How to Get Start-Up Loans for a Small Business?

Running a small business is tough, and it gets tough when there is not enough capital to support the business. A start-up goes through a lot of trial and error stages before it starts operating smoothly. A small business needs enough capital to sustain the operation before it can break even. However, these small hurdles should not put a dent in your aspirations as a start-up owner. Start-up loans are a great way to finance your business in its early stages and give your idea a chance to materialize.

Financial institutions, like Fullerton India provide loans for start-ups at affordable rates of interest. Even the Government of India is pushing aggressively to provide capital to all the small business owners. Small businesses are critical for boosting

 the Indian economy, and hence, the government ensures that there is enough capital for their survival. In this article, we will discuss how you can get a start-up loan for your small business.

How to Get Start-Up Loans for a Small Business?

There are various ways of getting capital for your business. You can either choose one of the government schemes or take start-up loans directly from a financial institution. The following are some of the many ways to procure capital for your small business.

  1. Pradhan Mantri Mudra Yojana (PMMY)

This scheme was launched in 2015 and is specifically meant for small and medium-scale business owners. This scheme is headed by Micro Units Development and Refinance Agency (MUDRA) that offers loans to business owners engaged in manufacturing, trading, and service sector activities. The available loan amount ranges from INR 50,000 to INR 10,00,000, depending on your business’s size.

  1. Credit Guarantee Scheme (CGS)

This loan is available for both new and existing MSMEs. The businesses should be involved in service or manufacturing activities. This scheme excludes educational institutions, agriculture, retail trade, Self Help Groups (SHGs), etc. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is issuing funds for this loan, and up to INR 200 lakh can be availed of through this loan.

  1. Standup India

This scheme was launched in 2016 and is headed by India’s Small Industrial Development Financial institution (SIDBI). It offers loans to businesses involved in green energy, renewable energy, technology hardware, and non-renewable energy sectors. This scheme aims to support businesses that are working towards developing a sustainable and better environment.

  1. Line of Credit

A line of credit is a financial instrument to avail credit similar to a credit card. However, this credit can only be utilized for business purposes, unlike a credit card. It is one of the best ways to finance a new business as there is no obligation to pay interest on the loan amount for the first nine to fifteen months. It can give the business a much-required space to grow freely without getting constrained by a financial crisis.

  1. Equipment Financing

It is also one of the popular ways of getting finance for a small business. In this type of start-up loans, the equipment bought to start the business or the most crucial equipment to do the business is kept as collateral. It reduces the risk of default if an asset is held as collateral against the loan. Hence, the interest rate for this type of loan is much less than the other options. The applicants must have a reasonably high credit score to apply for this type of loan. A credit score is required to ensure the financial viability of the borrower. The main benefit of equipment financing is that the customer can use the equipment’s depreciation as a tax benefit for many years.

How to Apply for a Start-Up Loan?

The general application process for start-up loans comprises the following steps:

  1. Procuring Documents: Keep all the relevant business loan documents ready. You will be required to submit identification proof, proof of address, and proof of income. For businesses, documents related to the business will also be required.
  2. Approach a Financial Institution: Financial institutions, like Fullerton India, provide these schemes. You can discuss your demands, and they will help you choose the right scheme for you.
  3. Final Application: Once you have finalized the scheme, you can fill out the application form, and the financial institution will disburse the loan after due assessment.

Individuals can also apply for the MUDRA loan. However, to apply for Credit Guarantee Scheme, you will have to get your company registered.


Getting a loan for your start-up is very easy. With online applications and minimal documentation, the entire processing can get completed in a matter of days. Financial institutions offer great schemes for start-up loans repayable in easy in small installments. This extra capital can prove crucial for the survival of a small business, and it can be pivotal in taking the business to the next level.

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