Current Business Loan Interest Rates in India
Below mentioned is the detailed table that will help in understanding the latest unsecure business loan interest rates, processing fee and loan amount offered by popular financial institutions in India:
|Lenders||Interest Rate (p.a.)||Loan Amount (Max.) in Rs.||Repayment Tenure (Months)|
|Axis Bank||15.5% onwards||50 lakh||12 – 36|
|Bajaj Finserv||18% onwards||20 lakh||12 – 48|
|Capital First Prime||21% onwards||75 lakh||12 – 36|
|Fullerton Finance||17% onwards||50 lakh||12 – 48|
|HDB Financial Services Ltd.||18% onwards||30 lakh||12 – 60|
|HDFC Bank||13% onwards||75 lakh||6 – 48|
|Hero FinCorp||18% onwards||25 lakh||12 – 36|
|ICICI Bank||13% onwards||40 lakh||6 – 48|
|IIFL Finance||18% onwards||50 lakh||12 – 36|
|Indifi Finance||18% onwards||50 lakh||12 – 36|
|Kotak Mahindra Bank||16% onwards||75 lakh||6 – 48|
|Lendingkart Finance||18% onwards||1 Crore||3 – 36|
|NeoGrowth Finance||21% onwards||75 lakh||6 – 24|
|PaySense Services India Pvt. Ltd.||18% onwards||5 lakh||3 – 36|
|RBL Bank||18% onwards||20 lakh||12 – 36|
|Tata Capital Finance||18% onwards||30 lakh||12 – 36|
|ZipLoan||18% onwards||5 lakh||6 – 24|
Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.
Note: The above table also contains interest rates of SME loan, MSME loan and Government loan schemes.
Business Loan interest rate starts from 11.90% onwards per annum. However, other factors too influence the final commercial business loan interest rates decided by the lender that include applicant’s profile and creditworthiness, business plan, credit score, required loan amount, repayment tenure, business vintage and profit, with various other financial aspects.
Business Loan Top Banks/NBFCs – Fees & Charges
|Bank/NBFC||Processing Fee||Pre-payment/Foreclosure Charges|
|SBI||1% of the sanctioned limit*||Varies from loan-loan|
|HDFC Bank||Up to 2.50% of loan amount||Up to 4% of outstanding amount|
|ICICI Bank||Up to 2% of loan amount||Charged as per T&Cs under sanction letter|
|Bajaj Finserv||Up to 2% of loan amount||Part-payment: 2% on the amount part-paid|
|Lendingkart Finance||Up to 3% of loan amount||Nil|
|RBL Bank||Up to 3% of loan amount||No foreclosure permitted before repayment of 6 EMIs|
|Tata Capital||Depends on applicant’s profile and business requirements||Foreclosure: 5% of Principal loan outstanding|
|IDFC First Bank||Up to 3.5% of loan amount||Foreclosure: 5% of Principal loan outstanding|
*Processing charge may increase depending upon sanction limit and applicant’s profile
Note: The mentioned fees and charges may change and shall depend on the sole discretion of banks, NBFCs and RBI, GST and service tax are not added in the mentioned charges and will be levied extra.
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Factors that affect Business Loan Interest Rates
The factors that affect business loan interest rates are as follows:
1. Nature of Business
The lender usually classifies the loan under Priority Sector and Non-Priority Sector. Loans that fall under Non-Priority Sector have a higher rate of interest, as compared to the priority sector loans. Hence, the nature of your business too determines the interest rate on your business loan.
2. Business Existence
The longer your business is in existence, the better it is for you. However, irrespective of the nature of the business, the minimum business operation of 2 years is mandatory. With more number of years in business, you have a higher possibility of getting loan(s) at lower interest rates.
3. Monthly Turnover
The monthly turnover of your business decides, if your business is making a profit or incurring losses. In short, it remains a key factor in determining your eligibility to avail a business loan. There are times when the turnover keeps fluctuating. However, maintaining consistency is highly crucial, as it helps your lender to determine the loan amount and repayment terms.
4. Credit Score
Credit score evaluates your creditworthiness and is based on your credit history. In case you have availed a loan in the past and repaid it on time or if you pay credit card bills on time, you will have a good credit score. And, if you have a good credit score, it will work in your favor while applying for a loan. A good credit score will give you more benefits like lower interest rates and flexible tenure or repayment terms.
