Business Loan in India

Below are the mentioned key features which you should consider before applying for a business loan online:

• Loan amount: Up to Rs. 1 crore
• Tenure: Usually up to 5 years; some lenders may offer up to 7 years
• Interest rate: Starting from 13% p.a. At Paisabazaar.
• Processing fee: May vary across lenders. Usually up to 3% of the loan amount
• Collateral: May or may not be required
• CIBIL Score Required: 760+ (preferably)
• Types: Unsecured, secured, term loans, working capital loans, startup loans, etc.

Lenders offer various business loan schemes to suit the varying operational and sector/industry-specific requirements of businesses. Hence, before making a choice, prospective borrowers should understand these schemes, their cost, repayment structures, etc. and how they align with the financial and operational requirements of their businesses.

Unsecured Term Loans

MSMEs can avail collateral-free term loans to meet their short-term as well as long-term business needs, such as expansion of operations, technology upgradation and meeting cash flow requirements.

Secured Term Loans

Secured term loans are offered against collateral like immovable property, existing business assets, financial instruments, etc.

Working Capital Loans

Working capital loans are available to meet a company’s everyday financial requirements, such as payroll, rent, daily operations, seasonal financial needs, etc.

Unsecured Overdraft Business Loan

An unsecured overdraft business loan refers to an unsecured credit line wherein applicants can make withdrawals within a predetermined limit.

Secured Overdraft Business Loan

Existing customers can avail a secured overdraft business loan to finance their business operations and cash flows by mortgaging their properties, financial instruments, etc.

Professional Loan

Professional loans are offered to self-employed professionals to finance their various profession-related requirements.

Bill Discounting

Bill discounting allows businesses to raise finance by selling their invoices/receivables before their due dates to the lenders at a discount.

Equipment/Machinery Finance

Equipment finance allows businesses to finance their machinery/equipment purchases.

Purchase Financing

Lenders offer purchase financing loans to manufacturers, traders and service providers to pay for the raw materials and trading goods purchased from the suppliers.

Letter of Credit

A letter of credit is a payment guarantee issued by the lender that enables traders or exporters operating in international trade to minimise their credit risk.

POS (Point of Sale) Loans

POS loans are offered to merchants based on the POS swipes and repaid through future POS transactions.

Understanding the differences between secured and unsecured business loans can help enterprises make the right financial decisions. The table provided below helps compare both loan types and evaluate the most suitable option.

Small businesses can avail business loans under various government schemes to start or expand their businesses and provide employment to others. Some of the most important government loan schemes are discussed below:

PMMY (Pradhan Mantri Mudra Yojana)

The government enables non-corporate, non-farming, small and micro enterprises to avail business loans under the Pradhan Mantri Mudra Yojana (PMMY) through designated banks, NBFCs, MFIs and other financial institutions that can help these entities grow their businesses.

Enterprises can avail loans under PMMY in four designated categories:

• Shishu - Offered to enterprises requiring loans up to Rs. 50,000.
• Kishore - For enterprises needing loans in the range of Rs. 50,000 and Rs. 5 lakh.
• Tarun - Enterprises needing loans between Rs. 5 lakh and Rs. 10 lakh can apply under this category.
• Tarun Plus - Offered only to those who have repaid existing Tarun loans and are now applying for loans in the range of Rs. 10 lakh and Rs. 20 lakh.

PSB Loans in 59 Minutes

• PSB Loans in 59 Minutes is a SIDBI-backed digital lending platform that helps MSMEs apply for a business loan through a quick, automated loan approval process.
• One can get in-principle loan approval through an end-to-end digital process and minimal documentation.
• Loan offers up to Rs. 5 crore from multiple private and public sector banks are available on the PSB59 platform.
• GST-registered businesses, proprietary firms, partnerships, and companies seeking new or additional working capital or term loans can apply for it.

CGTMSE Scheme (Credit Guarantee Fund Trust for Micro and Small Enterprises)

• New and existing Micro and Small Enterprises (MSEs), including service-sector units, are eligible for credit.
• Applicants can apply for loans from banks and NBFCs without requiring traditional security or third-party guarantees.
• As CGTMSE provides collateral-free credit guarantees to lenders, a large portion of their credit risk (up to 75 - 85 percent) is covered.
• Borrowers can apply directly to participating lenders, who later initiate the guarantee cover request with CGTMSE after loan sanctioning.

SMILE (SIDBI Make in India Soft Loan Fund for MSMEs)

• SMILE is a SIDBI initiative under which MSMEs can apply for soft loans to support expansion and modernization with flexible terms.
• Applicants get soft loans with longer repayment periods, lower interest costs, and a moratorium to improve project viability.
• Small enterprises can apply for loans up to Rs. 25 lakh and eligible MSMEs can also apply for higher amounts based on project requirements.
• Applicants can apply through the SIDBI branch network or online portals by submitting relevant details for credit assessment.

