Business Loan
Business Loan for Startups: Funding Options in 2026
R
Rahul Kapoor
Startup Finance Advisor
Dec 12, 2026
11 min read
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Starting a business requires capital, and securing funding is one of the biggest challenges for entrepreneurs. This guide explores various business loan options available for startups in India in 2026.
Government Schemes for Startups
Startup India Seed Fund
Up to ₹50 lakhs for proof of concept and prototype development
PM Mudra Loan
Up to ₹10 lakhs without collateral for micro enterprises
Stand-Up India
₹10 lakh to ₹1 crore for SC/ST/Women entrepreneurs
CGTMSE Scheme
Collateral-free loans up to ₹2 crores with government guarantee
Private Lender Options
Term Loans
₹1 lakh to ₹50 lakhs, 12-60 months tenure, 14-24% interest
Working Capital Loans
For day-to-day operations, flexible repayment
Equipment Financing
Up to 100% financing for machinery and equipment
Invoice Financing
Get advance on unpaid invoices, 1-3 months tenure
Alternative Funding Sources
Angel Investors - Equity funding for early-stage startups
Venture Capital - Large funding for high-growth potential
Crowdfunding - Raise small amounts from many people
Incubators/Accelerators - Funding + mentorship programs
Eligibility for Startup Loans
Business should be registered (Pvt Ltd, LLP, Partnership)
Minimum 1-2 years in operation (for some schemes)
Good credit score of founders (700+)
Solid business plan with revenue projections
Collateral may be required for loans above ₹10 lakhs
Tips for Loan Approval
Prepare Strong Business Plan
Include market analysis, financial projections, and growth strategy
Maintain Good Credit
Both personal and business credit scores matter
Show Traction
Revenue, customers, or pilot projects increase approval chances
Keep Documents Ready
ITR, bank statements, business registration, GST returns
Conclusion
Multiple funding options exist for startups in India. Choose based on your business stage, funding requirement, and repayment capacity. Government schemes offer better terms for eligible startups, while private lenders provide faster processing.