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Banks and NBFCs offer secured and unsecured business loans to finance the business or business related activities of self-employed individuals, MSME borrowers, self-employed professionals, etc. Paisabazaar.com allows the prospective business loan borrowers to compare the features and business loan interest rates offered by top lenders. The applicants can then apply online for the best options available based on their credit profiles.

Business Loan Highlights 
Interest Rate Varies across lenders depending on the applicant’s credit profile, margin offered, nature of business, type and value of collateral/security and type of loan facility to be availed
Loan Amount Depends on the credit profile of the applicant
Tenure Up to 25 years
Processing Fees 2%-6% of loan amount (may vary across lenders)
Margin Up to 50%
Collateral Mortgage of immovable property (residential/industrial/commercial)
Financial securities, such as LIC Policy/KVP/NSC/SV/RBI relief bonds/Trustee securities/IVPs/Mutual Funds/stocks
Hypothecation of equipment, machinery, vehicle purchased or assets created out of bank finance
Existing business assets of the borrower
Commercial or construction equipment
Non-agricultural plot

Business Loan interest rates may vary from lender to lender depending on the credit profile of the applicant, nature of the business, loan facility availed by the applicant and the type of collateral/security pledged by the borrower. The interest rates offered by top Business Loan lenders are mentioned below.

Comparison Table of Business Loan Interest Rates offered by Paisabazaar Partners

Bank/NBFC/Fintech

Interest Rate

 Bajaj Finserv

         9.75% - 30% p.a.

HDFC Bank

10.00% - 22.50% p.a.

IIFL Finance

12.75% - 44% p.a.

FlexiLoans

1% per month onwards

ZipLoan

1% - 1.5% per month (Flat)

ICICI Bank

 Up to 17% p.a.

Axis Bank

 10.75% p.a.

Indifi Finance

1.5% per month onwards

Kotak Mahindra Bank

16% p.a. onwards

RBL Bank

14%-26% p.a.

Lendingkart Finance

12%-24% p.a.

Tata Capital Finance

12%-17.50% p.a. 

NeoGrowth Finance

 18%-24% p.a.

Hero FinCorp

Up to 26% p.a.

Note: Business Loan Interest Rates are updated as on September 2023.

HDFC Bank

HDFC Bank offers secured and unsecured business loans @ 10% p.a. onwards for loan amount of up to Rs 3 crore and for tenure of up to 7 years to self-employed individuals and business enterprises.

Interest Rate

10% p.a. onwards

Loan Amount

Up to Rs 3 crore

Tenure

Up to 7 years

Processing Fee

Up to 2% of loan amount

 

Kotak Mahindra Bank

Kotak Mahindra Bank offers various business loan products like Construction Equipment Loan, Farm Equipment Loan, Loan Against Property, Healthcare Finance Solutions, Commercial Vehicle Loans, etc. It also offers various working capital business loan products to finance the business requirements of its applicants.

Interest Rate

16% p.a. onwards

Loan Amount

Based on the applicant’s credit profile

Tenure

Up to 7 years

Processing Fee

Up to 2% of loan amount

 

ICICI Bank

ICICI Bank offers both secured and unsecured business loans to importers, exporters, new entities, businesses not having audited financials, etc. ICICI Bank business loan interest rates start from 17% p.a. onwards for tenure of up to 7 years.

Interest Rate

Up to 17% p.a. 

Loan Amount

Up to Rs 10 crore

Tenure

Up to 7 years

Processing Fee

Up to 2% of loan amount

 

Axis Bank

Axis Bank business loan interest rates start from 10.75% p.a. onwards for tenure of up to 15 years. Prospective business loan borrowers of Axis Bank can borrow loan amount of up to Rs 10 crore. The bank also offers bills of exchange and Letter of Credit to its business loan applicants.

Interest Rate

10.75% p.a. onwards

Loan Amount

Up to Rs 10 crore

Tenure

Up to 15 years

Processing Fee

Up to 2% of loan amount

 

Tata Capital

Tata Capital offers various business loan products to self-employed individuals and business enterprises for tenures of up to 9 years. The NBFC offers business loans with minimal documentation, swift disbursal and quick approval.

