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Business Loan

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Business Loan Details
Loan Amount Rs. 1 lakh to Rs. 1 crore
Interest Rate 11% onward
Tenure 6 months to 5 years
Processing Fee Up to 3% of loan amount
Foreclosure Fee Up to 7% of the outstanding amount + GST
Collateral Not required

Features of a Business Loan

Below-given are business loan details:

  • A Business Loan is a loan taken to fund business requirements such as working capital, expanding operations, adding equipments, inventory, sponsoring events, projects, hiring staff, wages, etc
  • At Loanbaba, you can compare top offers from banks/NBFCs for unsecured business loans. You can apply online for the schemes.
  • The lowest interest rate is 11% by Axis Bank, followed by 11.20% by State Bank of India.
  • The lowest EMI per Rs. 5 lakhs for 60 months tenure is 10,871

Types of Business Loans in India

There are several types of loans for business that are provided by banks and NBFCs today. Some of the popular types of business loans are mentioned below:

Types of Loans for Business Details
1. Unsecured Business Loan You can avail high loan amount up to Rs. 1 crore under this scheme. No security is to be kept with bank.
This loan is for businesses that have at least 3 years vintage.
The company has to meet the eligibility requirement set by the bank/NBFC in regards to annual turnover to qualify for the loan.
2. Secured Business Loan In a secured loan, you have to provide an asset to the bank/NBFC providing you funds. The loan amount will be based on the monetary value of the asset.
You can get up to 80% of the asset’s value as the loan amount.
Many business owners take a loan against securities, loan against property, and other assets to arrange finances for their company.
3. Working Capital Loan This type of loan is for the purpose of funding day-to-day operations of a company.
The funds can be used to pay for regular business expenses to fuel the daily activities of the company.
Business owners use a working capital loan for sales/marketing campaigns, wages, manufacturing, adding resources, etc.
4. Equipment Financing This type of loan is taken to purchase equipment. Being a secured loan, the equipment itself serves as collateral.
You can get up to 90% or 100% finance as per the value of the equipment.
5. Line of Credit It is a revolving line of credit. Here, as a borrower you can take an agreed amount as credit.
You can draw the amount whenever necessary. There is no necessity to withdraw the amount in lump-sum.
Also, you have to pay an interest on the only amount used, instead of the total approved amount.
6. Bill Discounting This scheme provides instant cash-back on bulk or large purchases by means of getting discount on credit sales
You have to submit important documents which justify the transactions, such as transportation receipts, invoice, lading bills etc.
7. Business Loan for Women There are special schemes for women who have exceptional entrepreneur skills.
To be eligible for loan on business, the female must be an owner of at least 50 percent of the company.
Such a loan can be provided at a discounted rate of interest.
8. Mudra Yojana Business Loan The Mudra Yojana business loan was launched by the government of India for small and medium sized enterprises.
These loans carry special interest rates and are provided by almost every bank offering business loans.

Business Loan Eligibility Criteria

Below given are the eligibility requirements:

Eligibility Criteria Details
1. Who Can Apply? Self-employed individuals, professionals, service providers, manufacturers, private limited or limited company, etc.
2. Applicant’s Age At least 21 years old
3. Business Vintage Minimum 3 years
4. Annual Turnover Over Rs. 50 lakhs
5. Other Requirements Business should be registered, ITR of the last 3 years, and other required documents

Documents Required for a Business Loan

If you want to apply for an unsecured business loan, then you have to provide KYC (PAN Card, Aadhaar Card) - of Business /Directors/Partners/Proprietor. Apart from these, you have to submit the following documents.

Required Documents Details
1. Photograph As a borrower, you must provide your recent passport-sized photographs
2. Proof of Identity PAN card, Valid passport, Driving License, Aadhaar card, Voter's ID card
3. Proof of Address Business address proof, Utility bill, Latest (not older than 3 months) water bill/electricity bill/telephone bill/gas connection, Voter's ID card, Passport, Aadhaar Card, Driving license
4. Proof of Business Vintage and Ownership Proof of business existence for last 3 years, Shop Act/Gumasta License (if applicable), and registration proof
5. GST GST Certificate and GST Returns of last 4 quarters
6. Income Tax Return ITR for 3 years with computation
7. Financial Documents Current/saving account bank statement for all current/saving accounts in PDF Format (latest 12 months)
Audited Financials for 2 years - Balance Sheet and P&L
Existing Loan Account statements/sanction letters.

