Here we outline how startup loans actually work in India, from term loan structures and eligibility to secured and unsecured options. It is so that founders and decision-makers can choose funding that aligns with their business stage and cash flow. This guide helps you clear the confusion, understand lenders’ expectations, and take practical steps towards securing funding for your startup’s growth with confidence.
Business Loans for startup in India
Securing adequate finance is essential for any business, particularly for new ventures. Startup business loans play a vital role in supporting these enterprises from their initial setup through operational phases, growth initiatives, and necessary upgrades. Therefore, understanding the available funding avenues is crucial for financial decision-makers in the startup ecosystem.
Furthermore, business-term loans are a fundamental financial tool for startups in India. These loans provide capital for specific business needs and are repaid over a defined period. While a down payment might be necessary in some cases, understanding the different types of startup business loans is key.
Meeting Capital Needs and Loan Classification
These term loans address one-time capital requirements, such as acquiring assets or managing working capital. They are broadly categorized based on their duration into short-term loans and long-term loans.
Discover the opportunity of working capital loans specifically designed for startups.
Types of Term Loan:
The main determinant is the specified period. A term loan is categorized as:
1. Short-Term Loan:
- Usually reimbursed within a maximum of 5 years.
2. Long Term Loans:
- The repayment duration for this loan goes beyond five years, which can prolong up to 30 years.
Term loans can be further described depending on the security necessity imposed by the lenders. Based on this model, a term loan can be further categorized as:
A. Secured
Some collateral security has to be presented to avail of a secured loan for startups. So, Most Banks and NBFC lenders seek suitable security for business loans.
B. Unsecured
These loans are granted without any collateral as security. Most of the Digital Platforms implementing business loans offer unsecured loans. It may be for amounts up to Rs. 5 Cr. However, such loans are usually short-term loans to be reimbursed in 2 years.
Term Loan Eligibility – Business Loan
- Age Criteria: The minimum age of the candidate should be 21 years at the time of loan request and the maximum 65 years at the period of loan maturity
- The applicant should be an Indian citizen
- The applicant should maintain a good credit score
- Applicants should sustain a regular source of income
Term Loan Examples related to Business Loan
1. Working Capital Loan
Several types of term loans cater to specific business needs. Working capital loans, usually short-term, help manage immediate cash flow and day-to-day expenses, with repayment typically within 12 months
2. Overdraft
OD or Overdraft is a different loan form in which the financial institution raises a credit limit, as necessary. The interest rate is repaid only on the amount used, not the specified withdrawal limit. The repayment security is as low as 1 month and can pass up to 12 months. Every year the limit has to be restored by the borrower from the lender.
3. Equipment Financing
Businesses can use this type of loan. And industries for financing equipment or vehicles used for several purposes like agriculture, farming, commercial transportation, construction, etc. The equipment finance loan amount shall range wheresoever between Rs. 1 lakh to Rs. 10 crores. The term loan interest rate depends on the applicant’s profile and kind of business.
Terkar Capital for Startup Business Loans
At Terkar Capital, we understand the financial needs of emerging businesses and provide tailored startup business loans in India. Headquartered in Pune with a corporate office in Mumbai and operations across major Indian cities, we offer expert guidance to help you navigate the loan selection process and choose the most suitable repayment structure for your venture. Sources and related content