Interest Rate

12% p.a. onwards

Loan Amount

Up to Rs 2 crore

Tenure

Up to 9 years

Processing Fee

Up to 2.75% of loan amount

 

Lendingkart Finance

Lendingkart offers business loans @ 12% p.a. onwards to finance the business requirements of its applicants. The NBFC uses machine learning tools and proprietary big data for setting their business loan interest rates. Lendingkart also uses data technology tools and business analytics for evaluating the applications of its business loan applicants.

Interest Rate

12%-24% p.a.

Loan Amount

Up to Rs 2 crore

Tenure

Up to 3 years

Processing Fee

2%-3%

 

IDFC First Bank

IDFC First Bank offers business loans for tenure of up to 20 years to meet the business and working capital requirements of self-employed individuals, self-employed professionals, MSMEs, traders, hospitals, diagnostic centres and manufacturers. The bank offers a special Gold Card Working Capital Loan Scheme for tenure of up to 3 years. The scheme allows easy access to export credit and is automatically renewed annually.

Interest Rate

10.50% p.a. onwards

Loan Amount

Depending on the applicant’s profile

Tenure

Up to 20 years

Processing Fees

Up to 3.5%

 

Bajaj Finance Limited

Bajaj Finance offers secured and unsecured loans to its applicants for financing various business related activities like machinery purchase, business expansion, inventory restocking, renovation of office space, meeting the working capital requirements, etc. The NBFC also offers pre-approved business loans to its existing as well as new customers.

Interest Rate

9.75% to 30% p.a.

Loan Amount

Up to Rs 80 lakh

Tenure

Up to 12 years

Processing Fee

Up to 2.95%

 

HDB Financial Services

HDB offers unsecured business loans at 8% p.a. onwards for financing the business related activities of its applicants. The lender offers business loans to MSMEs, doctors and medical practitioners, chartered accountants, sole proprietors/partners/directors in manufacturing/trading/service business and private companies/partnership firms.

Interest Rate

8%-26% p.a.

Loan Amount

As per applicant’s profile

Tenure

Up to 5 years

 

U GRO Capital Limited

U GRO Capital offers both secured and unsecured business loans to micro, small and medium enterprises. The NBFC offers business loans at interest rates starting from 9% p.a. onwards for tenure of up to 10 years.

Interest Rate

9% to 36% p.a.

