5 Lenders Offering Lowest Business Loan Rates in India

23 Sep 2019 // 29 min read // Business Loans
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A Business Loan is a secured or unsecured credit facility offered by banks and financial institutions to business owners. The money availed as a Business Loan must be used for business-related requirements only. Most of the financial institutions in India offer Business Loans to SME, MSME, and large Corporates to fund a variety of business activities. 

You can use Business Loan for various business activities, such as working capital requirements, payment of salaries and wages, purchasing new machinery, opening a new office, and many more. Borrowers must prepare a business proposal specifying the intended use of money and how it will help improve business performance. It is recommended to draft the loan proposal carefully as lenders may reject the Business Loan application if they are not satisfied with the same.

Each lender has its clearly-specified eligibility criteria, and applicants failing to meet any of the guidelines may face a loan rejection or a very high rate quote from the lender. Here it is also important to know that many Business Loans are also available on subsidized interest rates upon meeting the eligibility criteria specified by the government for select categories.

Apply for Business Loan in India

The rate of interest depends on a number of factors such as nature of the loan, purpose of the loan, the reputation of the borrower, the amount required, and more. The interest rate applicable against the Business Loan is the single most significant factor determining the suitability of the loan. As a Business Loan is a long term financial commitment, any increase or decrease in the interest rates can have serious financial implications. Not only does the interest rate determine the interest cost for the loan, but it also decides the quantum of the EMI which you must serve over the repayment tenor.

Lenders with lowest interest rates on Business Loan in India

Here is a list of top 5 lenders offering lowest Business Loan Interest Rates in India.

1. SBI Business Loan

State Bank of India offers Business Loans to fund various business requirements of SMEs and MSMEs. SBI provides financial assistance for these companies in the form of working capital finance, project finance, corporate term loans, structured finance, dealer financing, loan syndication, construction equipment loans, etc. SBI Business Loan interest rates are floating rates and vary according to the credit profile of the borrowing entity. The processing fee for SBI Business Loan is 1% of the loan amount subject to a maximum of Rs. 10 Lakh. The maximum loan amount for SBI Business loan is Rs. 20 crore while the minimum loan amount is Rs. 10 Lakh.

2. HDFC Bank

Being one of the leading commercial banks in India, HDFC Bank offers various loan schemes and banking services to business entities at attractive interest rates. The flexibility to choose the loan tenure as short term, medium-term or long term by HDFC Bank helps many businesses to fund their business requirements (like business expansion, buying land/factory space, purchase of machinery/inventory, increasing the working capital, etc.) with complete ease. HDFC Bank offers Business Loans for up to Rs. 50 Lakh with interest rates ranging between 15.65% to 21.20%. The processing fee for HDFC Bank Business Loan can go up to 2.5% of the loan amount (subject to a minimum of Rs. 2,359 and a maximum of Rs. 88,500).

3. ICICI Bank

ICICI Bank is a leading private sector financial institution in India, offering financial solutions to both individual and non-individual customers in the areas of banking and finance. It offers flexible Business Loan options suitable for SMEs and Corporates categorized into three segments, namely industry-specific loans, business financing, and customized MSME solutions. 

ICICI Bank offers Business Loans on attractive interest rates, currently linked to MCLR i.e.

  • For secured Business Loans: 6 Months MCLR + 2%
  • For CGTMSE backed Business Loans: 6 Months MCLR + 4%
  • For Unsecured Business Loans: 6 Months MCLR + 6.5%

The processing fee for ICICI Bank Business Loan is up to 2% of the loan amount plus applicable taxes. Among the three categories, the ICICI Bank business financing is the most popular option one offering financial solutions for working capital finance, term loans, GST Business Loans, InstaOD.

4. Kotak Mahindra Bank

Kotak Mahindra Bank is one of the renowned private sector banks in India, offering financial solutions to customers through its wide branch network. It offers Business Loans to fulfil the financial requirements of various businesses in the sectors of manufacturing, agriculture and service providers, etc. Kotak offers Unsecured Business Loans up to Rs. 75 Lakh to SMEs and well-established organisations at attractive interest rates starting from 17% for a maximum repayment tenor of up to 48 months. The bank also levies a processing fee of 2% of the loan amount (plus applicable taxes).

5. Axis Bank

Being a prominent private sector bank in India, Axis Bank offers a wide variety of financial products and services to its customers. Axis Bank Business Loan schemes can be availed to fund various commercial requirements such as the purchase of machinery, business property, etc. at competitive interest rates. The lender offers a quick and hassle-free loan application and disbursal process with minimum documentation. There is no requirement to pledge any collateral to avail Axis Bank Business Loans. The interest rates for will vary depending on the credit profile of the borrower along with business profile, track record, loan amount, etc. The maximum loan amount for Axis Bank Business Loans is Rs. 50 Lakh with a processing fee of up to 2% of the loan amount plus applicable taxes.

To keep your interest expenses under control, it is recommended to compare the Business Loan interest rates offered by several financial institutions and make an informed decision.

A Business Loan is a secured or unsecured credit facility offered by banks and financial institutions to business owners. The money availed as a Business Loan must be used for business-related requirements only. Most of the financial institutions in India offer Business Loans to SME, MSME, and large Corporates to fund a variety of business activities.

You can use Business Loan for various business activities, such as working capital requirements, payment of salaries and wages, purchasing new machinery, opening a new office, and many more. Borrowers must prepare a business proposal specifying the intended use of money and how it will help improve business performance. It is recommended to draft the loan proposal carefully as lenders may reject the Business Loan application if they are not satisfied with the same.

Each lender has its clearly-specified eligibility criteria, and applicants failing to meet any of the guidelines may face a loan rejection or a very high rate quote from the lender. Here it is also important to know that many Business Loans are also available on subsidized interest rates upon meeting the eligibility criteria specified by the government for select categories.

The rate of interest depends on a number of factors such as nature of the loan, purpose of the loan, the reputation of the borrower, the amount required, and more. The interest rate applicable against the Business Loan is the single most significant factor determining the suitability of the loan. As a Business Loan is a long term financial commitment, any increase or decrease in the interest rates can have serious financial implications. Not only does the interest rate determine the interest cost for the loan, but it also decides the quantum of the EMI which you must serve over the repayment tenor.

 

Also Read: 10 Best Banks & NBFCs to Apply for Business Loan in India

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