PMEGP (Prime Minister’s Employment Generation Programme)

• PMEGP is a Government of India credit-linked subsidy programme that assists self-employed applicants in setting up manufacturing or service micro-enterprises.
• A subsidy of 15% to 35% is provided by the government to reduce the upfront financial burden.
• Any Indian citizen above 18 years with at least Class 8 education can apply for manufacturing and service projects.
• The application can be submitted online via the official PMEGP portal, which, upon scrutiny by District Level Task Forces, is forwarded to banks for sanction.

PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi)

• Aims to provide collateral-free working capital loans, interest subsidy, and digital transaction incentives to street vendors.
• Provides working capital loans in the following tranches:
  • 1st Tranche: Loan up to Rs. 15,000, to be repaid within 12 months.
  • 2nd Tranche: Loan up to Rs. 25,000, to be repaid within 18 months.
  • 3rd Tranche: Loan up to Rs. 50,000, to be repaid within 36 months.

Business loan interest rates start from 13% p.a. at Paisabazaar. Multiple factors influence the business loan interest rate, including the credit profile of the borrower, income, business stability, existing debt obligations, and more. Keeping these in check can help borrowers attract lower interest rates. 

What Affects Business Loan Interest Rates?

Multiple factors influence business loan interest rates. A few of these factors are discussed below:

• Credit score: A credit score helps lenders understand the creditworthiness of a borrower. A higher credit score signals low risk and attracts lower interest rates.
• Business turnover: Lenders usually set a limit for business turnover. A higher business turnover signifies higher repayment capacity and lower risk of default. 
• Business vintage: An established business operating for a longer time is considered stable and can get lower interest rates from lenders.
• Profitability: Profitability strengthens the repayment capacity of a borrower, boosting their chances of getting lower interest rates.
• Existing loans: Higher existing debt can strain finances and increase the risk of missed repayments. This increases the risk factor for lenders, making them charge more for a loan.
• Loan type: Secured loans involve lower risk and attract lower interest rates. On the contrary, unsecured loans are riskier and may come with higher interest rates.

Latest Business Loan Interest Rates by Banks and NBFCs

Rates Updated as of 1st September 2026

Lenders usually set their business loan eligibility criteria based on the following factors:

The amount of business loan that you can qualify for depends on multiple factors, as discussed below: 

• Turnover: Higher turnover increases loan amount eligibility
• Profit/cash flow: A strong profit and cash flow statement makes borrowers eligible for a higher loan amount.
• Credit score: A high credit score reduces risk for lenders, increasing the chances of higher loan amount approval.
• Business vintage: Longer-running businesses are considered stable and less risky by lenders, making them eligible for a higher loan amount.
• Existing debt: A debt-to-income ratio of 50-55% is preferred by lenders. A higher ratio decreases loan amount eligibility
• Collateral: Loans backed by collateral usually qualify for a higher loan amount.

Note: A business with stronger revenue, stable cash flow and a good credit profile may qualify for a higher amount than a similar business with weaker financials.

The exact documents required may vary depending on the applicant's business structure, loan type and lender.  Applicants usually need to provide the following documents to get their business loan applications processed.

Borrowers can apply for a business loan online by visiting Paisabazaar. Borrowers can follow the steps mentioned below to apply for a business loan online:

• Step 1: Enter your mobile number in the application form.
• Step 2: Enter the OTP to verify your mobile number.
• Step 3: Provide the required details.
• Step 4: Select a bank account for account aggregator consent.
• Step 5: Compare offers and apply for the best-suited loan.

Things to Know Before Applying for a Business Loan

For a smooth and seamless experience, applicants should follow best practices and take into account the following:

• Interest Rate Type

Business loans are usually offered at fixed interest rates. However, a few lenders may offer business loans at floating interest rates as well. If given a choice, select the interest type based on your cash-flow stability, risk appetite, and long-term business plans, as this will directly impact repayment predictability and overall cost.

• Lender Type Differences

Public sector banks, private banks, NBFCs, and fintechs have different approval timelines, risk appetites, benefits and limitations. Select your lender carefully to maximize your benefits.

• Credit Score/Rating

Applicants with a credit score of 700 and above or a strong credit rating usually have higher chances of approval. Some lenders also offer business loans at lower interest rates to those with a high credit score/rating. Low scores/poor ratings can lead to rejection or a higher cost of credit.

Suggested Read : Check Free Credit Score

• Processing Charges

Processing fees and other charges may vary based on the applicant’s profile. Try to negotiate the best offer with the lowest processing fee.

• Prepayment Rules

Most lenders levy rules on prepayment or foreclosure, including lock-in periods, prepayment charges, and more. Being aware of these terms helps you plan your loan journey better.

• EMI Affordability

Before you take a loan, it is pertinent to understand your EMI affordability to avoid missed EMI payments. Use a business loan EMI calculator to try various combinations of loan amount, tenure and interest rate and choose the one with the most comfortable EMIs. 

