Banks/Lenders
Interest Rate
Maximum Loan Amount
Maximum Loan Tenure
ICICI Bank

8.76% p.a. to 15.6% p.a.

Rs.5 crore

12 months to 36 months*

HDFC Bank

Contact the bank for details

Valuedraw – Rs.25 lakh Elitedraw –
Depends on collateral

Contact the bank for details

IDBI Bank

Contact the bank for details

Varies based on the value of the
collateral.

Contact the bank for details

Bajaj Finserv

From 18% p.a. onwards

Rs.30 lakh

60 months

Mahindra Finance

Contact the company for details

Rs.25 crore

36 months

Oriental Bank of Commerce

9.25% p.a. onwards

Varies based on the value of the
collateral.

12 months

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.

Factors that Affect Business Loan Interest Rates

The factors that affect business loan interest rates are as follows:

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.

Business Existence For OD CC

If your business existence is 3 year, the better it is for you. However, irrespective of the nature of the business, the minimum business operation of 3 years is mandatory. With more number of years in business, you have a higher possibility
of getting loan(s) at lower interest rates.

Monthly Turnover For OD CC

There is  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.

By the way maintaining consistency is highly crucial, as it helps your lender to determine the loan amount and repayment terms.

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 For OD CC

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 realestate, 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.

How to Get Collateral Free Business Loan?

Nature of Business

The lender basicaly 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.

Business Loan EMI Calculator

EMI calculator is an usefull online tool that enables you to calculate your monthly installments without any issue. All you need to do is feed in the required information:

  • Required loan amount
  • Rate of interest
  • Repayment tenure
  • Processing fee

Once its done, the calculator will provide you with an estimated amount of your monthly installments you need to pay towards your loan. In a way, it helps you prepare your monthly budget and prevent defaulting on the loan.

Calculate your Monthly EMI on  Business Loan EMI Calculator

How to Get Business Loan at Lower Interest Rates?

Prepare a convincing Business Plan

When you approach a lender you need to have a good business plan, which assures to strengthen your financial position in the future. It should reflect stability and growth, hinting security and low risk for the lender. This will help them build trust and offer business loan at low interest rate.

Carry Necessary Documents

No loan application is sanctioned without submitting all the required documents. Be well-informed about the documents and proofs you need to carry. This will assure the lender of your genuine intentions. Be sure to provide authentic documents and information; any misleading or ambiguous information can work against you.

List of Documents

  • Identity proof
  • Address proof
  • PAN card of the company
  • Trade license or sales tax certificate
  • Statement of bank accounts
  • Certified copy of partnership deed or sole proprietorship declaration

Choose Suitable Tenure

Shorter the tenure, higher the EMI will be. Although it may create financial pressure on you, it also means that you will be able to close the loan earlier and pay a lower amount as you save on the interest payout. If paying larger EMIs is comfortable for you, it is suggestion to take up this step to pay a lower interest amount.

Special Business Loans

Few lenders have exclusive loan schemes for specific business purposes. These loans are offered at discounted rates compared to general loan that will help you avail other benefits associated with the scheme. For instance, business extension loan, equipment loan or renovation loan may have lower interest rates, as compared to a regular business loan.

Business Loans offered by the Government

The Government of India offers business loans at attractive rates for SMEs and MSMEs. When you approach a lender, you can check if they provide loan under any government scheme. Make the right comparison and choose the most suitable business loan interest rate.

Types of Business Loan Interest Rates Reducing or Diminishing Balance Rate

Reducing 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.

Fixed Rate of Interest

Fixed/flat interest rate is calculated on full loan amount availing 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.

(FAQs)

Ques. What is the minimum interest rate offered by banks or NBFCs?

Ans. The business loan interest rate starts from 13.99% onwards and can exceed depending on the requirements.

Ques. What is the loan amount offered under business loan?

Ans. The minimum loan amount offered under business loan is Rs. 50,000 and the maximum loan amount can go up to Rs. 100 lakh which may exceed as per the requirements.

Ques: What are the different types of business loan in India?

Ans: Some of the business loans that are easily available in India are:

  • Term Loans
  • Working Capital Loan
  • Invoice Discounting
  • Letter of credit
  • MSME Loan
  • Mudra Yojana
  •  
  • Know More……