|Particulars of Interest Rate Business Loan||Interest Rate and Other Charges Applicable|
Type of Interest Rate
Flat Rate and Diminishing Rate
Zero to 2.5% of the loan amount
Rs. 1 lakh to Rs. 1 crore
6 months to 5 years
Preferable Credit Score
700 and above
Business loan interest rates are subject to change concerning RBI guidelines. Watch this space to keep track of the latest interest rates offered by banks and other lenders here. We. at Loanbaba, work closely with reputed banks, NBFCS, and financial institutions so that you can keep abreast of all details from business loans interest rates offered by the lenders to loan tenures and other charges like processing fees, foreclosure fees, etc.
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 purposes 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.
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||Processing Fee on the Loan Amount|
|Rs. 1 Billion Max||11.20% - 16.30%||Rs. 2,594 for 48 months||2% to 3%|
|Rs. 50 Lakhs Max||15.50% - 18.30%||Rs. 2,808 for 48 months||0.99% onwards. Max 2.50%|
|Rs. 40 Lakhs Max||12.90% - 16.65%||Rs. 2,270 for 60 months||0.99% onwards. Up to 2%|
|Rs. 50 Lakhs Max||15.50% to 24%||Rs. 2,405 for 60 months||Up to 2%|
|Rs. 10 Lakhs Max||20.00% - onwords||Rs. 2,649 for 60 months||3%|
|Rs. 75 Lakhs Max||16.00% - 19.99%||Rs. 2,432 for 60 months||Up to 2%|
|Rs. 1 Crore Max||18.00% – onwords||Rs. 3,615 for 36 months||Up to 2%|
|Rs. 1 Crore Max||18.00% - onwords||Rs. 9,168 for 12 months||2%|
|Rs. 30 Lakhs Max||Interest rate 18% onwards||Rs. 2,938 for 48 months||Up to 2%|
|Rs. 75 Lakhs Max||13.50% - 20.00%||Rs. 2,301 for 60 months||2%|
|Rs. 50 Lakhs Max||24.00%||Rs. 3,923 for 36 months||Up to 3%|
|Rs. 30 Lakhs Max||18.25% onwards||Rs. 2,553 for 60 months||2% onwards|
|Rs. 50 Lakhs Max||16.00% onwards||Rs. 2,834 for 48 months||2%|
|Rs. 50 lakhs Max||18.00% onwards||Rs. 2,938 for 48 months||1.50% to 2.50%|
|Rs. 5 Lakhs Max||Interest rate 1-1.5% per month(Flat).||3%|
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 the lowest Bank interest loan rates and compare business loan rates in 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 with the bank’s policy.
Business loan interest rates in India are of two types:
1) Diminishing rate of Business Loan Interest
2) A 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 the 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 based on 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 the 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 the 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 the 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 credit of Rs. 2,00,000, with a levied interest rate of 10%per annum for 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. The total amount to be paid by a borrower will be Rs.5000X12X5 =Rs.3, 00,000/-.
Besides, all business loan interest rates charged by nationwide banks and credit companies follow a value principle of the 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 the lowest interest rate for yourself.
Here are some business loan rates tips to help you get a suitable offer:
To understand the total cost of the loan, you must know not only the interest rate but other involved charges. Below, we have mentioned a clear listing of the charges and rates that apply on a loan for business.
Business Loan Rates: The rate of interest depends on the loan amount you apply for and the nature of the business, besides the other factors discussed above. Also, your past relationship with financial institution matters. If you have had a good repayment history with a financial institution, then the same lender can offer discounted or a lower rate on the loan. Thus, the rates on the loan differ from person to person, based on certain factors and criteria.
Processing Fees: Banks and NBFCs can charge between 2% and 3% of the loan amount as processing fees. To know the lowest applicable fee to process the loan, compare offers by financial institutions on Loanbaba.