Loan Amount

Up to Rs 5 crore

Loan Tenure

Up to 10 years

Processing Fees

Up to 4% of loan amount sanctioned

  • Most banks and NBFCs offer both secured and unsecured business loans
  • Business Loan interest rates vary across the lenders and are offered on the basis of credit profile of the applicant, nature of business, type of business loan offered and nature of collateral/security
  • Existing business loan borrowers of many banks and NBFCs can avail top-up loans over and above their existing business loans.
  • Many lenders also offer overdraft facilities to their existing business loan borrowers.
  • Existing as well as new customers of some lenders can apply for pre-approved business loans with instant loan disbursal and minimal documentation.
  • Many lenders offer concessional interest rates to women borrowers.
  • Applicants can also apply for business loans through online mode with quick approval, minimal documentation and swift loan disbursal.
  • Age - 21 years at the time of loan application and 65 years at the time of loan maturity (may vary across lenders)
  • Minimum Business Vintage - 3 years (may be 5 years for some lenders)
  • Minimum Business Turnover - Rs 90,000 to more than Rs 250 crore
  • Credit Score - 750 or above (some lenders may offer business loans to applicants having lower credit scores)
  • Minimum Income - Rs 1 lakh p.a.
  • Eligible Entities - MSMEs, Proprietors, Limited Liability Partnership firms, Private Limited Companies, Public Limited Companies, self-employed individuals, self-employed professionals (doctors, CA, CS, architect, etc.) individual corporations, etc.
  • ID Proof- Voter ID, Driving License, Aadhar Card, Passport
  • PAN Card for partnership firms, individuals and companies
  • Address Proof- Telephone/electricity bill, Voter ID, Passport, Bank Statement, Driving License, registered lease deed or sale agreement, NREGA Card
  • Age Proof- Birth certificate, PAN card, Aadhar card, Passport, etc.
  • Ownership proof of residence or office
  • Business continuity proof
  • Copy of company’s PAN card
  • Business registration proof
  • Passport size photographs
  • Latest GST returns
  • Bank statement for last 6 months
  • Latest ITR along with income computation, B/S, P&L account for last 2 years certified by a CA
  • Sole proprietor declaration or certificate
  • Partnership deed copy
  • Certified copy of MOA, AOA and Board Resolution
  • Unsecured Term Loans- Lenders offer Unsecured Term Loans to MSMEs to meet their business requirements, such as expansion of operations, technology upgradation and meeting the cash flow requirements, without any collateral/security
  • Secured Term Loans- Secured Term Loans are offered against collateral like mortgage of immovable property, existing business assets of the applicant, financial securities, etc.
  • Unsecured Overdraft Business Loans- Unsecured Overdraft Business Loan is a collateral-free credit line facility wherein the applicant can withdraw money from their current business accounts within a pre-determined limit, even with a zero balance.
  • Secured Overdraft Business Loans- Lenders offer Secured Overdraft Business Loans to their existing customers maintaining their current/savings account with the lender to finance their business operations and cash flows. The credit line facility is offered against residential/commercial/industrial property, financial securities like LIC Policies, KVP/NSC, Fixed Deposits, Mutual Funds, etc.
  • Professional Business Loans- Professional Business Loans are offered to self-employed professionals, such as doctors/medical practitioners, architects, CA and CS. Self-employed professionals can avail this loan facility to finance their business and working capital requirements including business expansion, purchase or construction of office premises, purchase of machinery, furniture, fixtures, equipment, purchase of medicine stocks, etc.
  • Bill Discounting- Bill Discounting allows the businesses to receive early payments against their outstanding invoices. The borrower presents the bill drawn on his customer to the lender, which pays him immediately after deducting a certain amount as discount or commission. The lender then collects the payment in full from the borrower’s customer on the bill’s due date. In case of any delay, the borrower or the customer has to pay a pre-determined interest to the bank or NBFC.
  • Machinery Finance- Machinery Finance is a credit facility that allows the applicants to purchase machinery and equipment for business purposes.
  • Purchase Financing- Lenders offer Purchase Finance to manufacturers, traders and service providers to pay for the raw materials and trading goods purchased from the suppliers.
  • Working Capital Loans- Lenders offer Working Capital Loans to finance the day-to-day requirements of business units, such as purchase of raw materials and payment of wages.
  • Letter of Credit- Letter of Credit (LC) is a payment guarantee issued by the lender that enables the businesses operating in international trade to minimise their credit risk.
  • Merchant Cash Advance/Point of Sales- This loan facility is offered to small and medium enterprises engaged in online sales or having Point of Sale machines wherein the repayment is made by direct deduction of the amount against their online sales or sales made through POS machines

 

Q1. What is a good credit score to get instant business loans?

Ans. Any credit score that is 750 or above is considered good by financial institutions. The maximum credit score is 900 and any score close to it shall be preferred first by lenders.

Q2. How to choose the ideal repayment tenor for business loans?

Ans. Ideally, if you avail short-term loan then the repayment tenure should not exceed 12 months. However, it may increase as per the desired loan amount. The maximum repayment period can be chosen up to 5 years depending upon the loan amount that may exceed as per business requirements.

Q3. What is the impact of GST on business loans for new businesses?

Ans. GST plays an important role in getting business loans, as the more the GST is paid, the larger shall be the business volume. Therefore, it becomes easy for banks to rely on such applicants or borrowers that pay their GST.

Q4. What is the minimum turnover requirement for a loan to start a business?

Ans. The minimum annual turnover criteria are defined by the lender and vary from bank to bank. 

Q5. What are the pre-closure and part-prepayment charges in business loans?

Ans. The pre-closure and part-payment charges vary from lender to lender. It may be Nil from some Banks and may exceed up to 5% of the loan amount from others. Ensure to check the same with your lender.

Q6. What are the loan schemes initiated by the Government of India?

Ans. Some of the popular schemes include MUDRA Yojana under PMMYSIDBI loanCGTMSEPMEGPStandup IndiaStartup Indiapsbloansin59minutes.comNSICNABARD, etc.

Q7. I want to start a dairy farming business. so how can I get a small business loan of Rs. 10 lakhs? 

Ans. To get a small business loan you can check and compare all the available options under a single web platform and get a collateral-free small business loan up to Rs. 10 lakhs at low-interest rates. You can also apply for a Mudra loan under PMMY or a loan with Private sector banks, NBFC, or small finance banks.

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