Start-up loan: SBI explores ways to support startups with debt financing
Startups raise funds to run their business. Promoters are being forced to dilute their stake because debt financing is not available to them because their businesses are loss-making in the early years, a senior SBI official said.
“We find it difficult to finance startups through debt. Banking standards and rules only allow debt financing to those that are profitable. As initially, startups are loss-making, they must be funded on the basis of of the viability of the idea only. We are trying a solution, “Ashwini Kumar Tewari, managing director of the international bank (technology and subsidiaries) at the State Bank of India, said at the annual general meeting of the House on Wednesday. from Bengal.
He said the bank is doing equity financing through SBI Ventures and acknowledged the country needs to support the culture of startups.
The number of startups recognized by the government as part of the “Startup India” initiative, launched by Prime Minister Narendra Modi in January 2016, has multiplied by nearly 85. Their number increased from 504 in 2016 to 42,733 in 2020, according to data from the Ministry of Commerce.
Speaking of the economy, Tewari said despite a healthy recovery, the country’s growth will be lower than 2019 due to the pandemic. “The big companies are doing well. The problem lies in the SMEs and the small sector. The big companies are paying more back. Credit growth is driven by the retail trade,” he said.
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Vedantu, an edtech platform, became the 28th Indian startup unicorn of 2021, a year that saw unprecedented funding pouring into new age companies across the country.
Referring to gold loans, he said that they are not popular in India but there are many that indicate the pain normal people have suffered. “If gold lending goes up, it’s good for business but it’s also a sign of the powerlessness of normal people,” Tewari said.
The Bengal Chamber has launched its Daytime Ease of Doing Business app for industry stakeholders. Subscribers and non-members alike can now learn from and benefit from the chamber’s experts in various fields.