Collateral is the security, which is pledged to the lender to avail a loan. Higher the value of collateral, the more will be the benefits. Highly valuable collateral like real estate, equipment, machinery, deposits or home equity gives security to the bank. After examining the collateral, the bank may grant you a higher loan amount as the risk is low.
6. Type of Lender
Business loan interest rates vary from one lender to another. But if you compare business loan interest rates offered by banks and NBFCs, you will find that banks levy lower interest rates, as compared to NBFCs.
Must Read: How to Get Collateral Free Business Loan?
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How to avail Business Loan at Low-Interest Rate?
To avail business loan at low interest rate, applicant should consider below mentioned suggestions and techniques:
- Prepare a Business Plan
- Maintain financial stability along with good loan repayment history
- Improve CIBIL score up to 700 or above
- Improve your creditworthiness
- Should have decent source of income
- Apply for long-term business loan, instead of short-term
- Build relationship with bank, open account
- Do not close old accounts or credit cards
- Increase your company’s profitability
- Submit all the required documents – authentic and audited by CA
- Apply loan with top private or public sector banks
- Offer or submit valuable collateral or security, if required for secured business loan
Business Loan Balance Transfer Online
Business Loan Balance Transfer Online is a credit facility in which customers can transfer their existing business loan from one bank to another online. In this process the outstanding balance of the loan amount is transferred from one bank to another at comparatively lower interest rates. The main purpose of making balance transfers is reducing EMIs and choosing a lower interest rate for outstanding balance of loan amount. Customers can perform business loan balance transfer online by selecting the required fields from the balance transfer EMI calculator and submitting the request online.
Types of Business Loan Interest Rates
1. Reducing or Diminishing Balance Rate
Reducing or diminishing balance rate is calculated each month on the remaining loan amount. If you opt for this type, the EMI comprises of interest that is payable for outstanding loan amount for each month along with the principal repayment. The good part is that after each EMI payment, the outstanding amount of the loan is reduced. Hence, the interest rate for the subsequent month would be the calculation of interest applicable only on the outstanding amount.
2. Fixed Rate of Interest
Fixed/flat interest rate is calculated on full loan amount during the course of its tenure. The interest is charged without considering the fact that the monthly EMIs would decrease that principal amount, and hence the interest rate.
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FAQs on Business Loan Fees & Charges
Q. What is the lowest interest rate on a business loan?
Ans. The business loan interest rate starts from 11.90% onwards per annum.
Q. Which bank gives the lowest interest rate for business loans?
Ans. SBI is among the leading banks that offers SME or business loans at lowest interest rates.
Q. What is the small business loan interest rates offered by SBI?
Ans. SBI offers small business loans or Mudra loans at an interest rate of 9.75% onwards.
Q. How do I get the lowest interest rate business loan?
Ans. You can visit paisabazaar.com to check and compare from all the leading banks and NBFCs offering business loan deals under one online platform.
Q. What is the interest rate for business loans in HDFC?
Ans. HDFC business loan is offered at 13% onwards.
Q. What is the minimum and maximum amount can I take through a Business Loan?
Ans. There is no minimum limit criteria to borrow a business loan. However, the maximum loan amount for an unsecured business loan is up to Rs. 1 crore.
Q. Is the interest rate fixed or floating?
Ans. It depends on the banks or lender to offer fixed or floating interest rates. However, both the types of interest rates are offered in the banking sector.
Q. What is the minimum interest rate offered by banks or NBFCs for unsecured business loans?
Ans. The business loan interest rate starts from 13% onwards and can exceed depending on the requirements.
Q. What is the loan amount offered under business loan?
Ans. The minimum loan amount offered under business loan has no limit and the maximum loan amount can go up to Rs. 1 crore which may exceed as per the requirements.
Q. How to Calculate Interest Rate on Business Loan?
Ans. Business Loan EMI is calculated from the below-mentioned formula:
E = P x r x (1+r)n / (1+r) n-1Here,
E = EMI amount
P = Principal amount
r = Rate of interest at which you will be borrowing the loan
n = tenure of the loan over which you will be repaying the loan.
Q: Is there any need to provide a collateral to avail Business Loan?
Ans: There is no need to provide any collateral/security or asset in order to apply for a Business Loan, except few secured business loans like Letter of Credit, equipment and machinery loan that are secured business loans.
Q. What is the repayment period of a business loan?
Ans. The minimum repayment period is 12 months, where as the maximum repayment period is of 5 years, however in some special cases it may exceed to up to 10 years.