Overview

Uttar Pradesh is home to the largest number of people in India, with a growing population of 232,072,879 and a large workforce. The state has the largest consumer population with growing per capita income. The GDP of UP is around 20.48 trillion rupees. Sugar mills, agro-based and textile industries employ a large number of people.

Business Opportunity & Landscape

Sitting at the crossroads of multiple industries under operation grounds that make the backbone of India’s largest revenue streams, Uttar Pradesh is a state with the highest gross domestic product contribution. Let us understand what makes Uttar Pradesh capable of being your next business location and how to leverage it with the right access to capital and loans.

Wondering what sorts of business opportunities knock in Uttar Pradesh, here are some of them that you can leverage with business loans in Uttar Pradesh.

Uttar Pradesh shares its international border with Nepal in the North, and cities like Ghaziabad and Noida are part of the NCR region.

Cities like Lucknow, Kanpur, Ghaziabad, Noida, and Greater Noida have existing metro rail networks; Agra metro is on completion and plans to expand metro rails in cities like Gorakhpur, Varanasi, Meerut, Jhansi, Prayagraj and Meerut are under discussion.

In addition, Uttar Pradesh, also termed the food basket of India, has rich agricultural lands blessed with rivers like Ganges, Yamuna, Gomti, Rapti, and Saryu. Hence, the fertiliser and pesticide industry is one of the leading industries in the state.

Uttar Pradesh is home to the largest number of people in India, with a growing population of 232,072,879 and a large workforce. The state has the largest consumer population with growing per capita income. The GDP of UP  is around 20.48 trillion rupees. Sugar mills, agro-based and textile industries employ a large number of people.

Moradabad is famous as Brass City, Meerut is famous for its stationary and sports items, Agra and Kanpur are famous as leather cities, addition, Kanpur is famous for other industrial facilities as well, Kannauj is famous for the perfume industry, Lucknow for Lucknawi Chikan, Varanasi for Banarsi silk and NCR cities for IT industries and electronics.

From a tourism perspective, Uttar Pradesh is part of the Tri junction, which comprises Delhi, Agra and Jaipur. In addition, a large part of the Buddhism and Ramayana circuit runs in Uttar Pradesh.

Regarding commercial connectivity, Uttar Pradesh is connected through Western and Eastern dedicated freight corridors. The state also has the largest no. of expressways in India.

The UP Investors Summit 2018 raised investments totalling more than Rs. 4.28 lakh in a variety of  industries, including renewable energy  (16.8%), Infrastructure (15.4%), power (14.7%), IT & electronics (10.2%), tourism (10.1%), and others. And the state will be organising a ‘Global Investment Summit’ in 2023 with a target to raise investments of Rs10 lakh crore.

Why do you need a business loan?

A business loan is a credit line used by commercial entities to

• Expand business
• Cover working capital needs
• Maintain cash flow
• Stock inventories
• Hire specialists,
• Building Credit Score
• Commercial requirements

for Business owners, self-employed professionals, MSMEs, and other business entities can all apply for business loans.

Financial institutions like Banks, NBFCs and MFIs provide secured and unsecured business loans under various loan schemes like working capital loans, term loans, overdrafts, cash credits, LOCs, bill discounts, equipment financing, loans under government programmes, and loans with bank guarantees.

The loan credit and repayment depend on the company’s need, the applicant’s CIBIL score and the loan scheme.

Reasons

Uttar Pradesh is a tech hub and home to various service sector MNCs, IT solutions companies, and startups. In addition, Noida is a growing focal point of the semiconductor industry.

Skilled Labour Force:

The state’s extensive professional pool is the ideal destination for skill-based industries. The state boasts 57 universities and ranks 3rd in the total no. of colleges, 3rd in total no. of B-Schools and 4th in total no. of engineering colleges in India.

Infrastructure matching global standards:

Uttar Pradesh has the highest number of expressways, with 48 national highways, 9 operational and 9 proposed airports with international connectivity, especially to Gulf

nations and the largest railway network in the country, accounting for 8,800km, which is vital for SEZ.

Ease of Doing Business and Fiscal Incentives:

The state, through its policies, offers subsidies, fiscal incentives and assistance to secondary and service sector businesses. And tailored policies for the IT and biotech sectors.

