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How to Secure a Micro loan for Start-up business?

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Micro loan for Start-up

Micro loan for start-up business

Want to be an entrepreneur like many others. Here is a good opportunity to realize your ambition.  Many entrepreneurs have plans, but they do not know how to take forward. Many fell in pursuit and a few crosses the line. If you have a proper plan with all covered, then there are many ways to secure a micro loan for start-up business. One way of funding your start up is to secure funds from venture capital firms and angel model. But, banks give the start ups a green signal and many are unaware of it. In fact, in India banks provide huge funds for starting a business.

Banks and financial institutions provide loan for the entire business process. As a startup company you can get the term loan, working capital, and asset based loans depending on your requirements. All you should provide to the banks is the right business plan. Banks and financial institutions give up to 70% loans against assets with a loan period of 7-15 years.

For a start up machineries are important and bank and financial institutions arrange term loans to buy the equipment.

Working Capital is Important

For starting a business working capital is important and banks and financial institutions lend working capital based on the stock inventory. Banks will analyze the working capital requirements of the startups and then lend working capital.

You can secure a micro loan without any collateral security. The CGSTME scheme provides a guideline to banks to extend loans up to Rs. One crore without any collateral security. You can also secure a loan under CGSTME scheme, provided you have the right business plan, experience to convince the bank with your technical report. Only a few have availed this type of loan.

Growth capital and Equity assistance

There are loans extended to startups by various financial institutions and banks. Many banks have exclusive branches and schemes to extend loans to the deserved. For example SIDBI, offer loan under ‘’ Growth capital and Equity assistance’’ for a budding entrepreneur. The loan can be used for brand building, marketing, setting up of a supply network, for getting technical assistance and for buying the software.

Detailed Project Report (DPR)

Before you approach the bank or any financial institutions for a loan, first get the complete details of the startups from A –Z. In the detailed project report (DPR) include all the details the banks look for extending a loan. The DPR is the way to secure a loan from the bank and based on your presentation. It is not easy to convince the banks and financial institutions to secure a loan in the first attempt. You require patience and guts to secure a loan for your startups.

As an entrepreneur, you can approach any bank or financial institutions in your area for a loan. Banks offer flexible interest rates and easy to approach unlike venture capital funds and angel funds. So, go with confidence to secure a micro loan for your startups.

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2 COMMENTS

  1. While traditional banks usually say a NO to lending loans for small businesses, microloans are one great alternative for financial requirements of small businesses. Due to the success of this alternative, there are now various sources of funding through micro loans. The basic process of applying for the loan is primarily the same. One can choose the best scheme as per ones needs.

  2. If banks are so easily approachable for micro loans why is it that only few have avail this? If the loan amount can be extended to upto 70% then why does the financial institutions and banks take a step back in providing them? The article seems to be just an eye wash cause it is never an easy task to convince a bank to provide loan.

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