Supporting India’s startup revolution, the State Bank of India (SBI) has introduced a dedicated Startup Financing Policy to help entrepreneurs access easy loans, working capital, and additional services. This policy is aligned with the Government of India’s Startup India mission and offers financial support to innovative businesses across MSME, agriculture, and allied sectors.
Whether you are building your first product, scaling an existing startup, or applying for venture-backed growth, SBI’s Startup Financing Policy provides a structured and transparent framework to fund your dreams.
Introduction – Why SBI Created a Startup Financing Policy
India is witnessing massive growth in entrepreneurship. To support this ecosystem, SBI introduced the Startup Finance Policy in 2021 with the aim to:
- Promote a culture of innovation
- Support the startup ecosystem
- Generate employment
- Boost socio-economic development
- Bring young entrepreneurs under formal banking
The policy was reviewed in 2024 to include new RBI and DPIIT guidelines, making it even more startup-friendly.
Background – Startup India, CGSS & Priority Sector Lending
In 2016, the Government of India launched the Startup India initiative. Later, DPIIT introduced the Credit Guarantee Scheme for Startups (CGSS), offering credit guarantee support up to ₹20 crore per borrower.
Based on updated Priority Sector Lending rules by RBI, SBI’s Board approved a dedicated startup financing framework in April 2021, with the latest changes introduced in April 2024.
Purpose of the Policy
The objective is to provide:
Financial assistance to DPIIT-recognized startups
Support for MSME, agriculture, and allied sectors
Flexible funding based on growth stages
The guidelines apply to all domestic SBI branches.
1. Eligibility Criteria for Startups
To qualify for SBI Startup Finance:
Allowed Types of Firms
- Private or Public Limited Company
- Registered Partnership Firm
- Limited Liability Partnership (LLP)
Mandatory DPIIT Recognition
Startups must be registered with DPIIT. State-level registrations are encouraged.
Age Limit
Up to 10 years from incorporation (subject to state policy limits).
Startup Attributes
Your business must show:
- Innovation or improvement
- Scalable model
- Potential for job creation or wealth generation
Turnover Limit
Not more than ₹100 crore in any financial year.
VC / PE / AIF Funding (Optional up to ₹25 crore loan)
If applying above ₹25 crore:
- Must have received at least 30% equity investment from SEBI-registered VC/PE/AIF.
Additional Requirements for Loans Up to ₹20 Crore
Must be covered under the Credit Guarantee Scheme for Startups (CGSS).
For Loans Above ₹20 Crore
- Startup must be beyond prototype/testing stage
- Must show commercial scalability
- Tangible asset creation is mandatory
- Should have received government, VC, PE, or AIF support
2. Purpose of the Loan
Loans may be used for:
- Working capital
- Purchase of raw materials
- Equipment & machinery
- Expansion and scaling
Loans above ₹5 crore require the startup to have received seed funding or VC/AIF investment.
3. Loan Amount Under Priority Sector Lending
Eligible startups can receive up to:
₹50 crore in Priority Sector Lending
Applicable to:
- MSME
- Agriculture (excluding harvesting)
- Allied services
Loans above ₹20 crore require mandatory tangible asset creation.
4. Assessment of Loan Limits
- Term Loans: Based on quotations/estimates & cash-flow visibility
- Working Capital: Cash budget / Nayak Committee / PBS method
- Non-Fund Based Limits: Need-based
Corporate loans are not permitted under this policy.
5. Financing Models
Fund-Based
- Cash Credit
- Term Loan (up to ₹50 crore)
Non-Fund-Based
- LC/BG (for working capital or capex)
Margins
- Loan up to ₹10 lakh → 0% margin
- Working Capital & Term Loan → Minimum 25% margin
Equity
VC/PE/State/Central investments may be treated as equity/quasi-equity.
6. Repayment & 7. Moratorium
Repayment
- Working Capital: 12-month validity
- Term Loan: Up to 84 months (including moratorium)
- No prepayment penalty
- Bullet payment allowed if supported by cash flow
Moratorium
Up to 24 months (case-to-case basis)
8. Security Requirements
- Hypothecation of assets
- CGSS/CGTMSE coverage where applicable
- Personal guarantee if not covered under guarantee schemes
- IP rights charge
- Promoter share pledge (optional)
Where fully covered under CGSS/CGTMSE → No collateral required
9. Guarantee Coverage – CGSS
CGSS covers loans up to ₹20 crore per startup.
All new startup loans must be registered under CGSS.
10. Circle-Level Screening Committee
SBI has formed a screening committee to:
- Evaluate VC/PE funds
- Identify eligible startups
- Shortlist branches to process startup loans
- Verify compliance & sector suitability
- Approve administrative clearance
11. Allocation of Corpus & Review
- Initial corpus: ₹500 crore
- Automatic increase to ₹750 crore if demand exceeds usage
- Half-yearly review of funded startups
12–15: Operational Guidelines
12. Stock Statements & Fees
- Stock/Cash-flow statements required periodically
- No processing fee, inspection fee, commitment charge
- FFR I & II mandatory for exposure above ₹10 crore
13. Inspection
- Quarterly for standard accounts
- Monthly if early signs of stress
14. Insurance
- Comprehensive insurance required
- Keyman Insurance may be considered
15. Interest Rate
Decided by respective Business Units (SME/Agri).
16. Concession for Women Entrepreneurs
Women-led startups (over 50% equity held by women) get:
0.50% (50 bps) Interest Concession
If equity share drops below 50%, concession is withdrawn.
17. CRA Model
Credit Risk Assessment will follow SBI’s Startup CRA Rating Model.
18. Products for Startups
BUs may design tailored products based on policy guidelines.
19. Additional Support
SBI may collaborate with:
- Funding agencies
- Government bodies
- Startup incubators
Best-startup awards and facilitation programs may be introduced.
20. Compliance Requirements
Startups must:
- Register charges with ROC
- Register with CERSAI
- Follow labour & environmental laws per DPIIT guidelines
21. Facilities Beyond Banking
SBI may also support startups with:
- Legal & accounting support
- Co-working spaces
- Mentorship through incubators
- Cloud services
- Enterprise support services
22. Focus Sectors (Examples)
SBI may give priority to startups in:
- Agriculture & Food Processing
- Renewable Energy
- AI, Analytics, Automation
- Robotics
- Aerospace & Defense
- IT & Software
- Healthcare, Biotech
- Media & Entertainment
- Security services
- Travel, Tourism, Transport
- Green Technology
…and more based on state policies.
23. Deviation Approval
For deviations in:
- Eligibility
- Moratorium
- Repayment
- Pricing
- Margin
Approval must be taken from respective sanctioning authorities.
Final Thoughts
SBI’s updated Startup Financing Policy is a major boost for Indian entrepreneurs. With government-backed credit guarantees, flexible funding, and support beyond banking, startups can now scale faster with trusted financial assistance from India’s largest bank.
If you’re a DPIIT-recognized startup and ready to grow, SBI’s Startup Financing Policy can be your gateway to success.
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