Many aspiring entrepreneurs have trouble getting the funds they need to start their businesses because they don’t qualify for bank loans and other financing options.
If you’re one of them, here are many different ways to get an Instant interest-free loan to start a new business in Pakistan and some of the pros and cons of each method.
Be sure to plan ahead before committing to any one option so that you can make the best decision for your business moving forward.
Here are 3 different ways to get an interest-free loan to start a new business in Pakistan.
Loan To Start A New Business In Pakistan | Online Loan To Start A New Business In Pakistan
Table of Contents
- Loan To Start A New Business In Pakistan | Online Loan To Start A New Business In Pakistan
- Government Loans For Small Business In Pakistan
- Government Business Loan Schemes | Prime Minister Loan Scheme
- Bank Loans | Personal Loan To Start A New Business In Pakistan
- Personal Loans From NGOs | NGO Loan For Business
- Interest-Free Loan In Pakistan FAQs
Government Loans For Small Business In Pakistan
Many people in Pakistan are eligible for interest-free loans from the government. If you’re running a small business and need to borrow up to PKR 1,000,000 for up to five years, you may be able to get this interest-free loan from the government.
This is beneficial because there are no additional fees or charges that come with it. The only downside is that getting this loan can take some time as the loan application process takes about three months to complete.
Interest rates on these loans depend on your credit score, which will determine whether you qualify for one of these loans or not.
Remember that if you don’t qualify for one of these loans, there are still other options available to help you get an interest-free loan in Pakistan!
Government Business Loan Schemes | Prime Minister Loan Scheme
There are two government schemes for interest-free loans for businesses: The Youth Business Loan and Prime Minister’s Interest-Free Loan Scheme.
The Youth Business Loan scheme is provided by the State Bank of Pakistan and is available to applicants between the ages of 21 and 40 with no prior business ownership experience.
The Prime Minister’s Interest-Free Loan Scheme is available to all Pakistani citizens who have no prior business ownership experience.
But are over 18 years old, and they can be used for any type of self-employment enterprise or small-scale industrial or agricultural activity.
The Prime Minister’s Interest-Free Loan Scheme has more generous terms than the other loans;
Its maximum amount is Rs. 2 million, it does not require collateral and there is no requirement that the borrower repays the loan within one year from the date of disbursement.
If you already have a business and would like to take out another interest-free loan under the Prime Minister’s Interest-Free Loan Scheme then you will need to show some existing equity in your existing business.
Bank Loans | Personal Loan To Start A New Business In Pakistan
The second way to get an interest-free business loan is from a bank. To get an interest-free business loan, you must show that you have a viable plan and that the bank can recoup its investment in your company’s success.
In Pakistan, banks make loans to new businesses in Pakistan with the intent of getting repaid through the profit generated by the company.
Once you have shown viability and secured a line of credit, banks will provide financing for operations and usually at competitive rates.
Some banks offer ‘Business Start up’ or ‘Loan Guarantee’ programs which allow someone with no credit history to borrow up to PKR 5,000,000 – 1,000,000 with very little documentation or collateral (things they could lose if they do not pay back the loan).
These types of loans typically have higher rates of interest than most bank loans because there is less risk involved but there are also benefits.
Most business owners use these types of business loans to make initial purchases such as purchasing inventory and supplies, equipment, or working capital.
Top Banks In Pakistan Which Give Interest-Free Loan
The top banks in Pakistan which give interest-free loans for business are Bank Alfalah, United Bank Limited, and Habib Bank.
Interest rates for business loans vary from bank to bank but are typically lower than for personal lines of credit.
Banks offer lines of credit that range from Rs. 5 million to Rs. 25 million with repayment schedules set at 12-36 months.
Interest rates for these lines of money can be as low as 6% per annum and are payable on the outstanding balance only.
All payments made during the course of the repayment schedule will go towards reducing the principal amount of your business loan.
Personal Loans From NGOs | NGO Loan For Business
The third way to obtain a loan is from NGO. Many NGOs offer interest-free loans to help people start businesses.
The loans are usually for small amounts, as the NGO wants to see you succeed and repay the loan.
NGOs often offer interest-free loans for start-up businesses that meet certain criteria, such as the type of business, number of employees, and similar factors.
In order to qualify for a loan from an NGO, you may need to provide information about yourself and your business.
One example of a well-known NGO is Akhuwat, which offers interest-free loans for start-ups with low-interest rates.
Akhuwat helps entrepreneurs access resources and create opportunities for a better future. They are focused on social entrepreneurship, sustainable agriculture, and renewable energy projects.
Akhuwat has partnered with the United Nations Development Programme (UNDP) to provide long-term technical assistance in achieving its goals.
Pros And Cons Of Getting A Business Loan
The government has set the maximum amount at Rs 250,000 which may be higher than what you need for your business idea and there is no limit on how many loans you can take out.
This means you could use it to grow your company or take out multiple loans if you’re looking for seed capital and then apply for more as your business grows.
You do not need collateral if you want to apply for a business loan via the program. If you already have a business, that’s great but if not they’ll help you come up with one.
If it doesn’t work out, no worries because all the loans are interest-free so even if you don’t pay them back they won’t make money off of your failure.
While getting funded by Pakistani banks might seem like it would offer better terms when compared to taking money from abroad.
But the terms actually vary widely depending on who is lending money and whether they’re a private bank or backed by international organizations such as ADB.
For example; ADB is based in Japan so their repayment terms will be much stricter than local banks’ willingness to work with entrepreneurs over time to grow their businesses and increase employment opportunities within Pakistan.
Interest-Free Loan In Pakistan FAQs
What are government schemes to get an interest-free loan in Pakistan?
Youth Business Loan and Prime Minister’s Interest-Free Loan Scheme give interest-free loans for businesses In Pakistan.
Can we get Business Loans from International Banks?
Yes, we can get business loans from International Banks like ADB, World Bank, and many more.
If you like this article, please share this article with others on Facebook, WhatsApp, or any other platform.
If you have any questions contact us (email) at Contact@personalloan.pk | Personalloan.email@example.com or leave us a comment, we would love to answer all of your queries. Thanks for reading!