Business Loan Interest Rate
Interest rate is the amount of interest charged over and above the principal amount by the lender from the borrower. Interest rate is the percentage or principal of the loan amount. Business loan interest rate is the amount levied by the lender over the principal amount taken for business purpose.
Business Loan Interest Rate
Starting a business requires planning and organising to make a business successful. One also needs a sufficient money to grow their business or to start their own business. One can avail a business loan from any financial institution to start up their business. Today in this article we will have a closure look on the business loans, the interest rates and the various charges on business offered as per comparison to banks.
What do you mean by Business Loan?
Business Loan is a loan which can be availed by any person who wants to start their own business or any individual who wants to expand their business.
There are two types of business loans offered by the bank –
1. Secured loans – This is a loan where individuals take a loan with collateral. Here the rate of interest is less.
2. Unsecured loan/ Small business loans – This loan a loan where businesses take a loan without any collateral. Here the interest rate is on higher side.
Also Read: Federal Bank Gold Loan
Benefits and Features of Business Loan
- Helps to start and grow your own business
- Helps in expanding your business
- Strengthens business credit score
- No collateral required
- Attractive and competitive interest rate
- Simplified documentation process
- Higher loan disbursal amount
What are the factors that affect the interest rate of Business Loan
Business loans are offered to the individuals who wants to grow their business or start their own business. Different bank offers different interest rates, loan amount and tenure for business loans. Business loan interest rates are important accepts for every borrower because everyone wants a high loan amount at a low interest rate, but there are certain factors which may affect you to get lower interest rate business loan. Mentioned below are some of the factors which affect your business loan interest rate.
- CIBL Score
A score of 750 or above is said to be a good and healthy score. If you have a low CIBL score then your rate of interest will be higher on the other hand if your score is higher you will get a lower interest rate.
- Nature of the Business
Your nature of business should be positive and doing of business should not be negative. Therefor nature of your business is one of the main factor which affects your business loan. On deciding the interest rate, the lenders will examine the nature of your business, whether it is profit making or loss making.
- Business Reputation
If your business reputation is good and have a steady track record of earnings, you can get attractive and lower rate of interest on business loan.
- Profit made by the Business
The lender will always examine the monthly, quarterly, and annual profit of your business before deciding the interest rate.
- Repayment History
Repayment history is another factor affecting your business loan interest rate. If your past repayment history is good then you are likely to get a lower rate of interest.
- Good Relation
Your interest rate also depends on your relation with the financial institution. If you have a good relation with the financial institution then you are likely to get a lower interest rate.
1. SBI Business Loan Interest Rate
SBI offers simplified small business loan to the entrepreneurs engaged in manufacturing, services, and wholesale or retail trade, for their business expansion. To avail business loan from SBI you just needs a minimal documentation[1].
| Interest Rate | As per the lender’s terms and conditions |
| Loan Amount | Rs 10 lakh to Rs 25 lakh |
| Loan Tenure | From 12 months to 60 months |
| Margin | 10% |
| Processing Fee | As per the lender’s terms and conditions |
| Pre-Closure Charges | As per the lender’s terms and conditions |
2. HDFC Bank
HDFC offers business loan offers both secured and unsecured business loans to self-employed individuals, private companies, business enterprises, partnership firms that are involved in trading, manufacturing, or services[1].
The Business Loan Schemes offered by the lender includes:
- HDFC Bank Business Loans for Manufacturers
- HDFC Bank Business Loans for Traders
- HDFC Bank Business Loans for Chartered Accountants
- HDFC Bank Business Loans for Doctors
- HDFC Bank Business Loans for Professionals
- HDFC Bank Term Loan
- HDFC Bank Working Capital Loans for Small Business
- HDFC Bank Working Capital Loans for Contractors etc.
| Interest Rate | 11.90% p.a. to 21.35% p.a. |
| Loan Amount | Up to Rs 50 lakh |
| Loan Tenure | Up to 7 years |
| Processing Fee | 2% + GST |
| Prepayment Charges | 25% of the principal outstanding amount |
| Overdue EMI | 2% per month |
HDFC Business Loan Interest Rate
| Particulars | Interest Rate ( per annum) |
| For availing fresh business loans | 10% to 22.50% p.a. |
| For business loans for professionals | 11.01% to 14% p.a. |
| For balance transfer of existing business loans from other lenders | 15.75% p.a. onwards |
| For balance transfer of existing business loans for professionals from other lenders | 13.29% p.a. onwards |
| HDFC Bank Sustainable Livelihood Initiative | 11.50% to 19% p.a. for SHG and 22% to 25% p.a. for JLG |
3. Axis Bank
Axis Bank offers business loans to both self-employed and salaried individuals, to trust and societies, individuals with business registration, etc. Axis Bank business loan comes with zero collateral. Apply business loan from Axis Bank and get all the needs for your business development.