Business Loan Interest Rates in India

The business loan interest rate starts at 12%. The rate of interest is influenced by the following factors:

  • Your age and personal profile
  • Your Credit score
  • Repayment capacity
  • Financial position of the company
  • Loan scheme chosen
  • Relationship with the bank/NBFC

NOTE: To better understand the factors that impact a loan’s interest rate - click

Business Loans Interest Rates by Top Banks

Bank Loan Amount Business Loan Interest Rates and Processing Fee (PF) Rs. 5 Lakhs Loan, Lowest EMI for 60 Months Tenure
State Bank of India Rs. 5 lakhs to Rs. 100 crore 11.20% - 16.30%, PF 2% to 3% Rs. 9,333 per month
HDFC Bank Rs. 50,000 to Rs. 50 lakhs 15.70% onward, PF 0.99% to 2.50% Rs. 11,961 per month @15.75%
NeoGrowth Credit SME Business Loan Rs. 1 lakh to Rs. 73 lakhs APR 21% onward, PF up to 3%
Fullerton Business Loan Rs. 1 lakh to Rs. 50 lakhs 17% onward, PF Rs. 12,426 per month
ICICI Bank Rs. 1 lakh to Rs. 40 lakhs 12.90% - 16.65%, PF 0.99% to 2% Rs. 11,377 per month @13%
Axis Bank Rs. 3 lakhs to Rs. 50 lakhs 11% onward, PF up to 2% Rs. 10,871 per month
RBL Bank Rs. 1 lakh to Rs. 10 lakhs 16.25% onward, PF 1.80% to 2.20% Rs. 12,226 per month
Kotak Bank Rs. 3 lakhs to Rs. 75 lakhs 17% onward, PF up to 2% Rs. 12,426 per month
Capital Float Rs. 1 lakh to Rs. 1 crore 18% onward, PF up to 2% Rs. 12,697 per month
Lendingkart Rs. 50,000 to Rs. 2 crore 15% onward, PF 2% Rs. 11,895 per month
Bajaj Finserv Rs. 5 lakhs to Rs. 30 lakhs 18% onward, PF 2% Rs. 12,697 per month
Standard Chartered Rs. 10 lakhs to Rs. 75 lakhs 16.50% onward, PF 1.5% to 2% Rs. 12,292 per month
Deutsche Bank Rs. 10 lakhs to Rs. 50 lakhs 24.00%, PF up to 3% Rs. 14,384 per month
Edelweiss Rs. 3.5 lakhs to Rs. 25 crore 18% onward, PF up to 2.5% Rs. 12,697 per month

Business Loan EMI Calculator

EMI (equated monthly instalment) amount is a combination of both principal and interest component, which you have to pay every months towards repayment. You can use our FREE business loan EMI calculator before applying for a business loan India. With EMI calculator, you can get the following details:

  • You will get a detailed repayment table. The table shows a break-up of the Total Payment (Principal + Interest).
  • The calculation will also include the amortization schedule. This amortization or payment schedule will show the interest and principal amount to pay separately for a selected tenure.
  • You will also get details about the opening balance, EMI, break-up of the interest and principal, and the outstanding loan amount.

Illustration of a Business Loan

Here is an example on total cost of a business loan:

  • Loan Amount: Rs. 1 lakh
  • Interest Rate: 14%
  • Processing Fee: Rs. 2,000
  • Repayment Tenure: 60 months
  • EMI: Rs. 2,327
  • Total Interest Payout on Entire Tenure: Rs.39,610
  • Total Payments (Principal + Interest + Processing Fee): Rs.139,610 + Rs. 2,000 = Rs. 141,610

Points to Consider Before Applying for Business Loan Online

Here are some of the factors to consider before you apply for an unsecured business loan:

