Since the Startup India campaign launched in 2015, the number of new Micro, Small, and Medium Enterprises (MSMEs) has increased. The program is based on an action plan aimed at encouraging startup loans. It has also boosted the number of startups, which will lead to greater job creation and contribute to the country’s economic progress.

What are startup business loans used for?

Purchasing inventory or equipment, working capital to fund payroll and everyday expenses, renovation and remodeling, and real estate acquisition are popular applications for availing business loans. The purpose of the startup loans will help you identify which sort of financing is ideal for your company.

What is necessary to get a small business loan?

Small business loans are determined by factors such as:

• Personal and business credit
• The firm’s age
• The company’s cash flow
• Existing debt obligations
• The industry in which the business operates 

The business loan eligibility for a small business lender will often require 3 things:

• That a company has been in service for one year
• It has a minimum credit score of 600
• It has financial documents that demonstrate its ability to service its loan obligations

Are financing institutions willing to lend to startups?

A financial institution’s decision to lend to a startup is based on many criteria, some of which include: 

• Capital: Lenders prefer to see business assets utilized to generate revenue, making loan payments.
• Collateral: You may be able to secure your loan with collateral such as equipment, personal assets, or a co-signer in some cases.
• Cash Flow: This is what some people refer to as capacity. But what this means is that the company has a track record of money flowing in.

Credit: Some people refer to this characteristic as “character,” which is linked to having a positive relationship with your lender.

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