Starting a new business requires not only passion and innovation but also strong financial support. Many entrepreneurs in India face the challenge of raising funds to fuel their startup journey. While venture capital and angel investors are popular, business loans from banks remain one of the most accessible and secure ways to arrange working capital.
In this guide, we will cover the top banks offering startup business loans in India, their features, eligibility criteria, interest rates, and tips for choosing the right financing partner.
Why Do Startups Need Business Loans?
A startup often requires funds for:
- Working capital to manage day-to-day expenses.
- Purchase of equipment or machinery for production.
- Expansion into new markets or scaling operations.
- Hiring employees and managing payroll.
- Marketing and branding to increase visibility.
Since most startups don’t have a long credit history, banks provide customized startup business loans under schemes supported by the government and RBI.
Key Features of Startup Business Loans in India
| Feature | Details |
|---|---|
| Loan Amount | Ranges from ₹50,000 to ₹5 crore depending on bank & borrower profile |
| Interest Rate | Typically 8.5% – 18% p.a. |
| Tenure | 1 – 7 years (some extend to 10 years) |
| Collateral | May be secured or unsecured (depending on loan type) |
| Processing Time | 7 – 30 working days |
| Government Support | Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Mudra Yojana, Stand-Up India |
Top Banks for Startup Business Loans in India (2025)
Below is a detailed overview of the best banks that provide startup loans in India, including their loan products, benefits, and interest rates.
1. State Bank of India (SBI)
SBI is India’s largest public-sector bank and a popular choice among startups. It offers multiple business loan products tailored for small and medium enterprises (SMEs).
Key Features:
- Loan amount: Up to ₹5 crore.
- Interest rates: Starting from 9.25% p.a.
- Tenure: Up to 7 years.
- Special schemes under CGTMSE for collateral-free loans.
Popular Products:
- SBI SME Smart Score Loan
- SBI Asset-Backed Loan
- SBI Working Capital Loan
2. HDFC Bank
HDFC Bank is well known for its unsecured business loans and quick approval process, making it a great choice for startups.
Key Features:
- Loan amount: ₹50,000 to ₹50 lakh (unsecured).
- Interest rates: 11% – 18% p.a.
- Tenure: Up to 4 years.
- Minimal paperwork and fast disbursal.
Best For: Startups looking for quick funds without collateral.
3. ICICI Bank
ICICI Bank offers a wide range of SME-focused loans and has dedicated programs for startups.
Key Features:
- Loan amount: ₹5 lakh to ₹2 crore.
- Interest rate: 10% – 16% p.a.
- Flexible repayment options.
- Pre-approved overdraft facilities for existing current account holders.
Special Schemes:
- Collateral-free business loans under CGTMSE.
- Term loans for expansion and equipment purchase.
4. Axis Bank
Axis Bank provides customized loans for entrepreneurs, including working capital loans and term loans.
Key Features:
- Loan amount: ₹50,000 to ₹1 crore.
- Interest rate: 10.75% onwards.
- Tenure: Up to 5 years.
- Quick loan processing for startups with good banking history.
Popular Products:
- SME Loans
- Collateral-free loans for women entrepreneurs under Stand-Up India scheme
5. Punjab National Bank (PNB)
PNB, a leading public-sector bank, offers various government-backed startup funding schemes.
Key Features:
- Loan amount: ₹50,000 to ₹5 crore.
- Interest rates: Competitive, starting at 9% p.a.
- Tenure: Up to 7 years.
- Special loans under PNB Startup Financing Scheme.
Best For: Startups looking for low-interest and collateral-free loans under government initiatives.
6. Bank of Baroda (BoB)
Bank of Baroda actively supports startups with its MSME loan schemes.
Key Features:
- Loan amount: ₹50,000 to ₹2 crore.
- Interest rates: 9% – 16% p.a.
- Tenure: Up to 7 years.
- Loans available under Mudra Yojana for micro businesses.
USP: Flexible collateral requirements and wide branch network.
7. Kotak Mahindra Bank
Kotak Mahindra Bank provides SME business loans with flexible repayment plans, especially for tech-driven startups.
Key Features:
- Loan amount: ₹3 lakh to ₹75 lakh.
- Interest rates: 11% – 18% p.a.
- Tenure: Up to 5 years.
- Unsecured loans available.
Best For: Startups in urban areas with limited collateral.
Government Schemes Supporting Startup Loans
Several government initiatives make it easier for startups to access funding through banks:
| Scheme | Details |
|---|---|
| CGTMSE | Provides collateral-free loans up to ₹2 crore for MSMEs |
| MUDRA Yojana | Loans up to ₹10 lakh for micro and small businesses |
| Stand-Up India | Loans for women and SC/ST entrepreneurs |
| Startup India Initiative | Offers tax benefits and funding support |
These schemes are often linked with public-sector banks like SBI, PNB, and Bank of Baroda.
Comparison Table: Top Banks for Startup Business Loans
| Bank | Loan Amount | Interest Rate | Tenure | Collateral |
|---|---|---|---|---|
| SBI | Up to ₹5 crore | From 9.25% | Up to 7 years | Required (some schemes collateral-free) |
| HDFC Bank | ₹50,000 – ₹50 lakh | 11% – 18% | Up to 4 years | Not required (for unsecured loans) |
| ICICI Bank | ₹5 lakh – ₹2 crore | 10% – 16% | Flexible | Collateral-free options |
| Axis Bank | ₹50,000 – ₹1 crore | From 10.75% | Up to 5 years | Optional |
| PNB | ₹50,000 – ₹5 crore | From 9% | Up to 7 years | Collateral-free under govt schemes |
| Bank of Baroda | ₹50,000 – ₹2 crore | 9% – 16% | Up to 7 years | Flexible |
| Kotak Mahindra | ₹3 lakh – ₹75 lakh | 11% – 18% | Up to 5 years | Not required (for unsecured loans) |
Eligibility Criteria for Startup Loans
Though each bank has specific requirements, common eligibility conditions include:
- Age of applicant: 21 to 65 years.
- Business vintage: 6 months to 3 years (depending on bank).
- Credit score: Minimum 650+ preferred.
- Valid business registration (GST, MSME, or Startup India recognition).
- Income tax returns of the business (if applicable).
Documents Required
- PAN Card and Aadhaar Card (Promoter/Business).
- Business registration certificate.
- Address proof of business.
- Bank statements (6–12 months).
- Income tax returns (if available).
- Project report or business plan (for new startups).
Tips to Choose the Right Bank for Your Startup
- Compare interest rates and processing fees across multiple banks.
- Opt for banks offering collateral-free loans if you lack assets.
- Choose a bank with strong digital banking support for faster transactions.
- Evaluate repayment flexibility and moratorium options.
- Leverage government schemes to reduce financial burden.
Conclusion
Securing the right financing partner can make or break a startup. Fortunately, several banks in India—such as SBI, HDFC, ICICI, Axis, PNB, Bank of Baroda, and Kotak Mahindra Bank—offer attractive business loans tailored for startups.
By understanding their loan products, interest rates, and eligibility requirements, entrepreneurs can make an informed decision. Additionally, government-backed schemes like MUDRA, CGTMSE, and Stand-Up India further enhance access to funding.
If you are a budding entrepreneur, carefully compare loan options, prepare a strong business plan, and choose a bank that aligns with your long-term growth vision.