Prepayment and Foreclosure Fees: If you have surplus funds with you, then you can choose to prepay or foreclose the loan. You do not always have to pay the specified EMIs through the tenure, but can a greater amount to repay sooner and reduce the EMI burden, and at times, even reduce the interest amount by repaying faster. If you pay the entire loan amount before the tenure ends, then it is known as foreclosure of the loan.
If you partly pay the amount before time, then it is known as prepayment. The charges for the same can be up to 5% of the outstanding amount, depending on the interest rate applicable on the loan. Some of the business loans however cannot be paid back before time, so check the clauses for foreclosure and prepayment with the financial institution you are applying with.
Insurance Premium: It is not mandatory to take insurance for your company or personal insurance as a business owner. However, if the loan amount is big, and the loan itself is an unsecured one, then it is advisable to take an insurance policy that offers coverage to the company or you, as an owner, to the amount of the loan. This way, during emergencies, if there is any financial risk, the policy will cover the outstanding dues.
The premium rates will differ based on the risk coverage, so study the insurance plans carefully before choosing one. Sometimes, the bank may offer a policy with the loan, on an additional premium. But also study other similar policies that you can take from insurance companies. Compare the features and cost of the policy, before selecting the right one.
Apart from the factors mentioned above, two major things influence the interest rate.
A) Loan Amount: The higher the loan amount, the greater will be the rate of interest. So, you must borrow funds only as per your need and not exceed the requirement. You may seek a little more amount than what you may require in case you think a need for backup funds. Otherwise, be wise when calculating the amount you need to borrow, and curtail unnecessarily increasing the loan burden. Usually, a lower rate is charged for a higher loan amount, and vice-versa.
The loan amount you are eligible for depends on many factors, especially related to the annual turnover of the company, and the establishment’s current financial position. To boost the loan amount eligibility, make sure to have a strong company credit score, and keep all the documents in place for verifications and checks.
B) Tenure: Longer the tenure, lower will be the monthly EMI, but higher will be the total interest outgo. Similarly, shorter tenure, higher will be the monthly EMI, but lower will be the total interest outgo. Tenure of the loan may also impact the rate of interest. Shorter tenure may apply a higher rate of interest sometimes, or vice-versa. It is best to check with the financial institution you wish to apply with as to the rate applicable over different tenures.
Remember to choose a tenure that entails an EMI suiting to your pockets. You may want to reduce the total interest payout, but if you cannot handle to pay higher EMIs on a shorter tenure, then it is best to stick to a longer tenure as per your repayment capacity.
You can either apply for the loan by visiting a bank branch or financial institution personally or choose to take benefit of our Loanbaba’s free service of connecting you with the right financial institution for the loan. We take care of the loan procedure, and you do not have to personally worry about anything after applying for the funds on our website. We offer you complete customer support without charging any fee or commission.
Manually applying for the loan is time-consuming, not to mention the huge amount of effort and time you have to spend personally contacting every bank and NBFC to know their loan offers. Below-mentioned is how our team helps in easing your journey to avail of a loan for business.
1. A much more comfortable option is to visit the website of Loanbaba to find a list of top banks and NBFCs, offering business loan. Compare the offers and select the one most suitable for your needs.
2. We list out all the latest details of the loan online, right from the loan amount, eligibility criteria, interest rate, tenure, charges, fees, and other information.
3. You can drop in your online loan application on the website, and a customer care executive will get in touch with you in a short time to discuss further. It takes just a few minutes to apply for the loan on the website.
4. There is an option to upload a soft copy of documents with the application so the loan process is completely hassle-free and paperless.
5. You can also keep a track of your loan application on Loanbaba. Any update on the loan application will be communicated to you by our team. On loan approval and signing of the loan agreement, funds will be disbursed to you shortly.
Following are the FAQs on business loan rate of interest in India:
Applying for an unsecured Business Loan at Loanbaba.com is simple, just follow the below-mentioned steps.
Step 1: Apply for a business loan at: www.loanbaba.com/business-loan
The application is sent electronically to the Loanbaba team. The customer service representative gets in touch with the applicant directly.
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