Friends, starting a startup is a dream, but the lack of funding often deters it. Good news! In 2025, the government and banks have launched several schemes for startups, offering loans at low interest rates – starting from 8.50% to 12%. These loans are also collateral-free, meaning you don’t need to pledge your home or property.
I checked the latest TRAI and bank data, and today I’ll explain in a simple way what options are available, how to apply, and what the eligibility requirements are. Let’s get straight to the point – if your startup idea is ready, these loans can help you!
Why are low-interest loans important for startups?
Startups need money for working capital, machinery, or expansion. High-interest loans can make EMIs a burden, but low-interest schemes like MUDRA or Startup India can help your business grow quickly.
In 2025, banks like SBI and ICICI have reduced rates and discounts to benefit more startups. These loans also offer tax benefits, and repayment is flexible – from 3 to 15 years.
Top Low-Interest Loan Schemes in 2025
Here are some of the best options for startups. I’ve compared their rates, amounts, and features:
1. Mudra Loan (PMMY) – The government’s most popular
This is the Pradhan Mantri Mudra Yojana, which is for micro businesses. Loans are available in Shishu (up to ₹50,000), Kishor (₹5 lakh), and Tarun (₹10 lakh) categories.
Interest: Starting at 8.50% (at banks like SBI).
Collateral: Not required.
Who can take: New startups, women entrepreneurs, and a special quota for SC/ST.
2. Startup India Scheme – For Innovation
For DIPP-registered startups, this scheme offers tax exemptions and low-cost loans.
Interest: 9-11% (from partner banks).
Amount: ₹10 lakh to ₹25 crore.
Benefit: Mentorship and funding combined.
3. Stand-Up India – Women and SC/ST Startups
For women or SC/ST entrepreneurs, for greenfield projects.
Interest: From 10.30% (at PNB).
Amount: ₹10 lakh to ₹1 crore.
Collateral: CGTMSE cover up to 85%.
4. CGTMSE – Collateral-Free Guarantee
A guarantee scheme for any MSME startup, which provides security to banks.
Interest: Starting at 7.65% (RBI guidelines).
Amount: Up to ₹1 crore.
Tenure: 5-10 years.
5. Private Bank Offers
ICICI Bank: Industry-specific loans for startups, starting at 11%, quick approval.
Axis Bank: 11.25% interest, digital process, minimal documentation.
HDFC Bank: 12% for existing customers, up to ₹40 lakh.
Loan Schemes:-
| Name of Scheme | Interest Rate (2025) | Maximum Amount | Guarantee/Collateral | Eligibility |
|---|---|---|---|---|
| Currency Scheme | Starting at 8.50% | ₹10 Lakh | No | New Startups, Women |
| Startup India | 9-11% | ₹25 Crore | CGTMSE Cover | DIPP Registered |
| Stand-up India | 10.30% | ₹1 Crore | 85% Guarantee | Women/SC/ST |
| CGTMSE | 7.65% | ₹1 Crore | Guarantee Scheme | All MSME |
| ICICI Bank | 11% | ₹50 Lakh | Minimum Docs | All Startups |
Eligibility and Documents: How to Apply?
Eligibility is simple: Your startup should be less than 5 years old, turnover should be less than ₹25 crore, and approval from DIPP (for Startup India). Credit score should be 700+ so that the rate is low.
Documents:
- KYC: Aadhaar, PAN, Voter ID.
- Business plan and registration proof.
- Bank statements (6 months).
- ITR or financials (if established).
To apply: Visit the Startup India portal or apply through the bank’s app. The 59-minute loan scheme provides quick approval. You can also try low rates (less than 10%) from US-based NBFCs like ECL, but consider tax benefits.
Pros and Cons: Advantages and Cons
Pros:
- Low rates (7.65-11%) lower EMIs, helping business growth.
- Collateral-free options, easy for new entrepreneurs.
- Government guarantees help banks approve quickly.
- Interest on tax deductions, and long tenure (up to 15 years).
Cons:
- High-risk startups can get higher rates (up to 35%).
- Processing fees (1-2%) and documentation required.
- Less access in rural areas, more in urban areas.
- Poor credit history can lead to rejection.
Conclusion
Low-interest business loans are a great opportunity for Indian startups in 2025 – whether it’s a small loan from MUDRA or a large one from CGTMSE. These schemes not only provide money but also stabilize businesses.
If your idea is ready, check your credit score first and start on the Startup India portal. If you have any doubts, ask in the comments – I’ll guide you! Are you going to apply for any scheme?