Food Basket of India:

Uttar Pradesh ranks 1st in India’s food grain production, accounting for 20% of total food production and the 2nd largest vegetable producer. Also, the state ranks 1st in mango, potato and dairy production and 2nd largest sugarcane producer.

Read More: Business Loans and Top 14 Types of Business Loans

Number of MSMEs

Uttar Pradesh ranks 3rd in India’s micro, medium and small industrial sectors.

Key Highlights of UP Government Policies

• The government is assisting in boosting export through an export promotion
• UP Start Policy of 2020 aims to incentivise early startups and build
• “Udyog Bandhu” has been set up for a single window

Best Business loans

Commercial loans are one of the best ways to finance your business. Following are the various types of business loans available in the state:

Working Capital Loan

A working capital loan is obtained to finance a business’s daily requirements, such as paying employees’ paychecks, because not all businesses see consistent annual revenue; hence, they need working capital flow to maintain the workflow. This loan is not utilised to purchase long-term assets.

Term Loan

These short-term loans have fixed interest rates and particular borrowing lengths of 84 months. These loans are given to established businesses to aid in capital expenditure expansion. Term loans come with flexible repayment terms and minimal documentation.

Equipment Loan

An equipment loan is obtained to acquire business-related equipment, which can be any physical asset or property. Both SMEs and MSMEs are eligible for an equipment loan. Credit amount, Repayment tenure, and the interest rate depend from bank to bank.

Micro Finance Scheme (MFS)

The Union Government has started a microfinance programme and partnered with the current SIDBI programme by paying for security deposits from MFIs and NGOs to obtain loans from SIDBI.

Small business owners and entrepreneurs in undeveloped regions of India can receive loans, credit, insurance, access to savings accounts, and money transfers through microfinance.

Government Business Loans

PSB Loan in 59 minutes:

 This portal was launched in 2018 to provide online loans to MSMEs in 59 minutes. The platform is a strategic initiative of a SIBDI-led PSB consortium of 5 PSBs incubated under the aegis of the DFS (Department of Financial Services), Ministry of Finance.

Note: The In-principle approval time is a maximum of 59 minutes, given that all the documents are in proper formats. Subsequently, the loan amount will be disbursed to customers within 7 – 10 working days of loan sanction.

Pradhan Mantri MUDRA Yojana (PMMY):

 Pradhan Mantri Mudra Yojana is a scheme of the Government of India that allows small borrowers to borrow up to INR 100,000 from banks, MFIs and NBFCs for non-agricultural income-generating activities. In general, loans of up to INR 100,000 granted by banks to micro-enterprises are granted unsecured.

Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGFMSE)

Credit Guarantee Fund Trust for Micro and Small Enterprises is a new “Hybrid Security System” product allowing guarantee cover for the part of the loan amount not covered under collateral security. This credit facility is given to Industries that start their enterprises as startups.

National Small Industries Corporation (NSIC)

NSIC signed various MOUs with various public and private sector banks to provide loans to MSMEs. NSIC helps MSMEs avail credits or funds based on non-based limits from financial institutions. NSIC assists MSMEs in the documentation and follow-up with the bank.

Credit Linked Capital Subsidy Scheme (CLCSS)

This is a new subsidy programme that the Ministry of MSME introduced for Small and Medium-Sized Enterprises.

The Scheme provides upfront Capital Subsidies to SSI units, including small units, to upgrade technology and enhance production.

Read More: Equipment Finance or Machinery Business/SME Loan

Top 10 Banks & NBFCs

1.Kotak Mahindra Bank

For your business requirements, Kotak offers a variety of collateral-free, customised loans with flexible repayment options ranging from Rs. 3 lakhs to Rs. 75 lakhs.

Major Highlights:

Kotak’s requirements for business loan eligibility include:

• The candidate must have been in business for 3 years with an annual turnover of 40 lakhs.
• The company must have made money for at least a
• Applicant should be a sole proprietor, partnership, private limited company, trust, or LLP engaged in manufacturing, service, or
• The applicant must be between 25 to
• Processing fees: 2% of the loan or facility amount, at most (Plus GST)

2.AU Small Finance Bank

Secured business loans (against property) designed to meet your growth objectives are available to MSMEs and other business categories. The bank offers the maximum amount of financing based on the market value of your property to help you with working capital, expansion, equipment purchases, and infrastructure needs. Any small or medium-sized business, sole proprietorship, partnership, self-employed individual, or privately held corporation is eligible.

