Key Difference Between Start-up Loan and MSME Loan

startup loan

Whenever the term “startup” comes to the mind, most individuals think of a small organisation with a few employees. This gives rise to confusion between a small or medium-scale enterprise and a startup, even though both organisations have different characteristics. A business has to meet certain parameters to qualify as a startup or an MSME. Moreover, these organisations can opt for certain government schemes and avail financial assistance to expand their operations.

Nevertheless, different types of businesses have different forms of funding assistance, and the eligibility requirements may vary based upon the loan provider. Hence, before budding entrepreneurs opt for a startup loan for new business, it is imperative to know the differences between a startup loan and an MSME business loan.

Differences between MSME business loan and Startup loan 

Here are some of the main differences between a startup loan and an MSME business loan:

The objective of availing financial assistance

An MSME loan’s fundamental objective is to fulfil various financial requirements of a business. It includes the purchase of machinery, funding marketing expenses and more.

One of the primary objectives of a startup loan is to ensure that there is enough working capital to facilitate a smooth flow of day-to-day activities. Without sufficient working capital, a business will fail to meet its short-term obligations. Hence, it is crucial to learn how to ensure your business never runs out of working capital. Moreover, a startup loan can also facilitate the expansion of an organisation in the long run.

Financial institutions such as Bajaj Finserv offer affordable business credit of up to Rs.45 lakh. This significant sum can go a long way toward financing all types of business needs daughter force sex video.

Furthermore, the financial institution also extends lucrative pre-approved offers that streamline the application procedure of availing credit. These offers are valid on an extensive range of financial products like business loans, credit cards and personal loans. Check your pre-approved offer now by just entering your name and contact details.

Type of organisation

A startup loan for a new business assists new enterprises that conceive and implement a unique business idea. It involves teamwork and is purely based on innovation. Furthermore, it aims to fulfil the requirements of individuals in an efficient way.

MSME business loans cater to a conventional form of business which conducts operations solely to make a profit. An MSME business can range from a grocery shop to an enterprise engaged in the manufacture of leather products.

Nevertheless, it is imperative that a business owner knows how to build a successful manufacturing business so that the sanctioned loan amount is efficiently utilised.

Tenure and amount of loan

Business owners opting for a startup loan for a new business can avail a principal amount, which is significantly higher than an MSME business loan.

Furthermore, the tenure of the former is much longer than the latter. Hence, individuals opting for  an MSME lone have to pay back the loan amount much faster than entrepreneurs who choose to avail a startup business loan.

Eligibility criteria and documentation process

The eligibility criteria of a startup loan are comparatively more stringent than an MSME loan. For instance, the credit history of a business plays a crucial role while availing a startup business loan. Nevertheless, in most cases, the credit score does not play a vital role when availing an MSME loan.

Whether it is an MSME business loan or a startup loan for a new business, it’s imperative for business owners to compare various loan products before making a decision. They must always go for the option that is best suited for their needs so that they can produce the best results and maximise their profits.