| Interest Rate | 11.25% p.a. onwards |
| Fixed Rate of Interest | 14.25% to 20% per annum |
| Loan Amount | Up to 10 crore |
| Repayment Tenure | Up to 15 years |
| Processing Fee | 0.75% of the loan amount + GST |
| Prepayment/Foreclosure Charges | 2% to 4% + GST on the principal outstanding loan amount |
| Penal Interest | 2% per month |
| Bounce Cheque | Rs 500 pr cheque bounce + GST |
Interest Rates of Axis Bank Business Loans
| Particulars | Floating Rate of Interest (per annum) |
| Overdraft | 12.25% to 13.25% p.a. |
| Cash Credit | 12.25% to 13.25% p.a. |
| Term Loan | 12.25% to 13.25% p.a. |
| Unsecured OD | 11.85% to 15.85% p.a. |
| Quick OD | 19.25% to 20.25% p.a. |
| CGTMSE | 13.75% to 14.75% p.a. |
| Unsecured merchant loan | 17.75% to 18.75% p.a. |
| Overdraft against FD | 11.25% to 12.25% p.a. |
4. Federal Bank Business Loan Interest Rate
One can avail business loan from Federal Bank at an attractive interest rate[1]. If you are thinking to start a business or want to expand your business but don’t have a sufficient money, then you can avail for business loan. Federal Bank offers business loan to self-employed individuals, proprietors, partnership firms involved in the business of manufacturing, trading, or services.
| Interest Rate | From 8.85% p.a. |
| Loan Amount | Up to 7.5 crore |
| Loan Tenure | Up to 120 months |
| Loan Processing Fee | Up to 3% of the loan amount |
5. Kotak Mahindra Bank Business Loan Interest Rate
Kotak Mahindra Bank offers business loans to individuals to meet newer milestone of success everyday. Kotak Mahindra offers a range of collateral-free customized business loan solutions best suited for everyone’s business requirements. To avail a business loan from Kotak Mahindra Bank, one has to be in business for last 3 years, applicant should be a Sole Proprietor, Partnership firm, Private Ltd Co, Trust, LLP involved in the business of manufacturing, trading and services. The applicant should be minimum 25 years of age and should be not older than 65 years at the time of loan maturity.
| Interest Rate | 16.00% p.a. onwards |
| Loan Amount | Minimum Rs 75 lakh Maximum (as per the applicant’s credit profile) |
| Loan Tenure | Up to 7 years |
| Processing Fee | Up to 2% |
| Prepayment Charges | Up to 4% of outstanding amount |
| Penal Interest | Up to 3% |
6. Tata Capital
Tata Capital offers business loans to self-employed individuals and business entrepreneurs to grow their business or to enhance their business. Tata Capital offers business loan products such as –
- Term loans cash credit
- Dropline overdraft facility
- Equipment finance
- Loan against security etc.
Business loan schemes offered by the Tata Capital are –
- Tata Capital Business Loans for Women
- Tata Capital MSME/SME Loans
- Tata Capital Machinery Loans
- Tata Capita Working Capital Loans
- Tata Capital Construction Equipment Finance etc.
Apply business loan from Tata Capital with less documentation and attractive interest rates and charges.
| Interest Rate | 12% to 19% |
| Loan Amount | Up to 2 crore |
| Loan Tenure | Up to 5 years |
| Processing Fee | Up to 2% of the loan amount + GST |
| Foreclosure Charges | 4.5% of the principal outstanding on existing loan plus GST |
| Penal Interest | 3% on the overdue amount per month + GST |
Tata Capital Business Loan Interest Rate on the business loan schemes:
| Particulars | Details |
| Tata Capital Business Loan | Starts from 12% p.a. |
| Tata Capital Business Loan for Self-Employed Doctors and Professionals | 13.50% onwards |
| Tata Capital Business Loan for Self-Employed Non-Professionals | 16.50% onwards |
| Tata Capital Business Loan for Women | 19% p.a. onwards |
| Tata Capital Business Loan for Machinery | 19% p.a. onwards |
| Tata Capital Business Loan for MSME/SME | 19% p.a. onwards |
7. Canara Bank Business Loan Interest Rate
Canara Bank provides business loans to the individuals who have been in the business for a minimum of 3 years. To apply for the loan from Canara Bank the applicants should be 21 years of age and should be not older than 65 years of age at the time of loan maturity. The bank offers various business loan products to its MSME borrowers such as MSME Gold Loan, MSME CAN BEML, MUDRA Canara Atithi, Canara GST, Canara Udyog etc.
