I would like to know the Islamic teachings on taking loan for starting a business, in which the total required amount is taken as loan. (Of course the loan will be from either friends, relatives or from Islamic financial institutions). I have heard in some Islamic lecture that, if someone is starting a business or such with the total amount as loan there wouldn't be "Barkath".

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.

It is permissible for a person to take a loan to start some business or for other lawful purposes.

On the other hand, there is no foundation for what some people say that whoever starts his trade with loans; no blessing will be bestowed on that business. In fact, if the person limits his business (purchasing/selling) to that which is lawful and he intends to return the loans to their creditors and gives the Zakat of his wealth as soon as it reaches the Nisaab and becomes due, then if he does all this, Allah bestows blessings on his business.

However, the loan should be a good loan, i.e. without interest otherwise it is Riba (interest and/or usury) and it is forbidden.

You should also have the firm intention to pay these loans back as soon as you become able to do so. The Prophet said: "Whoever takes people's money with the intention of repaying it, Allah will repay it on his behalf, and whoever takes people's money with the intention of spoiling it, then Allah will spoil him.” [Al-Bukhari]

Allaah Knows best.