Top 10 Small Business Loans in India

Updated on: 22 Dec 2023 // 4 min read // Business Loans
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One of the biggest challenges, an entrepreneur faces while starting a new business is securing funds for a start-up. Even if you manage to arrange funds initially, after some time, those funds will be invested for financing various business operations. As a result, at any stage of the business lifecycle, you might face the requirement for additional funding. You cannot always use your own funds to finance your business operations; after all, you do not have bottomless coffers. In such a situation, availing Small Business Loans in India is the best option at your disposal.

Small Business Loans in India

Small Business Loans are one of the most important requirements for small business owners. Thanks to the flourishing start-up culture in India, many financial institutions have come forward with attractive collateral-free Small Business Loans for entrepreneurs.

As there are multiple options available, you must be aware of the features of each loan offer. Besides, you must properly analysis the funds requirement and purpose before applying for the loan.

To help you further, sharing below a list of the top 10 Small Business Loans in India:

1. ICICI Bank

ICICI Bank offers smart Business Loans for small businesses and start-ups. It is a collateral-free working capital loan offered in the form of an overdraft. Existing ICICI Bank customers can avail this unsecured overdraft facility up to Rs. 25 Lakh against their Current Account. The Overdraft limit ranges from Rs. 2 Lakh to Rs. 25 Lakh. Every month, the customer has to pay 5% of the utilized limit, and interest will be charged only on the outstanding amount.

2. Fullerton India

Be it business expansion, or a need to purchase new machinery, a customised business loan from Fullerton India can efficiently address credit needs of a small business. Interest rates starting from 13% per annum and processing charges levied by Fullerton can go up to 6.5% of the loan amount. There is no upper limit on the amount of money available as an SME Loan from Fullerton India, though the repayment period for unsecured Business Loans is capped at 48 months.

3. HDFC Bank

HDFC offers a wide range of Business Loans to address various needs in the lifecycle of a business. The quick loan sanction and disbursal of funds and easy documentation process make it preferable by a large group of small business owners. The maximum amount available as HDFC Unsecured Business Loan is Rs. 50 Lakh with interest rates starting from 15.75% per annum. Processing charges start from 0.99% of the loan amount, and maximum repayment tenor is 48 months. A company should be profit-making for the last 2 years to avail the Business Loan from HDFC Bank.

4. Bank of Baroda

Bank of Baroda offers a wide variety of Small Business Loans such as working capital loan and term loan. The maximum amount available for manufacturers and traders is Rs. 5 Lakh while for medical professionals it is Rs. 10 Lakh. The asset purchased with the loan amount must be hypothecated with the bank. All the loan facilities come with tenor based MCLR interest rates that are affordable by small business owners.

5. Kotak Mahindra Bank

Kotak Mahindra Bank offers personalised solutions for your financial needs without hindering any of your investments. You can avail multiple loans from Kotak Mahindra Bank. With quick and hassle-free processing and sanctioning of Business Loans within 72 hours, Kotak Mahindra Bank offers collateral-free loans from Rs. 3 Lakh to Rs. 75 Lakh with a flexible repayment tenor of up to 60 months.

6. Magma Fincorp

Magma Fincorp offers SME Loans ranging from Rs. 7 Lakh to Rs. 2 crore with no primary or collateral security requirements. Magma Fincorp SME Loan is the highest value collateral-free, Business Loan in India. Interest rates against SME Loans from Magma Fincorp start from 17.05%. The flexible repayment tenor makes it very suitable for small and medium-size business owners.

7. State Bank of India

SBI Business Loan is a collateral-free loan with attractive and lucrative offers. The maximum amount available herein is Rs. 20 crore with a maximum repayment tenor of 15 years. Interest rates for SBI Business Loan are linked to MCLR and vary based on the repayment tenor. SBI offers a whole range of products designed for both manufacturing and service industry of SME. Various offers like the SME eBiz Loan, e Dealer Finance Scheme, Vendor Finance Scheme, PM Mudra Yojana, etc. make SBI Business Loans a viable option for SME owners.

8. Yes Bank

Yes Bank is a leading private sector bank that offers a variety of Small Business Loans of up to Rs. 50 Lakh. The maximum repayment tenor available is 36 months with the interest rates starting from 16.25%. Processing charges levied by the bank are 2% plus taxes.

9. Punjab National Bank

PNB offers financial solutions to small and medium businesses in both the manufacturing and service industry. The maximum amount available as an unsecured Business Loan with PNB is Rs. 15 Lakh and the maximum repayment tenor is 60 months. Interest rates start from 12.65% onwards, and the processing charges are 1.8% plus taxes.

10. Corporation Bank

Corporation Bank offers a wide variety of Small Business Loans for the SME sector. Interest rates for Corporation Bank SME loans start from 13.55% with maximum available amount going up to Rs. 5 Crore while the maximum repayment tenor is 84 months. The swift loan processing and disbursal, flexible repayment options, and attractive rates make these loans a comfortable option for all types of financial needs and requirements for small and medium businesses.

Undoubtedly starting your own business or expanding, has never been easy with so many business loans available to fund your financial requirements. It is advisable to do some research before you choose an option that is best suitable for your financial needs and requirements.