How To Check The Eligibility Criteria Of Startup Business Loan?

If you want to apply for a Startup Business Loan, then there are many banks and financial institutions is available in the market. The borrowers can avail of a start-up loan from a bank or a financial body to raise funds to start a business of their own or expand their current business. The rate of interest is charged by the bank and it will depend on your loan amount.

What is a Startup business loan?

Startup business loans are one which is exclusively meant for business with little or no history. It can be used for a variety of business purposes including working capital needs, debt consolidation, and purchase of machinery, supply chain financing, asset acquisition, and more.

Business Loan Eligibility Criteria

Following are the business loan eligibility criteria that most banks and NBFCs require their applicants to meet before loan approval. Business loan eligibility shall differ from bank to bank. These details can also be checked with the help of the business loan eligibility calculator:

Particulars

Eligibility criteria

Age criteria

The age limit is starting from 18 years and a maximum of 65 years.

Eligible entities

It may be individuals, SMEs, MSMEs, sole proprietorships, partnership firms, public and private limited companies, LLP (Limited Liability Partnerships) retailers, traders, manufacturers engaged in only services, and trading & manufacturing sectors.

Experience

Minimum 2 years and in profit; in the same location for minimum of 2 years.

Annual turnover

An individual should have an annual turnover of minimum Rs. 25 lakh and more.

CIBIL score

700 or above

Nationality

An individual should be an Indian citizen with no criminal background

Additional criteria

Individuals must own either a residence, office, shop, or go down.

Types of startup business loan

• Equipment financing:

A startup business loan is a scheme, under which the equipment that is bought by the entrepreneur or any business users acts as collateral. The borrowers are expected to repay the loan used to purchase the equipment while their business starts to generate revenues. In this case, the equipment is pledged as collateral and the rate on the business loan is relatively low.

• Business installment loan:

Business installment loans are mostly offered by top banks such as ICICI Bank, IDFC Bank, and Standard Chartered to offer immediate cash and expand the needs of the borrowers. Thus, this loan is offered as an unsecured loan.

• Growth capital and equity assistance scheme by SIDBI:

There are many banks and financial institutions available in the market that offers startup business loans for entrepreneurs to fund their startup business. Banks have many different names for these startup business loans available for the users.

Government loan scheme for business startups in India

The businessmen can get benefits while applying for different types of loans available for startups and MSME. Some of these are mentioned as under:

• Pradhan Mantri Mudra Yojana (PMMY):

This loan scheme is headed by the Micro Units Development and Refinance Agency (MUDRA), PMMY was launched to offer financial help to the micro-enterprise sector in the country for all kinds of service, trading, and manufacturing activities. Startups can get a business loan starting from Rs. 50,000 up to Rs. 10 lakhs under three categories- Shishu, Kishor, and Tarun.

• Stand-Up India Scheme:

This loan is designed to empower SC/ST and women startups. Under the Stand-Up India Loan Scheme, Scheduled Caste (SC), Scheduled Tribe (ST), and woman borrowers can apply for business loans between Rs. 1 lakh and Rs. 1 crore for starting a new enterprise involved in service, trading, or manufacturing activities. The repayment of the loan is expected within 7 years with a moratorium period of 18 months.

• Credit Guarantee Scheme (CGS):

In the Credit Guarantee Scheme both the new and the existing MSME units involved in service and manufacturing activities, other than educational institutions, retailers, Self Help Groups (SHGs), and agriculture, can get the loan amount up to Rs. 200 lakhs.

Documents required for startup business loan

While applying for a business loan it may also vary from lender to lender based on the loan scheme. Here is the checklist of some common documents required for a startup business loan:

• Share your business plan
• 2 copies of photographs
• Proof of age such as passport, PAN card
• Submit the proof of identities such as PAN card, passport, Aadhaar card, driving license, or voter’s ID
• Submit the bank statement as proof of income.
• Bank verified signature

Conclusion:

You can choose one of these schemes and apply for a start-up business loan such as Pradhan Mantri Mudra Yojana (PMMY), Credit Guarantee Scheme (CGS), or Stand-Up India scheme based on your requirements and eligibility. Additionally, if you want to get instant approval of a business loan, then- you have to submit the documents required for the same. But you should have a crisp business plan to convince the lender.

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