When a self-employed person needs for a loan, they go with a business loan. Small businesses and entrepreneurs need business loans for growing capital. Lenders offer loans at yearly interest which is called annual percentage rate (APR).
The business loan interest rates differ among various banks. Each bank sets its rates based on various factors.
Business Loan Interest Rate in India
| Lender | Loan Amount | Interest Rate(p.a.) | |
| Axis Bank | Rs. 3 Lakh | Rs. 50 Lakh | 14.95% – 19.20% |
| InCred Finance | Rs. 50,000 | Rs. 7.5 Lakh | 18% – 28% |
| Bajaj Finserv | Rs. 3 Lakh | Rs. 20 Lakh | 9.75% – 30% |
| SMFG (Fullerton) | Rs. 1 Lakh | Rs. 50 Lakh | 17% – 21% |
| Faircent | Rs. 50,000 | Rs. 10 Lakh | 12% – 28% |
| Ashv Finance | Rs. 3 Lakh | Rs. 40 Lakh | 18% – 21% |
| HDB Financial | Rs. 75,000 | Rs. 30 Lakh | 8% – 26% |
| HDFC Bank | Rs. 50,000 | Rs. 50 Lakh | 10.00% – 22.50% |
| Hero FinCorp | Rs. 5 Lakh | Rs. 40 Lakh | Up to 26% |
| ICICI Bank | Rs. 1 Lakh | Rs. 1 crore | 16% – 22% |
| IIFL Finance | Rs. 50,000 | Rs. 30 Lakh | 12.75% – 44% |
| Indifi Finance | Rs. 50,000 | Rs. 50 Lakh | 15% – 24% |
| Kotak Mahindra Bank | Rs. 5 Lakh | Rs. 75 Lakh | 16.00% – 19.99% |
| Lendingkart Finance | Rs. 50,000 | Rs. 1 crore | 1.25% per month |
| NeoGrowth Finance | Rs. 2 Lakh | Rs. 75 Lakh | 15.00% – 39.60% |
| PaySense | Rs. 50,000 | Rs. 5 Lakh | 16.00% – 36.00% |
| RBL Bank | Rs. 1 Lakh | Rs. 25 Lakh | 17.50% – 26.00% |
| Tata Capital Finance | Rs. 2 Lakh | Rs. 75 Lakh | 19% onwards |
| ZipLoan | Rs. 1 Lakh | Rs. 7.5 Lakh | 1% – 1.5% per month |
| Allahabad Bank | Rs. 50,000 | Rs. 5 crore | 8.55% – 13.05% |
| Andhra Bank | Rs. 50,000 | Rs. 6 crore | 10.55% onwards |
| Bank of Baroda | Rs. 50,000 | Rs. 10 crore | 10.25% – 15% |
| Bank of India | Rs. 1 Lakh | Rs. 5 crore | 10.20% – 12.95% |
| Bank of Maharashtra | Rs. 50,000 | Rs. 3 crore | 10.85% – 17% |
| Central Bank | Rs. 1 Lakh | Rs. 10 crore | 7.80% – 12.40% |
| Citibank | Rs. 50,000 | Rs. 3 crore | 12% – 18% |
| Federal Bank | Rs. 1 Lakh | Rs. 2 crore | 8.90% – 14% |
| HSBC Bank | Rs. 2 Lakh | Rs. 75 Lakh | 11.90% onwards |
| Poonawalla Fincorp | Rs. 2 Lakh | Rs. 50 Lakh | 15% onwards |
| Mahindra Finance | Rs. 1 Lakh | Rs. 5 crore | 14.00% onwards |
| Standard Chartered Bank | Rs. 2 Lakh | Rs. 1 crore | 17.25% onwards |
Business Loan Required Eligibility
- Borrower eligibility age: 23 to 60 years
- Business owners must be self-employed professionals and self-employed non-professional
- Individual proprietors, partnerships, private limited companies, and public limited companies are eligible.
- Business turnover must be Rs. 10 lakh or above
- Current business must be 3 years old
- ITR annual income minimum 2.5 lakh required
- CIBIL Report should be NIL or 700+
- Applicant minimum 1 year ITR file need
Also Read: Can I get a business loan up to 25 lakh?
Documents for Business Loan Application
The below list should meet whenever apply for a business loan:
- Indian Residence
- Pan Card of the borrower
- Identity Proof: Aadhaar Card / Voter Card / Passport / Driving License
- Address Proof: Rent Agreement / Utility bill / Property Paper
- Proof of Vintage (Trade License / MSME / ITR File)
- ITR file should be included with balance sheet, profit & loss
- Bank statement of recent 6 months
- Photocopy of customer
Also Read: Business Loan Eligibility Documents
Factors Influencing Business Loan Interest Rates
Banks calculate different factors for business loan interest rates. What are the actual main factors included in changing interest rates? Let’s know about this:
Creditworthiness: The Lender will check different factors before the loan is provided. Also, borrower credit score is one of the major factors. Strong credit scores secure lower interest rates.
Turnover: The lender will analyze your business turnover for loan eligibility. If you have a lower turnover, you can get a higher interest rate on a business loan.
Loan Types: Business loan includes the form of secured and unsecured. Generally secured business loans have lower interest rates compared to unsecured business loans.
Choose Lender: Government bank business loan interest rates are lower compared to NBFC banks. So, choosing a lender is one of the important parts of the interest rate.
FAQs on Business Loan Interest Rates
What types of interest are calculated on business loans?
There are two types of interest rates available. One is simple interest and another is compound interest rate. Business loan interest rates are calculated on simple interest.
What is the interest rate of a business loan?
Business loan interest varies depending on the lender. But the general interest rate is 7.80% to 44% per annum.
How much tenure is included for unsecured business loans?
If you choose an unsecured business loan, the repayment term is 1 year to 6 years available.
What is the loan amount available on a business loan?
Banks will calculate business turnover to calculate the loan amount. The minimum business loan is Rs. 1 lakh to the maximum of Rs. 5 crore business loan you may get.