In India, start-ups have started in almost all sectors very fast in the last few years. The contribution of start-ups to the Indian economy continues to grow. There are currently over 39,000 start-ups in India that have the potential to grow and may emerge as a market leader in the future. But most new businesses shut down due to lack of credit facilities. New businesses do not have access to stock market funding, so they need a strong credit system to run their business. Start-ups can focus on innovation and a long-term approach if there is enough money.
Start-up business loans can be availed by individuals who are starting their own business ventures or currently doing business. A start-up loan helps maintain a regular flow of cash in your business and expand, grow and innovate the business. A number of schemes are being operated by the government, which provide loans for start-ups and MSMEs. Therefore, information about start-up business loans is being given through this article.
It is often difficult for small and medium scale industries to get loans easily. They often borrow money from private lenders at very high interest rates and later face trouble. Therefore, the government has introduced the Mudra Loan Scheme to provide easy credit to MSMEs and to grow through it. It is a government loan scheme under which credit facilities are being provided to small and medium-sized enterprises. Its main objective is to encourage business potential. The loans available under this scheme are divided into three categories, which are –
- Baby A loan of maximum Rs 50,000 can be availed under this category at an interest rate of 12% per annum.
- Teens – The loan limit under this category is Rs 5 lakh.
- Young – A maximum loan of up to Rs 10 lakh can be availed under this category.
Credit Guarantee Fund Scheme
It is a government funded scheme, which can be availed by micro and small units of the country. The Credit Guarantee Fund Scheme was introduced to facilitate easy lending to businesses involved in service and manufacturing activities to strengthen the credit distribution system. If you meet the eligibility criteria, you can get collateral free loan under the scheme. Under this, you can get a maximum loan of up to Rs 10 lakh without collateral to finance your current or new business. MSMEs engaged in manufacturing or service activities, excluding retail trade, educational institutions, agriculture, and self-help groups, can avail this scheme. Training institutes are eligible to avail loans under this scheme.
Obstacles identified by the government in the way of start-ups were identified. The main problem of business failure is the non-availability of loans at cheaper rates. That is why the Government of India started the Stand-up India scheme in April 2016 to provide loans to start-ups. The objective of the scheme is to promote women entrepreneurship and provide credit facilities to businesses employed in manufacturing, trade and service sectors. Since start-ups can create jobs at the grassroots level, credit institutions are encouraged to provide loans ranging from Rs 10 lakh to Rs 1 crore to eligible candidates. The scheme also seeks to empower Scheduled Castes, Scheduled Tribes and women entrepreneurs, so that they can help their family members and become partners in economic development.
National Small Industries Corporation subsidy
The scheme has been started by the National Small Industries Corporation to promote the development of MSMEs. The scheme offers two types of benefits to the borrowing entity. This includes raw material support and marketing support. NSIC has partnered with various financial organizations to provide such loans to micro and medium units. The scheme facilitates raising the market value of products and services through a marketing assistance program. On the other hand, the raw material assistance provides funds for the purchase of indigenous and imported raw materials through the scheme. The main objective of this scheme is to help micro and small scale industries bring qualitative and quantitative changes in these units so that they can develop.
Along with this, loan schemes for businesses are offered by various government and private banks. You can choose the scheme according to your eligibility and as per requirement and get loan.