5 Ways to Get a Small Business Loan For a New Business / Startup

If you are looking to begin a new business venture or to expand the existing business to new horizons, the biggest hurdle that you might face would be the finances. Even if entrepreneurs have some of the brightest ideas to kickstart the company, if they miss out on the funding option at the right time, they might lAose out on the opportunities to the competition. Startup capital or a business loan is a lifeline for the budding entrepreneurs to unlock the plethora of options before them and achieve their organizational objectives. Below are some of the ways by which a startup owner can fund his/her business and get desired results.

Small Business Loan For a New Business

Five ways by which you can fund your startup:

1. Small business loans through NBFCs

Compared to traditional lending institutions, NBFCs are known for their flexibility and faster processing. Most of the time, startup owners might not have an excellent credit history. In such situations, NBFCs go easy on entrepreneurs by providing multiple finance options based on the borrowers' requirement. However, the onus is on the small business owner to ensure a cleaner track record and have the necessary documentation for the processing of loans.

2. Small business loans through banks

Majority of banks do offer startup business loans to the budding entrepreneurs today. With the rise of startup culture, the government is encouraging both public and private banks to provide small business loans with lucrative benefits. Hence the borrowers should know their business loan eligibility by getting in touch with their potential financial partner. 

3. Crowdfunding

In crowdfunding, a business venture receives support from various individuals/investors through a series of small donations/pledges. The business agrees to offer a premium product or share of the company's equity in return. The money comes from online crowdfunding sites, where people can list their underdeveloped idea or product. The money is being contributed by interested individuals/investors using online payment methods to finance the concept or project.

4. Angel investments

The majority of Angel investors make either one-time or daily investments in startups. Their primary goal is to help entrepreneurs develop and grow their business. And they are pursuing convertible debt or ownership shares in the company, in return for their financial contributions. In the initial stage, a startup may undoubtedly face several challenges, but it is the founder's determination and enthusiasm which keeps this business going. It is often challenging to locate Angel investors and to persuade them to invest in your idea.

5. Venture capitalists

A certain amount of investment is required to start businesses with the potential to expand. Wealthy investors want to invest their finance with a long-term view of success in such enterprises. Such capital is called venture capital, and the investors venture capitalists. Angel investors and venture capital funds concentrate on the various life cycles of firms. The business angels fill the 'gap' between friends & family and venture capital. They usually invest in startups and early-stage companies, which often means they face a higher risk relative to venture capitalists. The latter have less interest in early-stage enterprises and prefer more mature enterprises.

Documents for availing business funding:

Although the documents may vary for each lender, some of the standard documentation for availing business loan funding would be:

  • Bank statements(last six to twelve months)

  • Evidence of business registration such as a certificate of business registration

  • Copy of PAN Card for the proprietor.

  • Copy of proprietor's Aadhar Card.

  • Copy of the Partnership Deed (if applicable).

  • Copy of the company PAN Card.


Business loan eligibility is quite dynamic, and hence the startup owner should do the necessary research before applying for one.

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