Things to Keep in Mind for Business Loan Details
1. Compare Offers You must compare loan offers from different banks and NBFCs to pick a suitable deal.
On Loanbaba you can compare interest rates, loan amount, tenure, fees, charges, EMI, and other details pertaining to a business loan deal.
2. Interest Rate and Charges The rate of interest and charges affect the total cost of a loan
Lower the rate of interest and charges, lower will be the total cost of the loan.
3. Repayment Tenure Tenure, like the charges and rates, influence the total cost of the loan. A longer tenure means higher cost, as you have to pay interest for a longer time
A shorter tenure entails lower loan cost. This is because you pay the interest for a shorter duration.
Choose tenure as per your repayment capacity. If you can take a loan on a shorter tenure you can reduce the total interest payout.
But if you want to select a longer tenure to make EMIs more affordable, do not hesitate to choose longer repayment duration.
4. Credit History Banks and NBFCs offer best loan offer (lower rates, flexible tenure, highest loan amount possible, and other benefits) to those who are creditworthy. Creditworthiness of a company can be determine by its past repayment records.
A clean repayment record means you had made regular payments on previous and existing loans. This will improve your chances of getting a loan approval. Since the loan will be for a business, your company’s credit history will be looked into.
If your business is fairly new, then the lender will also check your personal credit history along with that of your firm. Thus, it is important to maintain a good personal credit score along with a good company credit score.

Why Choose Loanbaba to Help You Find a Business Loan Online

As a one-stop destination for your business funding needs, Loanbaba provides you a variety of business loan offers from top banks and NBFCs in India. Here is how you can ease your borrowing decision through our website.

  • Check Eligibility and EMI: On our website, you can use the free-of-cost EMI and eligibility calculator to check your loan EMI and loan amount you are eligible to borrow.
  • Grab Instant Quotes from Top Lenders: You will get instant quotes, interest rates, and offers from popular banks and NBFCs on our website.
  • Quick e-Approval: You will receive instant approval of your business loan application if you have submitted the required documents and meet the fund-provider’s loan eligibility criteria.
  • Best Customer Support Experience: We offer you a top-notch customer support. Our customer representatives will help you get the best loan deals at lowest rates. You can contact us at +91 8879695441/8805259089 or email on customersupport@loanbaba.com.
  • Guaranteed Privacy and Transparency: Your business loan application is sent to the bank/NBFC electronically. Thus, there is no risk to your privacy as information you share with us, is never shared with any unconcerned party.

Frequently Asked Questions for Business Loans in India

Below-given are business loan FAQs:

  • 1) How to improve your chances of getting a business loan approval?

    Follow the below mentioned steps to get your business loan application processed faster:

    • High Credit Score: You should maintain a good credit history and score. It will assist you in gaining trust of the financial institutions about your credit worthiness, and help in getting the loan application approved in a timely manner.
    • Good Repayment Capacity: Apply for a loan amount that is suitable as per your repayment capacity. Banks and NBFCs study your financial profile and business’s annual turnover before approving a loan amount. If the amount required exceeds your repayment capacity, the loan application can be rejected.
    • Submit Correct Documents: Provide all necessary documents such as your residence proof, ID proof, age proof with the company documents. The documents need to be uploaded online with the application form.
  • 2) Who are the eligible entities to apply for the loan?

    Those who can apply for a business include: self-employed individuals such as architects, doctors, CAs, or self-employed non professionals such as partnership firms, sole proprietors, public limited companies, and private limited companies involved in the business of manufacturing, trading, and services.

  • 3) What is the eligibility norm for applicant’s age?

    Banks and NBFCs offer loans to those between 21 years and 65 years of age.

  • 4) How much time it takes to get a loan for business from banks and NBFCs?

    The time taken for loan amount disbursal varies from one financial institution to other. If you submit correct documents, the loan can be processed faster. Usually it takes 3 to 4 days to process the loan.

    • You should maintain a good credit history and score. It will assist you in gaining trust of the financial institutions about your credit worthiness, and help in getting the loan application approved in a timely manner.
    • Apply for a loan amount that is suitable as per your repayment capacity. Banks and NBFCs study your financial profile and business’s annual turnover before approving a loan amount. If the amount required exceeds your repayment capacity, the loan application can be rejected.
    • Provide all necessary documents such as your residence proof, ID proof, age proof with the company documents. The documents need to be uploaded online with the application form.
  • 5) What is the tenure requirement?

    The tenure is between 1 year and 5 years, but may vary as per the discretion of the financial institution.

  • 6) What is the importance of business growth and vintage?

    For a financial institution to take a lending decision, it is important that your business has enough vintage and a growth figure. It gives the lender an assurance of your company’s stability, authenticity, and profit over years. These factors together decide your repayment capacity. Banks typically need at least 3 years of business stability and profitability. The lender may specify the minimal annual growth rate or turnover in their eligibility criteria.

  • 7) What is the importance of financial stability to avail a business loan?

