Start-Up Loans
Start-Up (a new business entity) faces severe challenges in mobilization their early stage funding requirements. As in the case of start-up funding, there is general lack of instance of an existing proven business model. Therefore, the banks, financial institutions or NBFCs generally exercise a lot of caution in giving loans to the start-ups.
In spite of constant, the Banks particularly Public Sector Banks and monetary establishments square measure the key supply of funding for the startup. In Start-Up Funding state of affairs, the lenders primarily do hunt for adequate collateral (immovable properties) in giving a loan to the start-up because the risk proportion is extremely high in relevancy the Start-Up Funding. By retention of the collateral property they use it united of the necessary risk mitigation tools in disposition book to forestall. However, to market the Start-Up funding, the govt. as Bharat has introduced a variety of schemes for serving to a loan to the start-up :
List of Debt Schemes for promoting start-up venture
1. MUDRA
With a view to promote the small businesses in India, the Govt. of India has set up an agency viz Micro Units Development and Refinance Agency Ltd. [MUDRA] which facilitates the finance to the small finance either through refinance or offering credit guarantee on the loans sanctioned under the following three schemes by the commercial bank branches in India:
- Shishu: covering loans up to 50,000/-
- Kishor: covering loans above 50,000/- and up to 5 lakh
- Tarun: covering loans above 5 lakh and up to 10 lakh
The further details about the scheme can be found at https://www.mudra.org.in/
2 . Credit Guarantee Trust for Small and Medium Enterprise
One such scheme is Credit Guarantee Trust for Small and Medium Enterprise. The scheme allows a loan up to Rs. 2 Cr. without any collateral security. The link to the scheme is available at the following https://www.cgtmse.in/schemes.aspx.
Under the said scheme, the Govt. of India through a Guarantee Fund known as Credit Guarantee. Fund for Small and Medium Enterprise administered through its Nodal Agency viz SIDBI (Small Industrial Development Bank of India) offers the guarantee of the loan taken by the eligible borrowers. This guarantee offered by the trust can replace the requirement of obtaining additional collateral security from the eligible borrowers. The scheme is available for every section of the borrower in the manufacturing or service enterprise.
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3. Start-Up India
With a view to giving a push to the business bringing new technology and innovation, the Govt. of India has announced the START-UP policy. Any business enterprise fulfilling the eligibility criterion in business such as introduction of newer technology / innovation/ up-scaling opportunities in the business and promoting the cause of employment can get a host of benefits under the Start-Up India Scheme which allows income tax holiday, concession in Patent Filing, Self certification under the labour laws, easy winding up etc. Although there is no automatic criterion of funding to Start Up ventures, however, some bank such as SIDBI & Union Bank of India has set up their policy of funding to Start-Up Ventures. http://www.unionbankofindia.co.in/Union_Start-up.aspx
4. Stand-Up India Scheme
With a view to promoting the greenfield projects being set-up by Scheduled Caste Entrepreneur / Scheduled. Tribes and working woman, the Govt. of India has mandated every branch of a commercial bank to disburse at least 2 loans under the stand-up India scheme. The scheme covers the loan amount between Rs. 10 lacs to Rs. 100 lacs but not exceeding 75% of the total project cost. The loan covers both term loan and working capital requirements. The Govt. has prescribed an online method for application under Stand-Up India which facilitates the tracking of the application. The scheme covers both manufacturers as well as service sector enterprise. The further details about the scheme can be found at https://www.standupmitra.in/
5. Credit Guarantee Fund for Scheduled Caste Entrepreneur
The scheme is similar to the CGTSME Scheme as in Pt. (2). The difference between the same is that the scheme is only applicable to the Scheduled Caste borrowers. The scheme offers the credit guarantee on the loan amount availed by the scheduled caste borrowers from commercial banks in India up to a number of Rs. 5 Cr. The scheme is operated by Ministry of Social Justice as well as Govt. of India and is being administered by IFCI (Industrial Finance Corporation of India). The further details about the scheme can be found at https://www.ifciltd.com/?q=content/credit-guarantee-scheme-scheduled-caste