Business Loan
Banks and NBFCs offer secured and unsecured business loans to finance the business or business related activities of self-employed individuals, MSME borrowers, self-employed professionals, etc. Paisabazaar allows the prospective business loan borrowers to compare the features and interest rates offered by top lenders. The applicants can then apply for business loan online from the best options available based on their credit profiles.
Table of Contents
- Compare Business Loan
- EMI Calculator
- How to Get a Business Loan
- Fees and Charges
- Features and Benefits
- Eligibility
- Documents Required
- Types of Business Loans
- Personal Loan v/s Business Loan
- FAQs
What is a Business Loan?
Business loan is a credit facility offered to self-employed individuals, self-employed professionals, private companies and partnership firms, MSMEs, etc. for financing their working capital requirements, capital expenditure requirements and other business related activities.
Business Loan Interest Rate
Business Loan interest rates may vary from lender to lender depending on the credit profile of the applicant, nature of the business, loan facility availed by the applicant and the type of collateral/security pledged by the borrower.
Business Loan offered by Top Banks & NBFCs in India
Interest rates offered by top Business Loan lenders are mentioned below.
| Bank/NBFC/Fintech | Interest Rates |
| HDFC Bank | 10.75% – 22.50% p.a. |
| IIFL Finance | Up to 36% p.a. |
| FlexiLoans | 1% per month onwards |
| ZipLoan | 1% – 1.5% per month (Flat) |
| ICICI Bank | Up to 17% p.a. |
| Axis Bank | 17.15% p.a. onwards |
| Indifi Finance | 1.5% per month onwards |
| Kotak Mahindra Bank | 16% p.a. onwards |
| RBL Bank | 14%-26% p.a. |
| Lendingkart Finance | 1.25% per month onwards |
| Tata Capital Finance | 12% p.a. onwards |
| NeoGrowth Finance | 15%-40% p.a. |
| Hero FinCorp | Up to 30% p.a. |
Note: Business Loan Rates are updated as of 3rd October 2024.
Business Loan EMI Calculator
Applicants can use the Business Loan EMI Calculator given below to calculate the EMIs and total interest cost payable throughout the loan tenure depending on the interest rate, loan amount and loan tenure offered by the lender.
How to Get a Business Loan Online?
Individuals, groups of individuals and entities can apply for a business loan online directly through the official website of banks and NBFCs. The interest rates, loan amount, margin, collateral requirements, guarantor requirements, fees and charges, eligibility and other features of business loans vary from lender to lender.
Therefore, applicants should visit online financial marketplaces like Paisabazaar.com to compare the interest rates, loan amount and other features offered by various lenders and opt for the lender that best suits their eligibility.
Business Loan Fees and Charges
Business loan lenders usually charge processing fees, prepayment charges, commitment charges, inspection charges, account service charges, penal interest and documentation charges from their business loan borrowers.
However, the fees and charges levied on business loans vary widely across lenders. Below-mentioned is an overall range of a few charges levied by the lenders on business loans.
| Particulars | Charges |
| Processing Fees | Up to 6% of the loan amount |
| Prepayment Charges | Up to 5% of the outstanding principal |
| Penal Interest | 2%-6% on the outstanding loan amount |
Business Loan – Features and Benefits
Below-mentioned are the features of business loans offered by various lenders:
- Most banks and NBFCs offer both secured and unsecured business loans
- Business Loan interest rates vary across the lenders and are offered on the basis of credit profile of the applicant, nature of business, type of business loan offered and nature of collateral/security
- Existing business loan borrowers of many banks and NBFCs can avail top-up loans over and above their existing business loans.
- Many lenders also offer overdraft facilities to their existing business loan borrowers.
- Existing as well as new customers of some lenders can apply for pre-approved business loans with instant loan disbursal and minimal documentation.
- Many lenders offer concessional interest rates to women borrowers.
- Applicants can also apply for business loans through online mode with quick approval, minimal documentation and swift loan disbursal
Eligibility Criteria for Business Loan
Lenders usually set their business loan eligibility criteria based on the following factors:
- Age: 21 years at the time of loan application and 65 years at the time of loan maturity (may vary across lenders)
- Minimum Business Vintage: 3 years (may be 5 years for some lenders)
- Minimum Business Turnover: Rs 90,000 to more than Rs 250 crore
- Credit Score: 750 or above (some lenders may offer business loans to applicants having lower credit scores)
- Minimum Income: Rs 1 lakh p.a.
- Eligible Entities: MSMEs, Proprietors, Limited Liability Partnership firms, Private Limited Companies, Public Limited Companies, self-employed individuals, self-employed professionals (doctors, CA, CS, architect, etc.) individual corporations, etc.
Documents Required for Business Loan
Applicants usually require the following documents for processing business loan applications.
- ID Proof: Voter ID, Driving License, Aadhar Card, Passport
- PAN Card for partnership firms, individuals and companies
- Address Proof: Telephone/electricity bill, Voter ID, Passport, Bank Statement, Driving License, registered lease deed or sale agreement, NREGA Card
- Age Proof: Birth certificate, PAN card, Aadhar card, Passport, etc.
- Ownership proof of residence or office
- Business continuity proof
- Copy of company’s PAN card
- Business registration proof
- Passport size photographs
- Latest GST returns
- Bank statement for last 6 months
- Latest ITR along with income computation, B/S, P&L account for last 2 years certified by a CA
- Sole proprietor declaration or certificate
- Partnership deed copy
- Certified copy of MOA, AOA and Board Resolution
Personal Loan v/s Business Loan – Which one best suits your needs?
Personal loan can be used for meeting both personal and business requirements, business loans can be used only for financing various business related activities like raising working capital, financing business expansion, etc. While personal loans are usually unsecured in nature, business loans can be both secured and unsecured in nature.
Personal loans are offered as term loans, where repayment is EMI-based, or as an overdraft facility. However, business loans are offered in the form of term loan facility, limit-based facilities like overdraft and cash credit accounts, bill discounting, non-fund based facilities like letter of credit and bank guarantee, etc.
Loan applicants planning to avail lesser loan amounts without collateral can apply for personal loans or unsecured business loans. Those having more complex requirements and/or greater repayment flexibility should opt for respective business loan schemes based on their requirements.