Business Loan

Financial institutions, including banks and Non-Banking Financial Companies (NBFCs), offer secured and unsecured business loans to cater to the financial requirements of self-employed individuals, MSME borrowers, and self-employed professionals for their business or related activities. Wishmyloan.com facilitates prospective business loan seekers by enabling them to assess and compare the features and interest rates of business loans provided by top lenders. This empowers applicants to apply online for the most fitting options based on their credit profiles.

Business loan Interest Rates

Business loan interest rates are subject to variance across lenders, influenced by factors including the applicant's credit profile, the nature of the business, the chosen loan facility, and the type of collateral or security provided by the borrower. The interest rates offered by prominent business loan providers are outlined below.

Comparison Table of Business Loan Interest Rates offered by wishmyloan.com partners

Bank/NBFC/Fintech Interest Rate
Bajaj Finserv 10.75% - 25% p.a.
HDFC Bank 10.75% - 22.50% p.a.
IIFL Finance 12.75% - 44% p.a.
FlexiLoans 1% per month onwards
ZipLoan 1% - 1.5% per month (Flat)
ICICI Bank Up to 17% p.a.
Axis Bank 10.75% p.a.
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% p.a. onwards
Hero FinCorp Up to 26% p.a.

Note:
Business Loan Interest Rates are updated as of February 2024.

Features and Benefits of Business Loan

  • The majority of banks and Non-Banking Financial Companies (NBFCs) extend both secured and unsecured business loans.
  • Business loan interest rates vary across these institutions and are contingent upon factors such as the applicant's credit profile, the nature of their business, the type of loan being offered, and the collateral or security provided.
  • Many banks and NBFCs also offer top-up loans to existing business loan borrowers, alongside providing overdraft facilities.
  • Additionally, both existing and new customers of select lenders have the option to apply for pre-approved business loans, which feature instant disbursal and require minimal documentation.
  • Furthermore, preferential interest rates are often available to women borrowers.
  • Applicants can easily access online platforms to apply for business loans, benefiting from expedited approval processes, streamlined documentation requirements, and prompt loan disbursal.

    • Eligibility Criteria

    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 Busniess Loan

  • Identity Proof Documents:
    Voter ID, Driving License, Aadhar Card, Passport
  • PAN Card:
    for partnership firms, individuals and companies
  • Address Proof Documents:
    Telephone/electricity bill, Voter ID, Passport, Bank Statement, Driving License, registered lease deed or sale agreement, NREGA Card
  • Age Proof Documents:
    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

    • Types of Business Loans in India

    Unsecured Term Loans:
    Financiers offer Unsecured Term Loans to MSMEs to satisfy their business needs, encompassing expansion of operations, upgrading technology, and addressing cash flow requirements, all without necessitating collateral or security.

    Secured Term Loans:
    Secured Term Loans are extended against collateral, including the mortgage of immovable property, existing business assets of the applicant, and financial securities.

    Unsecured Overdraft Business Loans:
    An Unsecured Overdraft Business Loan provides a credit line without requiring collateral, enabling the applicant to withdraw funds from their current business accounts within a predetermined limit, even if the account balance is zero.

    Secured Overdraft Business Loans:
    Lenders provide Secured Overdraft Business Loans to their established clientele who maintain active current or savings accounts, supporting their business operations and liquidity needs. This credit line facility is secured against a range of assets, including residential, commercial, or industrial properties, as well as financial instruments like LIC Policies, KVP/NSC, Fixed Deposits, Mutual Funds, and others.

    Professional Business Loans:
    Professional Business Loans are tailored for self-employed professionals, encompassing doctors/medical practitioners, architects, CAs, and CSs. These individuals can leverage this loan facility to address diverse business requirements, spanning business expansion, office premises acquisition or construction, machinery and equipment procurement, furniture and fixtures acquisition, as well as medicine stock purchase, and more.

    Bill Discounting:
    Invoice discounting facilitates businesses in receiving early payments against their outstanding invoices. The borrower presents the invoice drawn on their customer to the lender, who promptly disburses the funds after deducting a specified amount as discount or commission. Subsequently, the lender collects the full payment from the borrower's customer on the invoice's due date. In case of any delay, either the borrower or the customer is required to pay a pre-established interest to the bank or NBFC.

    Machinery Finance:
    Machinery Finance is a credit facility that allows the applicants to purchase machinery and equipment for business purposes.

    Purchase Financing:
    Lenders offer Purchase Finance to manufacturers, traders and service providers to pay for the raw materials and trading goods purchased from the suppliers.

    Working Capital Loans:
    Lenders offer Working Capital Loans to finance the day-to-day requirements of business units, such as purchase of raw materials and payment of wages.

    Letter of Credit:
    Letter of Credit (LC) is a payment guarantee issued by the lender that enables the businesses operating in international trade to minimise their credit risk.

    Merchant Cash Advance/Point of Sales:
    This lending solution caters to small and medium enterprises active in online sales or equipped with Point of Sale machines. Repayment is facilitated through direct deductions from their online sales revenue or transactions processed via POS machines.

    FAQs on Business Loan

    A credit score of 750 or higher is typically sought after by financial institutions. As the maximum credit score stands at 900, lenders tend to favor applicants with scores nearing this upper limit.

    Ideally, for short-term loans, the repayment tenure should not exceed 12 months. However, this duration may vary depending on the desired loan amount. Businesses have the flexibility to opt for a repayment period of up to 5 years, customized to their specific financial circumstances.

    GST payments serve as a significant factor in the approval of business loans, reflecting the scale of business activity. Higher GST payments indicate a larger business volume, which enhances the credibility of loan applicants in the eyes of lenders.

    The minimum annual turnover prerequisite varies across different banks and financial institutions, with specific criteria outlined by each lender.

    Charges for pre-closure and part-prepayment differ among lenders, ranging from nil to up to 5% of the loan amount. It is advisable to clarify these terms with your chosen lender before proceeding.

    Noteworthy schemes include MUDRA Yojana under PMMY, SIDBI loans, CGTMSE, PMEGP, Standup India, Startup India, psbloansin59minutes.com, NSIC, NABARD, among others, providing tailored financial support to budding entrepreneurs.

    You can explore various avenues through a single web platform to compare and select the most suitable loan option. Collateral-free small business loans up to Rs. 10 lakhs are available at competitive interest rates.

    Additionally, you may consider applying for a Mudra loan under PMMY or exploring offerings from private sector banks, NBFCs, or small finance banks.

    Apply for Business Loan Apply Now