Every business, small or big, requires enough capital to get going. And ‘Yes!’ you can get a business loan with no initial capital or collateral. 

If you are aware of a few things, you can raise money for your business easily: 

  1. Opt for Government-sponsored schemes: The government launches financial assistance schemes for the MSME sector on a regular basis. These schemes give low-cost loans to aspiring entrepreneurs with no collateral. Some of such prominent schemes are – PMMY Mudra Yojana, Credit Linked Capital Subsidy Scheme, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Prime Minister's Employment Generation Programme (PMEGP). 
  2. Go for Business Line of Credit: This is a simple credit line given by your bank to meet immediate cash needs. This credit line does not require any down payment or collateral. This is purely based on the discretion of the bank according to your relationship with them. 
  3. Opt for Invoice Financing: Similar to Business Line of Credit, but dependent on your invoice receivables. You can pledge your unpaid invoices with the bank and they will lend you money based on your receivables. The amount they pay you will be a little less than the original invoice, which they consider as the charges for the loan. 
  4. Equipment Loans: Loans you get to purchase equipment or machinery do you require you to put in a down payment or collateral; the purchased equipment shall serve as the collateral for the loan. 

Key Takeaways: 

  • Business loans are an integral part of entrepreneurship
  • There are many business loans that are collateral-free
  • The Indian government has launched various initiatives to encourage the ‘Make In India’ objective, which gives low cost, collateral-free loans to budding entrepreneurs
  • Be ready with a solid business plan to prove the profitability and sustainability of your business to impress upon the banks about your repayment capacity