You need more than just a good idea to start a new business. It takes money — for equipment, inventory, a workspace, or simply to cover your first few months of operations before revenue kicks in. If you're looking for a loan to start a new business but aren't sure where to begin, this guide walks you through what's available, what lenders actually look for, and how to put yourself in the best position to get funded.
What Types of New Business Loans Are Available in India?
If you're buying equipment or property, a secured loan typically offers lower rates. If you're covering early-stage expenses without assets to pledge, an unsecured or MUDRA loan is usually the more accessible starting point. There is no single type of loan for starting a new business. The right option depends on what you need the money for, whether you have assets to offer as security, and how much you want to borrow. Here's a clear breakdown:
*Figures are indicative. Actual loan amounts depend on your profile, the lender's assessment, and prevailing policies. Speak to a lender directly for confirmed figures.
Related reading: Learn more about the basic requirements to get a business loan → Shriram Business Loan
Government Loan Schemes for New Businesses in India
If you're an aspiring MSME entrepreneur, a few government-backed options can make a significant difference to your eligibility and cost of credit.
A note on application: For most MSME-facing schemes, Udyam registration serves as the essential first step. For startup-specific schemes, DPIIT recognition via the Startup India portal is required before any application can proceed. The JanSamarth portal additionally aggregates several credit-linked schemes into a single application interface, which is worth exploring for those weighing multiple options simultaneously.
What Lenders Actually Look for When You Apply for a New Business Loan
Here's where many first-time applicants get tripped up. A new business has no revenue history, no business bank statement, and no track record. So, what do lenders base their decision on?
Here's what typically matters:
Your CIBIL Score
Your personal CIBIL score — a 3-digit number ranging from 300 to 900 — is the single most evaluated factor when you have no business history. A healthy score gives you a much stronger chance of approval. If you're unsure where you stand, check your score through the CIBIL website before approaching a lender.
Your Business Plan
You don't need a 50-page document. But you do need to explain clearly what the loan is for, how the business will generate income, and how you plan to repay. A lender who cannot understand your business model cannot assess your risk. Keep it simple, specific, and honest.
Your KYC and Income Documents
Even for a completely new business, you'll need to provide identity and address proof (Aadhaar and PAN are standard), your Income Tax Returns (ITR) if applicable, and in some cases, a bank statement showing your savings or existing financial behaviour.
→ Calculate your Business Loan EMI before you apply — Shriram EMI Calculator
Your Pre-Application Readiness Checklist
Before you approach any lender for a loan to start your new business, run through this checklist. The more items you can tick off, the stronger your application.
- Your CIBIL score is healthy (check it before applying)
- You have a written business plan — even a one-page summary
- Your Aadhaar and PAN are updated and, in your name,
- You can show a bank statement covering the required months
- You have filed your most recent ITR (if applicable)
- You know exactly how much you need — and why
- You have a collateral asset ready if you're applying for a secured loan
- You've registered as an MSME on Udyam Registration Portal if eligible
→ Check Your Eligibility for Shriram Business Loan
What Interest Rates Should You Expect on a New Business Loan?
Rates vary significantly based on your credit profile, the type of loan, and whether you're offering security. As a reference point, Shriram Finance's Interest Rate Policy (Version V3.2025-26) shows the following for Business Loan/SME products:
- Secured Business Loan: Starts at 10%* p.a.
- Unsecured Business Loan: Starts at 12%* p.a.
These rates are annualised at monthly rests. For confirmed, current rates applicable to your profile, contact Shriram Finance directly.
→ Know more about Shriram Finance business loan interest rates
NBFCs vs Banks for a New Business Loan — Key Differences to Know
This is a practical question. Banks typically require longer business vintage before they'll consider a business loan application. An NBFC like Shriram Finance may have more flexibility for newer or early-stage applicants, particularly in Tier-2 and Tier-3 cities where access to formal credit is still growing.
The key differences come down to processing speed, documentation requirements, and how the lender evaluates new businesses. NBFCs are regulated by the Reserve Bank of India under the RBI Act and must follow responsible business conduct directions, so your rights as a borrower are protected regardless of where you apply.
How to Apply for a Business Loan with Shriram Finance?
If you're working on getting a loan to start a new business and want to understand what Shriram Finance can offer, the product page has current eligibility criteria and documentation requirements. You can also use the EMI calculator to plan your repayments before you apply.
Apply for Shriram Business Loan or Speak to a Shriram Finance advisor
Frequently Asked Questions
What types of loans are available for starting a new business?
You can access secured business loans (backed by an asset-like property or equipment), unsecured business loans (based on your credit profile), MUDRA loans under the Pradhan Mantri MUDRA Yojana for amounts up to ₹20 Lakh*, and project or term loans for longer-term capital needs. The right type depends on your specific situation, how much you need, and whether you have collateral available.
How is a startup business loan different from a small business loan?
The terms are often used interchangeably, but they mean different things in practice. A startup business loan is aimed at businesses in their earliest stage — before revenue — and relies heavily on your personal credit profile and business plan. A small business loan typically assumes some operating history, even if the business is small. When you apply, be upfront about how long your business has been running. Lenders will ask.
Can I get a business loan without existing business experience?
Yes, but your personal credit profile becomes the primary factor. Your CIBIL score, your ITR history (if any), your KYC documents, and the clarity of your business plan carry the most weight when you have no operational track record. Some lenders also consider the industry you're entering and whether your skills or professional background give you a credible claim on the business's success.
What is the minimum eligibility criteria for a startup loan?
Eligibility criteria vary by lender and product. As a general guide, many lenders may require applicants to fall within a typical adult age range, hold valid KYC documents, have a healthy CIBIL score, and be able to demonstrate the purpose of the loan. For confirmed eligibility criteria please contact the lender directly.
Do lenders offer loans to completely new businesses without revenue history?
Some do, particularly NBFCs and institutions that lend under government-backed schemes like MUDRA. For a business with no revenue history, the lender is essentially making a judgement on you as an individual — your credit behaviour, your financial discipline, and the plausibility of your business plan. It's harder than applying with an established track record, but it's not impossible. Starting with a smaller loan amount and repaying it well is one of the most effective ways to build the credit profile your next application will need.