Major Highlights:

• The loan amount starts at 2 lakh.
• Fast loan approvals and hassle-free loan offers.

• Complete direction and complete transparency with the
• Simple and adaptable loan payback
• The higher loan amount is available for a longer
• Transfers of loans with top-ups.
• Customised loan options for any business need, regardless of profile, location, or
• Loan accessible to both registered and unregistered companies/entities.
• Loans are made available against rural and urban collateral security that local government authorities may or may not

3.Karnataka Bank

To aid in the expansion of your Business, the bank offers working capital financing, term loans, and infrastructure financing. In addition, the bank has business finance products that are both fund-based and non-fund-based and suitable for all industrial sectors, from funding your working capital to giving these types of finances to establish an industry.

Major Highlights:

• Any legal entity may be the borrower or
• Term loan up to 120
• Collateral security of the properties to be acquired must equal at least 60% of the exposure and include a guarantee or joint obligation from an appropriate third
• The maximum borrowing limit is 1500 lakh.
• Loans up to 100 lakh rupees are collateral-free. A maximum of 200 lakh rupees are eligible to be protected under the

4.J&K Bank Ltd.

State-owned J&K Bank provides a wide range of business loans to its clients around the country. The following provides information on the business loan choices provided by J&K Bank. Various types of business loans are provided by J&K Bank, such as Start-ups Finance schemes, Construction Equipment Finance, and Commercial Vehicle Finance.

Major Highlights:

• Interest rates starting at 25% p.a.
• Loan Type: Term Loan Loan
• Amount: 5 lakh rupees or 30 months’ net monthly income (whichever is lesser)
• Processing Fees: 1000 Rupees plus GST
• Repayment Period: 5 years maximum
• A third-party guarantee of a single ECS/RECS mandate is required for

5.South Indian Bank

One of the top private sector banks is South Indian Bank. The bank offers a variety of financial products, such as company loans, commercial vehicles and equipment loans, working capital financing, long-term financing, non-fund-based financing, supply chain financing, and domestic financing.

Major Highlights:

• Rate of Interest: 55% to 16.55% per annum.
• Age requirements: minimum age of 21 and maximum age of 65
• Loan Amount: 5 lakh minimum and Rs. 50 lakh maximum
• The processing fee equals 2% of the loan
• Minimum 12 months and maximum 48 months for repayment
• Minimum credit/CIBIL score of 650
• Pre-closure fees: 3% of the total amount owed on

Documents Needed to Apply for a Loan:

• PAN Card for Company, Firm, or Individual, together with Photo ID
• The current account’s last six months’ worth of bank statements
• The most recent ITR and the income computation, balance sheet, and Profit & loss statement for the prior 3

6.Bandhan Bank

For SMEs and big firms looking to expand their operations or launch new ones, Bandhan Bank offers SME term loans with interest rates starting at 7.50% p.a. The applicant’s profile and credit rating are considered while determining the interest rate. The loan amount depends on the bank’s internal constitution and the supporting documents.

Major Highlights:

• Interest: 50% per annum (Floating)
• Loan Amount: Following internal bank regulation
• Processing charge: 1% of the loan amount
• Payback Period: up to seven years, with a three-month moratorium
• Insurance: All funded assets must be protected by a bank
• Persons & Startups: SMEs, sole proprietorships, and partnership firms are eligible

Small Business Loan:

Interest Rate: 15% per annum to 50% per annum

• 1 lakh to Rs. 25 lakh as the loan amount

Processing Charge: 2% of the Loan Amount Stipulated

Duration of Repayment: Up to 4 Years

• No collateral or security is

7.UCO Bank

A government-owned commercial bank, UCO Bank, formerly United Commercial Bank, provides its clients with a selection of business credit programs. The interest rate for business and MSME loans supplied by UCO bank is 9.85% p.a. and higher. Additionally, UCO Bank offers Mudra loans, which begin at 8.85% p.a.

