Business Loan Interest Rates

Business loan interest rates from banks and non-banking financial companies (NBFCs) typically begin at 9% per year. However, these rates can vary based on factors like credit scores, business type, income, and collateral. It's important for loan applicants to compare rates from different lenders before applying.

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Comparison Table of Business Loan Interest Rates offered by MybankingTips Partners:

Bank/NBFC/Fintech Interest Rate
SBI Bank 9.10% p.a. Apply Now
HDFC Bank 10.00% - 22.50% p.a. Apply Now
Kotak Mahindra Bank 16% p.a. onwards Apply Now
RBL Bank 14%-26% p.a. Apply Now
ICICI Bank Up to 17% p.a. Apply Now
Axis Bank 10.75% p.a. Apply Now
IDBI Bank 8.05% to 13.45% p.a Apply Now
Bank Of Baroda 10% to 15% p.a Apply Now
Ujjivan Small Bank Up to 2.50% Apply Now
Bajaj Finserv 9.75% - 25% p.a. Apply Now
IIFL Finance 12.75% - 44% p.a. Apply Now
FlexiLoans 1% per month onwards Apply Now
ZipLoan 1% - 1.5% per month (Flat) Apply Now
Indifi Finance 1.5% per month onwards Apply Now
Five Star Business Finance Up to 2% Apply Now
Lendingkart Finance 1.25% per month onwards Apply Now
Tata Capital Finance 12% p.a. onwards Apply Now
NeoGrowth Finance 15% p.a. onwards Apply Now
Hero FinCorp Up to 26% p.a. Apply Now
Aye Finance Up to 2.5% Apply Now
Clix Capital Up to 3% Apply Now
Protium Finance Up to 1.5% Apply Now
HDB Finance 8% - 26% p.a. Apply Now
U GRO Capital Up to 9% p.a. Apply Now
Mcapital Business Up to 2% p.a. Apply Now

Tips to Lower Interest Rates on Business Loans

  • Keep your credit score healthy.
  • Provide collateral or security to increase your chances of approval.
  • Maintain strong cash flows.
  • Compare offers from multiple lenders to find the best terms.
  • Refinance existing loans with higher interest rates to save money.
  • Check eligibility for government schemes offering interest subsidies.
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Business Loan EMI Calculator

You can use a business loan EMI calculator to figure out your monthly installment amount for various interest rates and repayment periods. These calculators also show you the total interest you'll pay over the loan term. Many lenders offer these calculators on their websites, or you can find them on online financial marketplaces. Just input the loan amount, interest rate, and repayment period to get your EMI and total interest payable. It helps you choose the best EMI for your needs.

Factors Affecting Business Loan Interest Rates

Business loan interest rates are mainly decided by lenders based on how much it costs them to get the money, how much they want to earn from lending it out, and how risky they think your business is. Here are the main things that can affect the interest rates you're offered for a business loan:

  • Credit Scores: Lenders check the credit scores of people applying for business loans, especially for ones without collateral. If you have a good credit score, you're more likely to get a lower interest rate. That's because lenders see higher scores as a sign that you're good at handling money. If your score is lower, lenders might either reject your loan application or charge you a higher interest rate to make up for the risk. So, it's smart to work on keeping your credit score high to boost your chances of getting a loan with a lower interest rate.
  • Business income: Lenders check how much money your business makes when deciding on the interest rates for loans. Some lenders need you to earn a certain amount each month or year to qualify for a loan. If your business makes more money, lenders think you're better able to pay back the loan, so they're more likely to give you a lower interest rate.
  • Nature of the collateral/security: When you're applying for a business loan, lenders look at the value and type of asset you're offering as security. If you provide an asset that's worth more, you're more likely to get approved for the loan with a lower interest rate.
  • Type of loan facility: Different lenders provide various types of business loans, like ones for working capital, invoice discounting, cash credit, term loans, overdrafts (secured or unsecured), commercial property loans, and more. The interest rates can differ based on the type of loan you're applying for.
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1. What is the minimum and maximum loan amount can I avail through Business Loan?

You can borrow as little as you need for a business loan, as there's no minimum limit. However, the maximum amount you can borrow without needing collateral is up to Rs. 2 crores. Many financial institutions provide loans starting from just Rs. 10,000.

2. How do I get the lowest interest rate business loan?

You can easily compare business loan offers from different banks and non-banking financial companies (NBFCs) on a single online platform. This helps you find the best deal for your business, considering factors like loan amount and repayment duration.

3. What are the pre-closure/foreclosure charges for business loans?

The fees for closing a business loan early, known as pre-closure or foreclosure charges, differ among lenders. They can range from zero to 5% of the remaining principal balance.

4. Is there any need to submit collateral or security with the bank to avail Business Loan?

For unsecured business loans, you don't need to provide any collateral or assets as security. However, some business loans, like Letter of Credit, Cash Credit, POS loan, Bill Discounting, Equipment Finance, and Machinery loan, are secured loans and require collateral.

5. Is the business loan interest rate fixed or floating?

Banks or lenders can offer either fixed or floating interest rates for loans. However, most banks prefer fixed rates rather than floating ones. Typically, private sector banks offer fixed interest rates.

6. What is the repayment period of a business loan?

The shortest time you can repay a loan is 12 months, while the longest is 5 years, but it can be longer if needed for your business.p>

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