"Looking to fund your startup? Discover top business loan options tailored for new entrepreneurs in India. Get easy approvals, low interest rates & online access."
Published: 19 April 2025
Updated: 26 April 2025
Starting a business is a dream for many, but turning that dream into reality often begins with a major roadblock , funding. Especially in India, first-time entrepreneurs without prior credit history or collateral face difficulty in getting traditional business loans approved.
Here in this blog, we discuss the top business loan opportunities specifically for budding entrepreneurs.
The Hard Truth First:
As a first-time entrepreneur, you might know that banks and NBFCs prefer lending to established businesses or applicants with strong financials, proven revenue, or collateral. Unfortunately, most startups in the ideation or early stage don’t meet these criteria. So, if you’re expecting a direct loan from a bank without any business history, it’s highly unlikely.
But does that mean funding your dream is impossible? Absolutely not.
1. Stand-Up India: For SC/ST and women entrepreneurs
2. MUDRA Loan: For micro-businesses (non-collateral)If your startup is DPIIT-recognized, you get access to a host of schemes including funding, mentorship, and tax exemptions.
Tip: Keep usage limited and ensure timely payments to build creditworthiness for future business loans.
As a fintech company ourselves, we understand how traditional lending models fail to support new entrepreneurs. That’s why we offer alternative credit evaluation models using:
No collateral. No revenue history. We believe in your idea + intent.
RBF allows you to repay loans as a percentage of revenue. No equity dilution, no fixed EMI.
Often the first believers in your vision.
While first-time entrepreneurs often face rejections due to lack of financial history or collateral, some banks and NBFCs do offer products tailored for new or small businesses with minimal documentation.
Note: Slightly tough for completely new startups, but worth checking if you have any business revenue
SIDBI also partners with fintechs and local banks for co-lending models, offering easier access.
Selecting the optimum loan depends on your business needs, financial health, and repayment capacity. Below are some recommendations:
Determine how much capital you need and for what purpose – working capital, equipment, or expansion. Avoid borrowing more than necessary to reduce the interest burden.
Some lenders require a minimum business age (e.g., 2 or 3 years) and a certain turnover. At My Mudra, we also cater to startups with less history. Ensure you have all documents ready, such as business registration, bank statements, and KYC.
Interest rates vary widely. While government loans may be less expensive, private lenders offer faster approvals. When comparing interest rates, consider processing fees, prepayment penalties, and late payment charges as well.
Longer tenures reduce EMIs but increase total interest paid. Use online EMI calculators (like My Mudra’s) to simulate different tenures and find a comfortable monthly repayment.
Opt for lenders offering a fully online application and disbursal to save time. Instant business loan online options are especially useful for urgent capital needs.
Before granting any loan, lenders typically assess:
Tip: Have a solid pitch deck, a lean business model, and a clear go-to-market strategy ready, even if you’re not applying for VC or equity funding.
At My Mudra, we understand that getting a business loan as a startup can be tough. That’s why we offer a smart alternative:
We don’t just lend—we empower you to grow with flexibility and financial support tailored to your journey.
If you're a first-time entrepreneur in India, getting a traditional business loan might be tough — but not impossible. With the right alternatives and a strong pitch, you can unlock funding that suits your startup stage. Stop waiting for the “perfect” loan. Start exploring smarter options. Because your idea deserves a fighting chance.
Also Read: Business Loans for Women Entrepreneurs
Yes, some lenders like Axis Bank offer collateral-free business loans to new entrepreneurs and startups.
Based on the lender, approvals can be given within minutes, and disbursement can be done within 24 to 48 hours.
Typically, you need proof of business registration, bank statements, KYC documents (PAN, Aadhaar), and income proof.
Yes, a credit score of over 700 improves your chances and promises you lower interest rates. However, some financiers provide loans even if you possess a modest credit score, but these tend to charge higher interest.
Many lenders allow prepayment after a certain period without charges. For example, Axis Bank waives prepayment penalties after one year of loan tenure.
Yes, often the tenure period of an unsecured business loan is a bit shorter than other loans.
