Best Options to Get Funds for Your Small Business in India

by kriankita014

Starting a small business in India is no small feat. It takes commitment, time and money to launch a successful venture. You can fund your start-up or small business in India in several ways. A small business can be a sole proprietorship, partnership, corporation, or legal entity. Small businesses are the backbone of the economy. In India, small businesses make up more than 90 percent of all enterprises and employ nearly 80 percent of the country’s workforce. Small businesses are usually privately owned and operated, with a limited number of employees and relatively small revenue. Small businesses in India significantly contribute to the country’s Gross Domestic Product (GDP).

The Indian government has supported small businesses by startup business loans and loan for women and put in place various measures to help them grow and succeed. One such measure is the setting up of the Small Industries Development Bank of India (SIDBI), which provides financial assistance to small businesses. The government has also created several business incubators and accelerators to help small businesses access startup business loans, resources and mentorship. The government has undertaken several policy initiatives to make it easier for small businesses to obtain loans and other forms of financing. Despite the challenges, small businesses in India have been able to make a significant impact and contribute to the country’s economy.

Listed below are the best options to get funds for your Small Business in India

Bank Loan

If you’re looking for funding to start or grow your small business in India, you may want to consider a bank loan. Bank loans can provide the capital you need to get your business off the ground or expand your operations. Remember a few things when pursuing a bank loan or startup business loans for your small business:

  • You’ll need to have a strong business plan and demonstrate how you’ll use the funds from the loan to grow your business.
  • You’ll need good personal credit and collateral to secure startup business loans.
  • Be prepared to pay higher interest rates on a bank loan than you would for other types of financing.

Government Schemes

  • MUDRA: The Pradhan Mantri Micro Units Development and Refinance Agency Limited Yojana is a scheme that offers startup business loans or loan for women of up to Rs. 10 lakhs to small businesses.
  • NSIC: The National Small Industries Corporation provides financial assistance and support services to small businesses through various schemes.
  • PMEGP: The Prime Minister’s Employment Generation Program is a scheme that provides startup business loans for setting up new businesses or expanding existing ones.
  • RBI: The Reserve Bank of India’s Refinance Scheme for Small Scale Industries offers small businesses loans at lower interest rates.


NBFC stands for a non-banking financial company and refers to a class of financial institutions that provide banking services without meeting the legal definition of a bank. In India, NBFCs are regulated by the Reserve Bank of India (RBI). Many small businesses in India rely on NBFCs for funding. Some NBFCs specialize in lending to businesses startup business loans and may offer more flexible terms and conditions than traditional banks. To apply for startup business loans from an NBFC in India, you will typically need proof of ownership, financial statements, and a detailed business plan.

The NBFC will use this information to assess the creditworthiness of your business and determine the loan terms and interest rate. It’s important to shop around and compare offers from different NBFCs to find the one that best meets your needs. You should also be sure to carefully read and understand the terms and conditions of the loan before accepting it. Bajaj Finance is one of the largest NBFCs in India and offers a wide range of financial products and services, including startup business loans for small businesses.

Angel Investors

  • If you’re looking for funding for your startup business loans in India, you may want to consider working with angel investors. Angel investors invest their money in small businesses that they believe have the potential for high growth.
  • Working with an angel investor can be a great way to get the capital you need to start or grow your business. And, because they’re investing their own money, they’re typically more willing to take risks on young companies than traditional financial institutions like banks.
  • They will often want a significant amount of ownership in your company in exchange for their investment. This can be a problem if you’re uncomfortable giving up a large stake in your business. They may be more hands-on than other investors.

Important tips for applying for startup business loans in India

  • Prepare a solid business plan: A well-written and thorough business plan will demonstrate to lenders that you have a clear vision for your business and understand how the loan will help it succeed.
  • Have all necessary documents ready: Lenders typically require proof of business ownership, financial statements, and tax returns. Ensure you have these documents ready to provide to the lender to expedite the application process.
  • Shop around: Don’t just apply for startup business loans with the first lender you come across. Compare offers from multiple lenders, including banks, NBFCs, and online lenders, to find the one that offers the most favourable terms and interest rates.
  • Understand the terms and conditions: Carefully read and understand the loan terms, including the repayment schedule, business loan eligibility and any fees or penalties. Don’t be afraid to ask questions if there is anything you don’t understand.
  • Keep your credit score in check: A good credit score can make securing a loan easier and may result in more favorable terms. Check your credit score before applying and work to improve it if necessary.


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