack of funding turns to be one of the common reasons. Money is the bloodline of any business. There are many options to fund a start-up in India like NBFC. Even there are many banks which are funding the start-ups or businesses because of a new campaign of Make in India by PM Narendra Modi. But all banks offer loans on collateral or net worth detail. If you are a start-up and don’t have many documents to show I would highly recommend about Lendingkart which offers loans to start-ups and small businesses loans on the basis of bank statements and VAT returns.
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All businesses cannot get a business loan, so you need to take highest care in applying for one. By ensuring that the whole lot is as accurate as possible and by putting your business in the best possible radiance, you will improve your chance to get the loan.
- Obtain a copy of your credit to ensure that it is accurate. Obtain a copy of CIBIL report with score. Most financial institutions review your credit report while they review your loan application. Better CIBIL SCORE will give you better bargaining power. If you are CIBIL score is not up to the mark or if it is not correct according to your recording to your record try to improve it or rectigy it.
- Get together some essential financial statements. In order to quality for a small business loan, the lender needs to be reasonable certain you will be able to pay it back. Here are some of the essential financial documents you will need to pay back.
- ID proof of promoters: Papers as proof of identity like passport, pan card, voters id card and driving liscence
- Address proof.
- Bank statement 6 months.
- Latest ITR along with computation of income, balance sheet and profit & loss a/c for the last 2 yrs. Audited or certified by a CA
3. Make a projection of future operations. This projection of future operations should go as fas as a year or until positive cash flow is achieved, whichever comes first. Type in 12 month profit and loss projection into a reputable search engine for a pre formatted spreadsheet that you will be able to work with.
4. Ask the financial institution which specific documents you will need. Also ask what information the lender requites for you loan proposal. Different institutions have different requirements for small business loan applications.
5. If a loan is not granted, even after fulfilling above steps succesfully, inquire about the loan gurantee program under credit guatantee fund trust for micro and small business scheame. Through this program, the central government gurantees loans that financial institutions couldn’t otherwise afford to make it. If the financial institution can do this, give it permission to process your loan application under CGTMSE Scheme. You will then receive a loan through your local financial institution.
You can try the above steps and if face any problem contact Chartered Accountant in India.
You need to do a comparative analysis among all the lenders in the market to find the best lender that offers a business loan at the least possible interest rate. Lenders are sometimes skeptical while offering a loan to a startup, as the risk factor is much high. The startups can prosper in future or it may face a huge loss. So, the probability of becoming a defaulter is much higher than any other stable business. But if you are a startup, you need to provide assurance to the lender that your business will prosper, it will have profit and you won’t be a defaulter ever. You will find many banks and NBFCs that are ready to offer a business loan to a tech startup at a reasonable rate of interest.
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