4 Ways To Get A Business Loan For New Food Business

Food provides one of the most attractive business opportunities for new investors. In this article, we are discussing how people can get a business loan for new food business in India. Eating out is an option exercised by people belonging to all classes of society. It is this trait that entrepreneurs want to cash in by opening a cafe, restaurant or any other eatery. However, an eating joint is a cash-intensive venture and it is essential to ensure a steady flow of funds to keep it running. Such enterprises need money to set up their establishment and build a base kitchen. They need funds to gather food stock and other inventory like crockery and cooking essentials. Initially, food-based commercial ventures must have sufficient working capital for meeting operational expenses. Finally, they will need funds to market and promote their business to the target audience. Let’s see how Indian entrepreneurs can get low-interest small business loans for a food-based enterprise.

1. Approach Banks For Loans

India has a robust banking sector with numerous government and private banks. These organizations provide two financing options for commercial ventures. The first is funding in which investors have to share their business plan along with a project report to establish the feasibility of their venture. All banks provide finance for small and medium enterprises (SMEs). A businessperson must engage a financial advisor to understand and compare the different SME schemes offered by all banks. The second option is to get a working capital loan. This will help in meeting the business expenses during one revenue generation cycle. This method will be suitable for people who possess the funds for creating the infrastructure of the new enterprise.

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2. Small Operators Can Approach Microfinance Companies

Many small operators who wish to start a roadside eatery or a regular joint on a limited scale, may not qualify for regular bank loans. Such entrepreneurs can approach microfinance companies to raise funds. These organizations cater specifically to those people who are unable to access traditional banking services for any reason. They provide loans to business owners who have limited requirements. Non-banking Financial Corporations (NBFCs) can also be approached to get a business loan for new food business.

3. Use Central Government’s PMMY Scheme

The central government runs the Pradhan Mantri Mudra Yojana (PMMY) under which entrepreneurs can get term and working capital loans of up to Rs 10 lakh from commercial, co-operative, and rural banks. MUDRA provides refinance support to all the specified banks who disburse loans under this scheme. Micro Finance Institutions (MFIs) can also provide support of up to Rs 1 lakh to people wishing to initiate microenterprise activities. Micro Units Development And Refinance Agency Ltd. (MUDRA) was set up by the union government to help out the country’s Non-corporate small business sector (NCSBS). It does not directly lend funds but its Mudramitra portal can be used by borrowers to submit loan applications to a preferred lending organization.

4. Get Loans Under CGTMSE Scheme

Food business owners who fall under the category of Micro and Small Enterprises (MSE) can get loans under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme. Entrepreneurs can get term and working capital loans which have been divided into three categories. In the first, people can borrow up to Rs 5 lakhs while in the second they can get a loan for up to Rs 50 lakhs. In the third category, they can get credit up to Rs 1 crore. The fund is disbursed by commercial, rural, and small finance banks as well as NBFCs.

Conclusion

These are some traditional methods which entrepreneurs can use to get a business loan for new food business in India. People with an innovative business idea related to the industry can approach business incubators or accelerators who are looking to invest in unique and potentially profitable ventures.

Author bio

Soniya Sharma has been working as a professional charter account at loanClix – Best home loan finance company in India. She loves to share excellent stuff about home equity loan, low-interest personal loans etc. You can also follow her on various social media platforms such as Twitter, Facebook.

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