Business Loan Interest Rates 2020
|Bank||Business Loan Interest Rates||Processing Fee|
|HDFC Bank Business Loan||15.65%||Starting from 0.99%, Max 2.50%From 2% to 3%|
|SBI Business Loan||11.20%||From 2% to 3%|
|ICICI Bank Business Loan||16.49%||Starting from 0.99%, Up to 2%|
|Bajaj Finserv||18.00%||Up to 2% of the loan amount|
|United Bank of India||13.00%||1.15%|
|Citibank||16.00%||Up to 2%|
|RBL Bank||16.25%||1.80-2.20% of the loan amount|
|Tata Capital||19.00%||From 1.50% to 2.50%|
|IDFC First Bank||22.00%||2.00%|
|IIFL||16.00%||Up to 2%|
|Bank of Maharashtra||14.50%||1.00% of the loan amount, Min Rs. 1,000|
|Kotak Bank||16.00%||Up to 2%|
|Indifi||24.00%||2 to 3%|
|Neogrowth||19.50%||2.5% of the loan amount|
|Allahabad Bank||12.75%||up to 2.25%|
|Yes Bank||16.25%||Up to 2%|
|PNB||12.65%||1.8% + taxes|
|OBC||11.40%||0.50% of Loan Amount|
|Indian Overseas Bank||14.90%||Rs. 204 per lakh|
|Dhan Laxmi Bank||12.90%||–|
|Andhra Bank||15.75%||Case to Case|
|Corporation Bank||13.55%||1.5%, Min Rs. 500|
|Syndicate Bank||12.65%||0.5%, Min Rs. 500|
|Bank of Baroda||14.10%||Up to 1.00%|
Interest Rates amount varies according to the banks or NBFCs. It may also depend upon your business, loan amount and your credit history. Check Interest Rates for Business Loan here.
What is a Business Loan?
If you own any business, running it on the desired track is not an easy task. One can face difficulties in maintaining the right pace of the business. A successful company requires sufficient manpower, technology, good infrastructure, and financial resources. Capital is always needed to run the business on the desired track. You can avail a loan for your business from Banks or NBFCs.
Business Loan is a scheme that provides you with the required funds to cater to all the needs of your company. Business Loan can be used for multiple business purposes like buying new machinery, new technology, making payments and many more. You can get the required finance by availing this scheme. It is unsecured Business Loan. There is no need of any collateral. If you are having a small scale industry, you can also avail this SME (Small Medium Enterprises) Loan.
Purpose of a Small Business Loan
Businesses can raise funds by inviting shares and debentures or simply borrowing from banks and other lending institutions and the purpose of doing so could be different:
- Expansion of an existing business.
- For improvement of office premises, constructing a new building.
- Designing a new concept or product in new business.
- Starting a new business.
Features of a Business Loan
- Fixed Interest Rate
Business Loan Interest Rates are fixed in nature which means that the rate remains constant throughout the loan period. The rate of interest varies between 14.99% – 48% depending on the lender’s rates and the loan amount borrowed.
- Flexible Repayment tenure
The borrowers of a business loan can enjoy flexible repayment tenure of up to 5 years, making it a better option over any other loan. The applicant can also opt for an option of loan pre-payment or foreclosure in which he/she can partly or completely pay off the loan by paying some additional charges defined by the respective bank or NBFC.
- Loan Amount
A borrower can avail a business loan can be up to Rs 2 crore or greater amount depending on the requirement of the business and the eligibility. The loan amount mainly depends on the financial credibility of the applicant, past repayments, Credit score and financial institutions check the eligibility of the applicant before lending the amount. Moreover, financial institutions like banks and NBFCs review the applicant’s credit history/score, Identity proof, business existence, income details before loan sanctioning, etc.
- Collateral Free Loan
As business Loans are unsecured loans they do not require any collateral from the applicant. However, under specific situations and for very few loans in which plant, machinery or raw material need to be provided as collateral. The applicant otherwise does not require providing any asset like a car or house to avail a business loan.
Types of Business Loans
- Secured Business Loans: In secured business loan, the borrower pledges his valuable property as security to the lender. It is called a secured loan because the property pledged by the consumer is kept secured to the lender. When the borrower fails to make repayments on time, the bank can get possession of the collateral provided. As a result, the creditor can recover easily from the risk occurred by selling property for any purpose.
- Unsecured Business Loans: In an unsecured loan, there is not any hard requirement of any type of collateral. It is hard to get, but cheaper at the same time. Creditors check the credit history before granting the business loan. Creditors evaluate the repayment ability of the business.
- Professional Loans: Professional Loans are given to Self Employed Professionals like Doctor, Engineer, Chartered Accountant, Secretary and any more. For Doctors, there is a specially designed scheme called Doctor’s Loan. These loans are unsecured by nature, i.e, you do not need to pledge any valuable property to the lender and also known as Personal Loan for Self Employed. These loans are not given to manufacturing and trading units. The loan amount varies from 25,000 to Rs. 25 lacs.
- Trade Loans: Trade loans are provided to traders/ businessmen, so as to help them either open a new business or operate/expand an existing one. The amount of loan varies between Rs. 25000 to Rs. 100 lakh, considering the age of the customer, his financial standing, his repayment capacity, tenure of the loan, etc.