| Rate of Interest | 9.05% to 18% p.a. |
| Loan Amount | Up to 20 crore |
| Loan Tenure | Up to 10 years |
| Processing Fee | Up to 1% of the loan amount |
8. IDFC First Bank
IDFC Bank offers business loans to both self-employed and salaried professionals such as doctors, traders, manufacturers etc., to meet their business needs and growth of their business[1]. IDFC bank also offers loan against property to self-employed, salaried individuals and businesses for all kinds of commercial residents and industrial properties. Avail collateral free business loan up to Rs 1 crore from IDFC Bank with less documentation. IDFC First Bank business loans make it convenient to finance your business needs. If you are a start up or a seasoned entrepreneur looking forward for the growth of your business, IDFC Bank business loans can help you in business loans with preferential business loan rates.
| Interest Rate | 15.00% p.a. onwards |
| Loan Amount | From 9 lakhs to 100 lakhs |
| Loan Repayment Tenure | 12 to 48 months |
| Processing Fee | Up to 3.5% |
| Foreclosure Charges | 5% of the outstanding principal amount |
| Penal Interest | 2% of the unpaid EMI or Rs 300 whichever is higher |
| EMI Bounce Charges | Rs 400 |
| Loan Products | Rate of Interest |
| Business loan (self-employed) | 15% |
| Professional Loan (salaried/self-employed) | 10.50% |
IDFC First Bank business loans are designed to help individuals to meet a variety of business requirements, including market expansion, equipment purchase, facility upgrades, and working capitals requirements.
9.Union Bank of India
Union Bank is an Indian public sector bank which provides all the financial services to its customers. Union Bank offers various types of retail and MSME loans at an attractive interest rate. It offers loans to MSMEs engaged in the trading, manufacturing, and services. MSME loans are a special category of loan products that help in raising the working capital of micro, small and medium enterprises.
| Interest Rate | 8.20% to 12.30% p.a. |
| Loan Amount | Up to 25 crore |
| Loan Tenure | Up to 10 years |
| Processing Fee | As decided by the bank from time to time |
| Prepayment Charges | As decided by the bank from time to time |
10. Indifi technological Pvt Ltd.
Indifi offers business loans to self-employed individuals and business enterprises. The business loan products offered by Indifi include term loans, cash credit, line of credit, merchnt cash advance and invoice discounting. The business loan schemes offered by Indifi are Indifi Term Loans, Indifi Business Loan Line of Credit, Indifi Working Capital Loans, Indifi Merchant Cash Advance Loan etc. Indifi interest rate usually ranges from 15% to 24%. With better knowledge and proper research, you can opt for a business loan that fulfils your funding requirements with the best interest rate.
| Interest Rate | Starting from 1.5% per month |
| Loan Amount | Up to Rs 1 crores |
| Loan Tenure | Up to 36 months |
| Processing Fees | 2% |
| Preclosure Charges | 4% |
FAQs
1. What do you mean by Business Loan?
Ans: Business Loan is a loan which can be availed by any person who wants to start their own business or any individual who wants to expand their business.
2. What are the two types of business loans offered by the bank?
Ans: Two types of business loans offered by the bank are –
1. Secured loans – This is a loan where individuals take a loan with collateral. Here the rate of interest is less.
2. Unsecured loan/ Small business loans – This loan a loan where businesses take a loan without any collateral. Here the interest rate is on higher side.
3. Is the business loan interest rate fixed or floating?
Ans: It depends on the bank or lender to offer fixed or floating interests’ rates. However, most banks prefer Fixed interest rates over floating.
4. What are the factors which affects business loan interest rate?
Ans: Factors which affects business loan interest rates are as follows:
- CIBL Score
- Business Reputation
- Nature of Business
- Repayment History
- Relationship with the bank etc.
5. What is the repayment period of a business loan?
Ans: The minimum repayment period is 1 year whereas the maximum repayment period is 5 to 6 years.
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