It is impossible to run a business without proper funding, irrespective of whether it is a small scale or large scale one. Free flow of cash is not only required for investment purpose but also as working capital. Often businesspersons do have sufficient cash when required. Also the money required varies from time to time, depending on the scale of investment. Entrepreneurs usually prefer to keep their cash handy, and borrow low interest rates Business loans from the financial institutes.
At loanbaba.com, you can compare business loan interest rates across banks and non-financial banking companies.
Particulars of Interest Rate Business Loan |
Interest Rate and Other Charges Applicable |
Interest Rate |
13% onwards |
Type of Interest Rate |
Flat Rate and Diminishing Rate |
Processing Fees |
Zero to 2.5% of the loan amount |
Loan Amount |
Rs. 1 lakh to Rs. 1 crore |
Loan Tenure |
6 months to 5 years |
Preferable Credit Score |
700 and above |
Following are the interest rate in business loan by leading banks and NBFCs in India.
Bank | Loan Amount | Business Loan Interest Rates* | Lowest EMI per lakh for Max Tenure |
---|---|---|---|
Rs. 1 Billion Max | 11.20% - 16.30% | Rs. 2,594 for 48 months | |
Rs. 50 Lakhs Max | 15.50% - 18.30% | Rs. 2,808 for 48 months | |
Rs. 40 Lakhs Max | 12.90% - 16.65% | Rs. 2,270 for 60 months | |
Rs. 50 Lakhs Max | 15.50% to 24% | Rs. 2,405 for 60 months | |
Rs. 10 Lakhs Max | 20.00% - onwords | Rs. 2,649 for 60 months | |
Rs. 75 Lakhs Max | 16.00% - 19.99% | Rs. 2,432 for 60 months | |
Rs. 1 Crore Max | 18.00% – onwords | Rs. 3,615 for 36 months | |
Rs. 1 Crore Max | 18.00% - onwords | Rs. 9,168 for 12 months | |
Rs. 30 Lakhs Max | 16.00% - 21.00% | Rs. 2,834 for 48 months | |
Rs. 75 Lakhs Max | 13.50% - 20.00% | Rs. 2,301 for 60 months | |
Rs. 50 Lakhs Max | 24.00% | Rs. 3,923 for 36 months | |
Rs. 30 Lakhs Max | 18.25% onwards | Rs. 2,553 for 60 months | |
Rs. 50 Lakhs Max | 16.00% onwards | Rs. 2,834 for 48 months |
The top 4 decisive factors that determine the Business loan bank interest rates, in India are:
It is however necessary that a borrower does a thorough market study about the business loan provider. He/she should look for lowest Bank interest loan rates and compare business loan rates India. He/she should go for low interest rate business loans, and make sure that the interest rate and other charges being charged on the loan amount, the interest rate method, and EMI policy, are in accordance, to the bank’s policy.
Business loan interest rates in India are of two types:
1) Diminishing rate of Business Loan Interest
2) Flat rate of interest for Business Loan.
When the interest rate is levied per month on the remaining loan amount, it is referred to as Diminishing or Reducing rate of interest. In this system, the EMI stands out to be the interest rate that is to be paid for the outstanding amount for every month in addition to the principal amount of repayment. In this process, after each EMI payment the amount of borrowed loan decreases. So the interest rate next month is calculated on the remaining amount of loan. It is calculated on the basis of the given formula:
Interest payable per payment = interest Rate per Payment X Remaining loan amount.
If a person has borrowed a loan amount of Rs. 2,00,000, with reducing rate of interest applicable being 10% per annum, for 5 years tentatively, the EMI payable would reduce with every month ‘s repayment. So the first year the loan applicant has to pay an interest of Rs 20,000, in the following year the interest rate would come down to Rs. 18000, as the principal amount would come down Rs. 1,80,000. This will continue till the last year of loan clearance, when the borrower would have to pay only Rs. 4000 as interest. This method works just opposite to the fixed rate of interest payment method.
Flat interest is calculated on total amount of loan, taking into account its time period of repayment. In this system, the monthly payment of EMI does not decrease. The formula for calculating flat rate of interest is given below:
Interest Payable per Payment = (Original loan amount * Number of Years * Interest Rate per annum)/Number of Payments.
This means that if a businessperson takes a credit of Rs. 2,00,000, with a levied interest rate of 10%per annum for a period of 5 years , then he would pay Rs. 40,000/- as principal repayment(2,00,000/5)+20,000 interest @10% of 2,00,000 equal to a total of Rs.60,000/- or Rs. 5000/- every month. Total amount to be paid by a borrower will be Rs.5000X12X5 =Rs.3, 00,000/-.
In addition all business loan interest rates charged by nationwide banks and credit companies follow a value principle of amortization table. Financial companies and banks Business loan interest rate, vary within 13%-24%p.a.
Here are some of the ways you can get lowest interest rate business loans for yourself.
Here are some business loan rates tips to help you get a suitable offer:
Following are the FAQs on business loan rate of interest in India:
The rate of interest charged by the lender depends on factors like: annual income, credit history, existing loans, CIBIL score, business stability and its share values in the market, whether it’s a start-up or long running business and finally the risk factors involved.
Always read the terms and conditions for company loan. Lowest business loan interest rate in India from a financial institute may not mean it is the most suitable offer. Sometimes the financial institute may incur hidden charges. In fact you should take information of all charges applicable, such as processing fee, administrative costs, late penalty, prepayment charges etc before choosing a suitable offer.
There is hardly much difference in rates charges by NBFCs and banks (both public and private). However, some banks charge lower than leading NBFCs, but may offer lesser benefits. To find the perfect fit of interest rate, you can compare top providers of business loan and their rates at loanbaba.com.
If the business has co-owners then the co-owners become co-applicant for the loan. If you are unable to secure better interest rate on your loan, then the co-owners income profile may come to rescue. However, since the loan is for business, the analysis of interest rate will depend primarily on the performance of the business.
Yes, the company’s financial statements such as Profit and loss statement, balance sheet, liabilities portfolio, tax paid etc will be considered to understand the creditworthiness of the company in question. If the organization has good financial statements, then the financial institute will readily provide the loan at lower interest rate.
Applying for an unsecured Business Loan at Loanbaba.com is simple, just follow the below mentioned steps.
Step 1: Apply for business loan at: https://www.loanbaba.com/online-loans-india/business-loan.aspx
The application is sent electronically to Loanbaba team. The customer service representative gets in touch with the applicant directly.