Bank Loan for Startup Business

Securing funds for a startup is one of the toughest challenges an entrepreneur's faces while starting a new business. With a plethora of funding options available, it is important for the Entrepreneur to understand the pros and cons of each funding methodology, estimate the value of funds required, the application of funds, projected financial position of the business including the returns generated and evolve a strategy - to approach and secure the required funds. With venture capital firms and angel investors enjoying plenty of coverage as a great source of funding for a startup, many Entrepreneurs are unaware that financial institutions and Banks are also an avenue of funding for startups. In fact, Banks are one of the largest funders of startups in India, providing funding to thousand of startups each year. In this article, we cover the types of funding available from banks as loans, along with a host of other questions surrounding bank loans for startup businesses in India.

Do banks provide loans for a startup business?

Yes, banks and financial institutions provide financial assistance for companies in all stages of the business lifecycle. Startup companies can avail of a host of term loans or working capital or asset-backed loans based on their requirements. Banks will lend even to a start if they are satisfied with the business model, projected returns from the business, the ability to pay back the loan (through business or otherwise), management experience and expertise, and other security provided.

Will banks provide loans for startups in novel areas?

For companies starting up in novel areas where the business model has not yet been established, banks will typically insist on higher collateral security coverage, typically with other sources or back-up sources of income. If the same can be provided, banks will lend to a startup with novel business models as well.

As a startup, can I get a