Major Highlights:

• UCO Bank provides Credit Schemes like UCO Trader, UCO Udyog Bandhu, UCO Vyapar Samridhi, Standup India,
• The interest rate for MUDRA Loans starts at 85% p.a.
• A 25 lakh rupee MSME Loan is available with an interest rate starting at 85% p.a.

The highest and minimum loan amounts that can be issued are as follows:

Within the Manufacturing industry: between 25 lakh and Rs. 5 crores

For the service sector: 10 lakh rupees and 2 crore rupees

• The loan repayment tenure ranges between 1 to 10
• Prepayment options are offered and are cost-free.

8.Corporation Bank

Use the Corporation Bank secured business loan to meet your business’ credit flow requirements. The bank offers loans up to 5 crores at a flexible interest rate. As market rates fluctuate throughout the loan term, the interest rate may also. A processing fee of 1% of the approved loan amount is assessed.

Major Highlights:

• Interest rates range from 10% to 50%.
• Amount of Loan: Up to 5 crores
• Tenure: A maximum of 7
• Processing charge: 1% of the loan amount
• Individuals, sole proprietorships, partnerships, HUFs, joint  stock  companies, and other entities involved in trade or Business are all
• The applicant must possess either a trade or business license or permit issued by a statutory authority or other recognised organisation or sales tax

9.Indian Overseas Bank

The bank offers a variety of low-interest business lending options to professionals and non-professionals who work for themselves. IOB business loans start with an 11.0% interest rate. The interest rate is subject to the sanctioned amount and the applicant’s employability.

Major Highlights:

• IOB provides Working Capital loans, Term loans, and PSB loans for
• Interest rates begin at 11%.
• Up to 3% of the loan is charged in processing

• The loan duration varies from 12 to 60
• 2,174 per lakh is the least EMI.
• There is no minimum loan The maximum amount could be Rs 1 cr. and can be exceeded depending on business needs.
• You can avail of no collateral loans upto 10 lakh.

Features of IOB Loans provided by the CGTMSE program:

• Maximum loan amount of 1 crore rupees
• Under the CGTMSE program, working capital and term loans are
• Loans are only available to the manufacturing and service
• Maximum guarantee coverage of 75% and up to 62.50 lakh

10.Punjab and Sind Bank

The primary emphasis of Punjab and Sind Bank is to offer their clients flexible business loans. Under the MSME sector, the bank gives business loans through the PSB Vyapar program.

Major Highlights:

• Rate of interest – Overdraft facilities From 45% p.a.
• Rate of Interest – Term Loan From 20% p.a.
• Rate of Interest – Working Capital From 70% p.a.
• The minimum Loan Amount that can be credited: is 5 lakh
• Loan amount maximum of 5 crores.
• Processing fees of up to 1% of the sanctioned loan amount and 5% for overdraft facilities are charged.

Payment Terms:

1. 10-year term loan
2. year working capital loan

Entities eligible for PSB loans are:

1. Contractors
2. Wholesale and retail traders
3. Startup Businesses
4. Independent professional MSMEs / manufacturers

Conditions for loan eligibility

These short-term loans have fixed interest rates and particular borrowing lengths of 84 months. These loans are given to established businesses to aid in capital expenditure expansion. Term loans come with flexible repayment terms and minimal documentation

Employability	Self-employed
Annual Turnover	Min. of 12 lakhs p.a.
Business Vintage	Min. 1-year
CIBIL Score	750 and higher
Nationality	Indian
Eligibility	Pvt. Ltd., MSMEs, Sole Proprietorships, individuals, retailers, traders etc.
Other	Ownership of a commercial or residential property

Documents required for a business loan

The documents depend on the bank’s needs. Some of the documents required by banks may include the following:

• Registration Certificate
• PAN card of the candidate or the company
• Government Photo id and address proof of the primary
• A list of directors and shareholders
• Bank statement from the previous six months
• Last 3 years’ account statements (audited)
• Balance sheet of the past 3 years, including profit-loss

Process to apply

• Visit the bank website and fill in the application
• Complete the KYC
• Documents will be accessed
• Application form will be verified
• Get your loan approved
• Amount will be credited in a click!

FAQ’s