• Loan Tenure Selection

The longer the tenure, the smaller the EMIs but the higher the total interest cost. The shorter the tenure, the higher the EMIs but the lower the total interest outgo. Choose a tenure as per your future business plan and EMI affordability to ensure smooth repayments.

How Long Does It Take to Get a Business Loan?

The time taken for business loan approval and disbursement varies across lenders, depending on various factors. Usually, the process flows in the direction below: 

• Application submission: You submit the application by providing the required details and documents.
• Eligibility check: Your eligibility for the loan is checked by the lender
• Document verification: Your uploaded documents are verified by the lender.
• Approval: Based on the eligibility check and document verification, final approval is given. Approval is usually faster, provided all application details and documents provided are accurate.
• Disbursal: Disbursement can take up to 72 hours, depending on the lender’s internal process.

Borrowers of business loans have to pay processing fees, prepayment charges, commitment charges, inspection charges, account service charges, penal interest and documentation charges, etc., as and when required. The fees and charges levied on business loans vary widely across lenders. Below is an overall range of a few charges levied by lenders on business loans in India.

To calculate business loan EMIs, borrowers can visit Paisabazaar’s Business Loan EMI Calculator page and follow the steps mentioned below:

• Enter loan amount
• Enter loan tenure
• Enter interest rate

The calculator will show instant results. Borrowers should try different combinations of loan amount, interest rate and loan tenure to understand which scenarios work best for them and apply for a business loan online accordingly. 

Business Loan EMI Calculator Examples at 13% p.a.

Business loan offers vary depending on specific financial needs as per the business type, size, industry, sector, etc. Applicants can choose the most suitable loan option depending on their industry-specific requirements and the category they fall into.

Business Loans for Startups

• Startups, new businesses, or enterprises with less vintage can access collateral-free loans
• Government schemes such as CGTMSE, SIDBI, etc., help these organisations get the loan
• Lenders assess the business plan, promoter’s profile and cash flow potential while approving the loan application. A limited loan amount is approved by lenders

Business Loans for Women Entrepreneurs

• Offered to businesses promoted primarily by women entrepreneurs
• Special business loan offers for women at concessional rates and relaxed eligibility
• Loans offered under Government-backed schemes such as PMMY, Stand-Up India scheme, etc., as well

Loans for Manufacturers

• Manufacturers typically require larger loan amounts for the smooth functioning of their businesses
• Loans availed can be used for purchasing machinery, raw materials, and meeting production cycle requirements

Loans for Traders/Retailers

• Traders and retailers usually seek short-tenure loans and relatively lower amounts
• These loans can be used for inventory purchase, daily cash-flow management, POS requirements, etc.

Loans for Doctors & Professionals

• Doctors, CAs, architects, and other professionals can avail these loans
• These loans can be used for setting up clinics, expanding offices, purchasing equipment, etc.

Business Loan for MSMEs

• Offered to small businesses or MSMEs to keep their operations running smoothly and expand their business.
• MSME Loans can be secured and unsecured. Covers multiple government schemes, including PMMY, PMEGP, CGTMSE, etc.

Business Loan for Self-Employed Professionals

• Usually unsecured loans offered to self-employed entrepreneurs.
• Covers working-capital loans, term loans, etc.

• Improve credit score: Maintain a good credit score/rating. Most lenders prefer borrowers with a credit score of 700 and above. 
• Maintain stable cash flows: Maintain strong and consistent cash flows to demonstrate stability.. This develops confidence in lenders regarding your repayment capacity.
• Choose the correct loan amount: Borrow an amount aligned with your business needs and repayment ability to avoid financial strain.
• Apply via a multi-lender platform: Compare business loan offers across multiple lenders on Paisabazaar to find the most suitable rates and terms.
• Seek expert assistance: Consult loan experts to understand eligibility, documentation, and the process of loan application.

Vijay Pal Sharma - For Expanding Medical Store Business

I run Vijay Pal Pharmacy in Gurgaon. I got an opportunity to open one more medical store in the main market but did not have enough money for it. I applied for the business loan by visiting the Paisabazaar seva kendra and my loan was approved. I was surprised that the loan amount was credited in just a week’s time.

Sourabh Jain - For Bus Business

I run bus service from Jaipur to nearby cities and when I needed a loan to set up offices in Ahmedabad, Udaipur and Kota, I applied for the loan through Paisabazaar app. The credit person guided me in applying for the business loan, submitting the required documents and getting the loan approval directly from my office. I think the way they helped me collect all documents beforehand and submit them as required made the approval very smooth.

Devanshu Kohli - Loan for My RC Drone Startup

My startup for low-cost RC Drones needed funds but we weren’t getting funding from anyone as it’s a new venture. However, when I connected with Paisabazaar, they helped me secure a loan worth 40 lakh. Initially it was difficult convincing any lender but the support from Paisabazaar guys helped a lot. If you genuinely need funds for your startup, do give a try with Paisabazaar.