How to get Government Startup Loan

The new year brings fresh and innovative business prospects to your creative minds. Granting startups will make those innovations feasible.

Yet it's not always straightforward to address the issue of how to get funding for a startup. You must know where you are going to look and get ready to do the job you need to make your dream come true.

It is time you took a near dive into your investment opportunities if you really want to get a startup off the ground and see it become a profitable venture.

The first stage anytime you need money to start up a company is to report the initial costs. Take out all needless or unsustainable costs in order to detect the critical criteria of the startup.

Startup Loans For Budding Entreprenuers

• The Credit Guarantee Scheme (CGS)
• Stand Up India Scheme
• Coir Udyami Yojana
• National Bank for Agriculture and Rural Development (NABARD)

What To Consider While Requesting A Loan
Eligibility for a Government Startup Loan
Interest Rate For Startup Loans In India
Conclusion

Startup Loans For Budding Entreprenuers

In order to collect funds to launch your own company or extend your existing business, you can secure a start-up business loan from any bank or financial institution. The interest rate paid to the bank depends on the amount of the loan you earn and the tenure of repayment.

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Here Are Few Government Loans For Startups!

MSME Business Loans in 59 Minutes

The loans are currently provided for a value of ₹1 Lakh to ₹1 cr with a rate of interest of more than 8%. MSME Business loan in 59 minutes initiative aims at loan appraisal process automation ultimately resulting in getting eligibility letter, in-principal approval in less than an hour. post the in-principle approval, the loan is expected to be sanction/disbursed in 7-8 working days.

To be eligible for this loan as a borrower you should be GST, IT compliant and must have six months bank statement facility. The business loan eligibility is determined by a company’s, income/ revenue, repayment capacity, existing credit facilities, any other factors as set by lenders (banks)

The Credit Guarantee Scheme (CGS)

To be able to avail Credit Guarantee a startup has to be recognized by DIPP (Department of Industrial Policy and Promotion). The Credit Guarantee consists of at least startup loans for a financial year and will be offered on the basis of a portfolio.

Coverage offered by the scheme -

• This scheme covers up to 80% of the credit facility for MSMEs owned by women and all loans granted to North-East-Region including Sikkim.
• The scheme will be providing credit to cover up to 75% of the credit facility subject to a ceiling of Rs. 150 lakh. For micro-enterprises, the scheme covers up to 85% credit facility.
• 50% of the amount of credit for MSME retail trade will be covered under this scheme.

Stand Up India Scheme

This scheme aims to set up an enterprise in manufacturing, services, or agriculture allied activities by SC/ST/women entrepreneurs. To be eligible your project must be a greenfield project. This scheme facilitates bank loans between 10 lakh to 1 crore. The interest rate for the loan is the lowest applicable rate of that bank for that specific category.

Coir Udyami Yojana

The main objective of the scheme is to facilitate the development of the coir industry in India. The scheme is running under the ambit Ministry of MSME.  Coir Udyami Yojana is a mix of loans and subsidies. The rate of subsidy and bank credit rate is 40% and 55% respectively. Your project won’t be eligible for the scheme If your project has already availed subsidiary under another scheme of the central government.

The loan covers capital expenditure, building, and machinery. Working capital is not considered in this scheme. Also if the work shed is already available it is not covered in the loan. Loan under Coir Udyami Yojana is covered through the CGTMSE scheme under the Ministry of MSME.

National Bank for Agriculture and Rural Development (NABARD)

Through this scheme government of India is encouraging farmers in taking up projects aimed at enhancing capital investment, sustained income flow, and employment areas of national importance.

• Dairy Entrepreneurship Development Scheme
• Commercial production units of organic inputs
• Agriclinic and Agribusiness Centers Scheme
• National Livestock Mission
• Gss - Ensuing End Use of Subsidy Released
• Interest subvention Scheme
• New Agriculture marketing Infrastructure

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What To Consider While Requesting A Loan

The borrowers shall execute the paperwork required and send documentation for the use of these credits. As the government funds the projects, some of the loans are free of collateral. In the following you will notice some points to review before applying for the loan:

• Personal record: background information is reviewed. Crimes performed or criminal history will disqualify or postpone the loan sanction phase.
• Based on resume or company background: information of the company and applicant’s skills in developing the business will be asked.      
• Business proposal: the borrower has to bring into the loan document a well-considered business plan.
• Business and personal tax return: For a period of three years, candidates must submit personal and corporate tax returns.
• Financial reports: the claimant shall apply the statement of benefit and loss, the bank statement, the balance sheets, and the cash flow forecasting.
• Legal documents: the requester must ensure that the company works legally.
• Collateral: collateral strengthens your profile and will assist you to receive a greater amount of loan.

Eligibility for a Government Startup Loan

The qualifying conditions for the use of start-up corporate loans can vary from borrower to creditors but are generic and therefore been listen below:

1)The candidate must not be under age 21 while the applicant must not be above the legal age of 65 years.

2)The nominee must be an Indian resident.

3)Candidates should include a corporate strategy.

4)The firm will need an incubation letter.

5)The organization must deliver a framework and product for innovation purposes.

6)A patron assurance from the Indian Patent and Trademark Office should be secured by the company.

7)It must be a young firm and not more than 5 years old.

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Interest Rate For Startup Loans In India

The interest rate and maturity tenure differ between banks. The interest rate, though, varies between 10.99% and 21% a year. The sum lent shall also be subject to a transaction fee. The tenure is up to five years.

How To Request a Government Loan

Here are few ways to apply for a start-up business loan are:

• Visit the official website of the lender to order the loan by completing the form and submitting the required paperwork.
• Visit the closest lender's branch to have the form and documentation for the loan application.
• You may also contact the customer service of the loan company to offer help for a start-up loan application.

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Conclusion

A huge number of start-up firms live in India. The number of cottage industries and small units is increasing. However, start-ups and micro-industries need capital to grow, manage, and succeed in the global giant market. Since these units lack access to price raising, the Government has taken the lead to fund these small scale enterprises and facilitate them.

Hope this article helped all our budding entrepreneurs. For more such articles, do check our blog section!