Startup business loans: how a new business borrows without a track record

What startup business loans are

Startup business loans are loans to a business that is new: less than a year or two of trading, or not yet trading at all. The word "startup" is used two ways in India. In everyday speech it means any new business, a bakery or a workshop. In government schemes it means a business recognised as a startup by DPIIT (the Department for Promotion of Industry and Internal Trade). The routes differ, so this page covers both.

The hard part is plain. A lender judges a loan on past repayment and cash flow, and a new business has neither. So lenders lean harder on the owner, the plan and government support. New-to-credit borrowers have also become a smaller share of new commercial loans: SIDBI and TransUnion CIBIL's MSME Pulse found their share of commercial entity originations fell from 52% in FY2023 to 42% in FY2026 (SIDBI).

Capnix is not a lender. The lender decides the amount, the rate and whether to lend.

Can a new business get a loan with less than one year of vintage?

Yes, through specific routes. Many lenders' general business loan products ask for a minimum trading history, but these routes are built for new businesses:

Government schemes that fund a new business

Mudra

Mudra lends through banks, NBFCs (non-banking finance companies) and microfinance institutions in four categories: Shishu up to ₹50,000, Kishor up to ₹5,00,000, Tarun up to ₹10,00,000, and Tarun Plus up to ₹20,00,000 (Mudra loan categories). Tarun Plus is only for borrowers who took and repaid an earlier Tarun loan (Mudra FAQ), so a first-time borrower realistically starts at Tarun or below. See the Mudra loan guide.

PMEGP

PMEGP gives a one-time subsidy on a bank loan for a new micro enterprise. The rules are strict: new projects only, capital expenditure required, and land is not counted in project cost (PMEGP portal).

New PMEGP units must register on Udyam before the subsidy is adjusted (PMEGP portal). See the PMEGP guide.

Credit Guarantee Scheme for Startups

For DPIIT-recognised startups, CGSS lets banks, NBFCs, all-India financial institutions and SEBI-registered funds lend without collateral, for working capital, term loans or venture debt (PIB press release, 09-May-2025). It is run by NCGTC (the National Credit Guarantee Trustee Company) and has operated since 01-Apr-2023 (PIB press release).

The guarantee goes to the lender, not to you. You approach a lender; the lender decides whether to use the cover.

Startup India Seed Fund and Fund of Funds: not loans

Two more Startup India schemes come up in searches for a "startupindia loan". Neither is a bank loan.

• Startup India Seed Fund Scheme. Grants up to ₹20,00,000 for proof of concept and up to ₹50,00,000 through convertible debentures or debt-linked instruments, given through selected incubators (PIB press release, 19-Apr-2021). The whole corpus has been committed, and the scheme was extended only to finish approved activities (PIB press release, 17-Apr-2026). Ask an incubator whether it still has funds.
• Startup India Fund of Funds 2.0. A corpus of ₹10,000,00,00,000 that invests in SEBI-registered alternative investment funds, which then invest equity in startups (PIB press release). You raise from those funds, not from the government.

Stand-Up India and the 2025 announcement

Stand-Up India, which funded first-time ventures by SC, ST and women entrepreneurs, ended in March 2025, and a revamp is being drafted (All India Radio, 16-Mar-2026). The Budget 2025-26 also announced a new term-loan scheme for 5,00,000 first-time women, SC and ST entrepreneurs (Union Budget speech). We found no launch by 02-Oct-2026. The Stand-Up India page tracks both.

What lenders look at when there is no track record

How much loan can a new business get?

It depends on the route and on what you bring. As a guide: Mudra Tarun goes up to ₹10,00,000 for a first-time borrower (Mudra loan categories, Mudra FAQ); a PMEGP project can cost up to ₹50,00,000 for manufacturing (PIB press release); and CGSS covers up to ₹20,00,00,000 for a recognised startup (PIB press release). The lender sizes the actual loan on your plan and contribution.

Can I start a business with no money of my own?

Rarely. Most routes expect some contribution: PMEGP asks for 5% to 10% of project cost (PMEGP guidelines compendium). Small Mudra Shishu loans need the least. If you have nothing to put in, start smaller and borrow again once you have repaid.

How to get a loan for a new business, step by step

1. Register on Udyam, free, on the official portal. The Udyam registration guide explains it.
2. Write a one-page plan: cost, income, repayment.
3. Check your own CIBIL report and fix errors.
4. Pick the route from the first table and gather its documents.
5. Apply to a lender that funds new businesses under that route. For CGTMSE-backed loans, the lender applies for the cover after sanction (CGTMSE).

Where Capnix fits

Capnix is free for the business. We read a new business's file the way a lender would, give you a Capnix score from 0 to 100, and, with your approval, take your loan requirement to lenders on our lender panel that fund new businesses. The lender decides. Start with the free readiness check. Women founders should also read business loans for women.