How to Get a Startup Business Loan in 5 Steps

Starting a business is exciting, but securing the right funding can be a challenge. A startup business loan can provide the capital needed to launch, grow, or sustain your business during its early stages. Whether you're looking for equipment financing, a working capital loan, or a line of credit, understanding how to navigate the loan process is crucial.

India has rapidly become one of the most attractive markets for startups, ranking among the top 20 globally. With over 100 unicorn-status startups in the country, the entrepreneurial landscape continues to thrive, and more businesses are seeking the right funding options to scale.

In this guide, we’ll walk you through five essential steps to getting a startup business loan, ensuring you find the right funding option for your business needs.

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What Is a Startup Business Loan?

A startup business loan is a financing option specifically designed to help new businesses secure the capital they need to launch and grow. Unlike traditional business loans that often require an extensive financial history, startup loans cater to entrepreneurs who may not yet have established revenue streams or creditworthiness.

These loans can be used for various business needs, including:

• Initial setup costs – Registering the business, leasing office space, purchasing equipment.
• Working capital – Covering day-to-day operational expenses.
• Inventory purchases – Stocking up on products or raw materials.

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Guide to Securing Startup Business Loan in 5 Steps

1. Decide What Type of Business Loan You Need

The right startup business loan depends on how much funding you need, how quickly you need it, and your repayment ability. Here are the most common loan types for startups:

• Term Loans

Term loans provide a lump sum of cash that can be used for various business expenses, such as payroll, marketing, or expansion. These loans have fixed repayment terms and are paid back in monthly installments. They are best for businesses that need structured, long-term financing.

Must Read: Short-Term vs Long-Term Loans: Benefits and Differences

• Equipment Financing

Equipment financing is used to purchase or upgrade essential business equipment. The equipment itself serves as collateral, which reduces the lender’s risk. This type of financing is particularly useful for startups that need machinery, vehicles, or technology to operate efficiently.

• Working Capital Loans

A working capital loan provides short-term funds to cover day-to-day business expenses such as payroll, rent, or inventory purchases, ensuring smooth business operations without disrupting cash flow.

• Revenue Based Financing

Revenue-based financing is a flexible funding option where a lender provides capital based on a percentage of your future revenue. This means repayment amounts are tied to your sales performance, making it easier for startups to manage cash flow.

Recur Club offers funding for startups with a proven revenue model. Businesses with a minimum of ₹5 Crores in annual revenue can access funds up to ₹10 Crores, with repayments directly linked to monthly revenue, offering an easier path for high-growth companies to scale without financial pressure. 

Apply here!

• Invoice Financing

Invoice financing helps businesses access quick cash by using unpaid invoices as collateral. Lenders advance a percentage of the invoice value, allowing startups to maintain cash flow while waiting for customers to settle their payments. This is a good option for businesses that experience delayed payments from clients.

Also Read: Understanding Accounts Receivable Financing: Definition and Structure

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2. Determine Your Eligibility

Each lender has specific business loan requirements, but most assess common factors before approving a startup business loan application.

• Credit Score – A minimum score of 670 is preferred, though some lenders may accept lower scores based on the loan type. 
• Business Vintage – Most lenders require startups to be operational for at least one year to qualify for funding. Some alternative lenders may offer loans to newer businesses.
• Operational Runway – Startups should have at least three months of runway to ensure sustainability and repayment ability.

Collateral – Many lenders require business assets as collateral to reduce risk and secure better loan terms for borrowers.

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3. Estimate Your Required Funding

Before applying for a startup business loan, determine how much funding your business actually needs. To determine loan terms, lenders assess factors like credit score, revenue, and loan amount. However, the total loan cost matters just as much as the interest rate—fees like origination charges and early repayment penalties can significantly impact what you pay.

At Recur Club, startups can quickly estimate their potential funding amount in less than 60 seconds using our business funding calculator, helping you plan smarter.

Click here to estimate your funding now

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4. Compare Lenders

Different lenders offer startup business loans, each with unique benefits:

• Banks – Low rates, strict approval requirements.
• Credit Unions – Flexible terms, membership required.
• Online Lenders – Quick approvals, higher rates.
• Alternative Lenders – Ideal for startups with limited credit history.

Recur Club connects startups with 125+ lenders, including Tata Capital, HSBC, and Incred. Plus, our capital experts help you compare and secure the best debt financing offers.

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5. Apply for a Business Loan

Applying for a startup business loan is simple with Recur Club. Our streamlined process connects you with the best financing options in just a few steps:

• Step 1: Register – Sign up on Recur Club and create your account.
• Step 2: Share Financial Details – Link your GST, enter basic business details (CIN, PAN, GSTIN), and upload a 24-month bank statement, MIS, and audited financials.

Step 3: Access Funding – Within 48 hours, we provide a debt term sheet with the best offers. Compare options from multiple lenders and choose the one that suits your business needs.

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Benefits of Securing a Startup Business Loan

• Immediate capital: A startup business loan provides quick access to funds for essential expenses.
• Simplified Process – Applying for a startup business loan is straightforward. Banks and alternative lenders have clear criteria, making it easier to secure capital.
• Maintain Ownership – Business loans allow entrepreneurs to retain full control of their company. 
• Build Business Credit – Timely repayment of a business loan strengthens the company’s credit score, making it easier to qualify for more extensive funding options in the future at better interest rates.

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Conclusion

A startup business loan is a reliable way to secure funding without giving up equity. By selecting the right loan type, meeting eligibility requirements, and comparing lenders, startups can access capital to fuel growth while managing costs effectively.

At Recur Club, we streamline the funding process by offering startups access to over 125+ lenders with tailored loan options. Our fast, data-driven approach ensures businesses receive the best financing offers within 48 hours. 

With over ₹1000 Crore funded in capital, we provide both secured and unsecured financing options, offering businesses the flexibility they need to thrive without giving up equity or ownership.

Apply now and find the right funding for your startup!