India has a startup ecosystem and growing entrepreneurial spirit, offering immense opportunities for young entrepreneurs. However, taking a business loan is complicated if you don’t know properly.
We explore the benefits and tips for obtaining business loans for young entrepreneurs in India.
Why Business Loans Are Essential for Young Entrepreneurs?
To expand the business you will require amount and equipment. This amount is available through business loans for purchasing inventory, hiring staff, and marketing.
- Get initial investments to operate the business.
- Expand business through outlet open.
- Enhance cash flow for smoother functioning.
- Invest in technology and innovation.
Types of Business Loans Available for Young Entrepreneurs
Government and financial companies offer various types of business loans to young entrepreneurs. Below are some popular options available:
1. Startup Loans
Various Non-Banking Financial Companies (NBFC) and government banks provide startup loans designed for new businesses. Get flexible repayment terms, affordable interest rates, and minimal process. With 2 vintage proofs, you may apply for a startup business loan.
2. Government Schemes
The Indian government supports several loan schemes for young entrepreneurs. The government schemes are included:
Pradhan Mantri Mudra Yojana (PMMY)
PMMY scheme is suitable for every business owner. Women entrepreneurs and new business owners can take loans on this scheme. Offers loans under three categories—Shishu, Kishor, and Tarun—catering to different funding needs up to ₹10 lakhs.
MSME Loan Scheme in 59 Minutes
Indian government introduces MSME scheme for working capital needs. You can obtain up to 1 crore loan on this scheme. The loan process time is up to 15 days. You can apply for an MSME loan within 59 minutes digitally.
Stand-Up India Scheme
This scheme was launched in 2016 headed by SIDBI. Focused on SC/ST entrepreneurs, women, and young entrepreneurs offering loans from ₹10 lakhs to ₹1 crore.
Startup India Initiative
At present more than 39,000 startups in India are available. Get instant funds for equipment purchases, machinery loans, or open new outlets.
3. Collateral-Free Term Loan
Young entrepreneurs can obtain collateral-free loans for new businesses. This is a term-based loan. It’s easy to take with minimal documents. Also, these loans are ideal for first-time business owners.
4. SIDBI Loan
Small Industries Development Bank of India offers loans between Rs 10 lakhs to 25 crores. This is one of the government business loan schemes.
SIDBI provides business loans for 10 years period. Borrow loans for product purchases, shop opening, buying equipment & more.
Also Read: How to start a business with Rs. 10,000
Eligibility Criteria for Business Loans
While eligibility criteria vary by lender and loan type, common requirements include for business loans:
- Age Limit: Borrower must be 21 to 60 years old.
- Credit Score: A decent credit score of 700+ or above is good.
- Bank Statement: Maintain good banking for quick approval.
- Documents: Identity proof, address proof, business registration, financial statements, and GST returns.
Comparison of Business Loan Interest Rates
| Banks / NBFCs | Interest Rate | Loan Amount | Repay Term | |
| Faircent | 14% p.a. to 21% p.a. | Rs.50,000 to Rs.10 lakh | 12 months to 36 months | Apply Now |
| InCred | 18% p.a. to 28% p.a. | Rs.30,000 to Rs.7.5 lakh | 12 months to 48 months | Apply Now |
| IIFL | 11.25% p.a. to 33.75% p.a. | Rs.50,000 to Rs.30 lakh | 12 months to 60 months | Apply Now |
| Chola Finance | 14% p.a. to 21% p.a. | Rs.30,000 to Rs.20 lakh | 12 months to 60 months | Apply Now |
| Poonawalla Fincorp | 15% p.a. to 28% p.a. | Up to Rs.50 lakh | Up to 3 years | Apply Now |
| FT Cash | 12% p.a. to 22% p.a. | Up to Rs.50 lakh | Up to 3 years | Apply Now |
| NeoGrowth | 19% p.a. to 24% p.a. | Up to Rs.75 lakh | Up to 7 years | Apply Now |
| FlexiLoans | 12% p.a. onwards | Up to Rs.1 crore | 1 year to 5 years | Apply Now |
| LendingKart | 12% p.a. to 28% p.a. | Up to Rs.1 crore | 12 months to 36 months | Apply Now |
| Ashv Finance | 18% p.a. to 21% p.a. | Up to Rs.40 lakh | 12 months to 36 months | Apply Now |
| Aditya Birla | 14% p.a. onward | Up to Rs.15 lakh | 12 months to 36 months | Apply Now |
| Tata Capital | 16.50% to 19% p.a. | Up to Rs.75 lakh | 12 months to 36 months | Apply Now |
Challenges Faced by Young Entrepreneurs in Availing Loans
Young entrepreneurs face many challenges to take a business loan:
Bad Credit History: Many entrepreneurs can’t obtain business loans because of bad credit scores.
Vintage Proof: New business owners don’t have vintage proof like Trade Licenses or income Tax files. The lender does not provide a loan without proper vintage proof.
Bank Statement: Maintaining a bank statement is one of the important parts of loan approval. Young entrepreneurs do not maintain bank statements.
Conclusion
Business loans for young entrepreneurs in India are good options for quick funds. Business owners can unlock the funds from government schemes, banks, and NBFC companies. Boost your business through various types of loans like term loans, cash credit loans, secured business loans, etc.