    Lenders check financial stability to understand your repayment ability. For this purpose, the lending institution will check your company’s (and in some cases, your personal account) bank statement of the recent 6 months or a year. The bank/NBFC will consider your average account balance, outbound and inbound cheque bounce information, credit track record, etc to determine your loan eligibility.

  • 8) Why to get the financial statement and documents audited by a Chartered Accountant?

    The bank/NBFC will prefer that you submit audited financial reports and statements. This is because such reports are authentic and have lower chances of errors or discrepancies. It will reduce the bank’s work on spending time on verifying these documents. Also, it will increase your ability to get the funds as audited reports are more accurate, which is needed to give a real idea to the lender about your financial information.

  • 9) Why do financial institutions charge a pre-closure fee?

    Pre-closure fee is charged if you wish to close the loan before the end of tenure. Financial institutions may impose this fee to cover the loss. The fee can be up to 3% (sometimes more) of the outstanding amount.

  • 10) Will the business loan carry fixed interest rate or floating interest rate?

    If you take a loan on a fixed rate, then the interest rate will not change throughout the tenure. But if you take a loan on a floating rate, the interest rate pay change time and again, and so will the EMI amount. Most of the business loans carry fixed interest rates. However, in certain cases, a floating rate may be applicable. Check details of the loan scheme to understand the type of interest rate applicable.

  • 11) Which factors affect the business loan interest rate?

    The below 3 factors influence the rate of interest:

    • Greater the business tenure, lower will be the rate of interest
    • Higher the loan amount, lower will be the interest rate
    • Shorter the tenure, lower will be the interest payout
    • Longer the business vintage and stability, lower will be the rates
  • 12) Is it possible to reduce the business loan EMI?

    You can lower the loan EMI if you opt for full or partial prepayment. Most financial institutions may allow foreclosure or par pre-payment after the complete payment of the initial 6 to 12 EMIs. So you can choose to repay the loan sooner and save yourself on the interest payout. Partial payments can also help to lower the EMI burden for the rest of tenure.

  • 13) Does defaulting on EMI affect co-applicant?

    Co-applicants are equally responsible as the primary applicant, to shoulder the responsibility of the loan. So if the primary borrower fails to repay the loan on time, it will affect the co-applicants. In case of a default, all the applicants are liable. Thus, credit scores of every applicant will be negatively affected.

Business Loan Reviews


Overall Rating

4.6/5

46 reviews
Rating Breakdown
5
20% Complete (danger)
4
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3
20% Complete (danger)
2
1% Complete (danger)
1
0% Complete (danger)
Most Helpful Reviews
  • Feb 29, 2020
    Happy With Business Loan in Hyderabad
    I am much satisfied with the business loan in Hyderabad as it required a lot less paperwork. Everything was online.
    0

    Jan 24, 2020
    Business Loan Bank
    Thank you for the help to arrange business loan from a top bank.
    0

    Dec 03, 2019
    Experience on IIFL Business Loan
    My experience of applying for IIFL business loan at Loanbaba is nothing less than an adventure. I applied on a weekend, so it took a day more to respond. But I was contacted on Monday and the loan application was quickly processed thereafter. Since, I took more time to send all documents, the procedure was delayed, but finally once that was done, I received the amount in no time.
    0

    Nov 26, 2019
    Business Loan HDFC for Inventory
    I wanted funds for extra inventory and got the right business loan for it at HDFC bank online.
    0

    Oct 01, 2019
    Business Loan Website
    With the help of customer care executives and wealth managers, I was able to secure a suitable business loan deal on this website. Thank you.
    0

      • April 22, 2019
        Timely Business Loan
        The business loan process went well and everything from loan approval to disbursal happened on time.
        0

        April 21, 2019
        Business Loan Borrowing
        Thanks for approving by business loan application. It was a worriless borrowing experience.
        0

        April 20, 2019
        Thanks for Business in Chennai
        Best offers for business loan in Chennai, thanks for that.
        0

        April 19, 2019
        IIFL Business Loan Urgent
        The biggest benefit of IIFL business loan is that if you have an urgent need, then you are well taken care of.
        0

        April 17, 2019
        HDFC Business Loan Application
        Our HDFC business loan was disbursed within less than a week. It was a fantastic experience talking with Loanbaba team. I appreciate the way they helped us out with the queries and application process and to get the loan approved by the HDFC bank.
        0

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