Business Loans for Women Entrepreneurs
Nowadays, women entrepreneurs are being encouraged by providing certain schemes. These schemes are started exclusively for women to provide them with the necessary encouragement. Ownership of 50% and above is essential to avail the benefits of the women’s special schemes.
Some of the popular loan schemes for women entrepreneurs are as follows:
- Mahila Udyam Nidhi Scheme
- Shringaar and Annapurna from Bhartiya Mahila Bank
- Dena Shakti Scheme from Dena Bank
- Mahila Samridhi Yojana
- Cent Kalyani from Central Bank of India
- Stree Shakti Package from State Bank of India
Eligibility For a Business Loan
Check the business loan eligibility calculator below:
|Eligible individuals||Self-employed non-professionals – Sole proprietors, partnership firms, public limited companies involved in the business of manufacturing, trading or services|
|Self-employed professionals – Doctors, CA, CS, Architects.|
|Age||21 – 65 years|
|Loan Amount||₹ 50,000 to ₹ 100 Cr|
|Interest Rate||13.50% – 24.00%|
|Loan Tenure||Up to 5 years|
|Business Vintage||For self-employed professional – 3 years|
|For self-employed businessmen – 5 years|
|Annual Turnover||₹ 1 Cr and above|
|Banking Stability||6 months and above|
|CIBIL Score||650 or above|
|Other Eligibility Conditions||The borrower should have a self-owned house or workplace|
Documents Required For Business Loans
Documents required for availing a Business Loan are:
- ID Proof ( Passport / Voters ID card / Driving License) Any one of these
- Residence Proof ( Ration card / Telephone Bill / Electricity Bill / Passport ) Any one of these
- Proof of continuity of business ( Trade License/ Establishment / Sales tax Certificate)
- Latest ITR of 3 years with the audited balance sheet
- Latest 1-year Account Statement
- 2 passport size photographs
|Identity Proof||PAN card/ Passport/ Driving License/ Aadhar Card/ Voter ID|
|Business Documents||PAN/ sales tax/ excise/ VAT/ service tax registration, Copy of partnership deed, Trade license, certificate of practice, registration certificate issued by RBI, SEBI|
|Address Proof||Passport, Driving License, Election ID card, Electricity/ Telephone/ Mobile bill/ bank statement (not more than 3 months old)||Bank statement, utility bill, Registry copy, lease or rent agreement, TAN allotment letter|
Take benefit of our EMI calculator to check the affordability of your Business Loan EMI
Business Loan Types
Start-up Business Loan
If you are a budding entrepreneur, you can avail the Start-up loan to start a new business or expand the current operation of your existing businesses to new horizons.
- Business Loan for Women
Various banks and NBFCs offer Business Loans for Women, encouraging women entrepreneurs to support themselves financially and ensure the growth of their newly established enterprises.
Business Term Loan
A Business term loan is a loan that can be used to finance high-cost investments to expand your business or for purchasing basic essentials for the company like new machinery or tools for a smooth business operation.
MSME Business Loan
An MSME Loan can be easily availed to meet your business’ working capital requirements through any bank/NBFC. An MSME loan can be of multi-purpose like renovating your organization’s infrastructure, purchasing a new plant/machinery, purchasing raw materials, etc.
- We offer you doorstep pickup documentation facility and personalised service.
- India’s first financial helpline.
- Get expert advice on a wide range of business loan portfolio.
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- Unbiased and Transparent Expert Advice.
How to Apply for a Business Loan?
Applying online is an easy process with DialaBank. Just follow the steps mentioned below to get the best deals on Business loans:
- Visit our website dialabank.
- Fill in your basic details like name, income, and choose Business Loan from the options given.
- Click on “Request a Quote”.
- Our relationship manager will soon get in touch with you over your application form.
Business Loans Amidst COVID 19
The entire world is grappling with the issue of COVID 19. As most businesses get impacted by the Corona Virus and undergo a direct impact on their financial stability and existence, most of the lending institutions are becoming stringent on lending to small and medium-sized business.
The product programs of all Banks and NBFCs have 2 standard options for businesses to get money. The business needs to either fit into a standard financial eligibility program or in case of the entity not being able to have adequate financial strength on paper, the lending institutions consider and run surrogate programs. These surrogate programs consider various other documents to establish the strength of the business. These programs include Banking Surrogate and Existing Loan Surrogate.
With COVID 19 impacting most businesses, the lending institutions have stopped lending under the Surrogate programs and also made the criteria for standard programs more stringent. One of the ways to get Business Loan under COVID 19 is to look at other products of these Banks.
During this time of COVID 19, the most affordable and one of the surest ways is to look at leveraging your Gold Jewellery and getting a Gold Loan @ 1% pm.
Avail the Doorstep Services of Dialabank and get the Best Business Loan on Affordable Interest Rates. You can apply online or can call us on 9878981166. Get Experts Advice and find the best offer.
Tips to Get the Best Business Loans
The following is the checklist of business loan requirements; you must keep in mind before applying to bank/NBFC for a loan:
- A well-written business plan is required to be submitted to the lender.
- A decent credit/CIBIL score is essential that shall range between 650-900 points before applying for the loan.
- Ensure that you have the necessary documents required and fulfil the eligibility requirements.
- Make sure that you are debt-free.
- As you are applying for business loan, you must maintain an inclusive database of the company’s financial situation and past performance along with its cash flow statement, balance sheets etc.
FAQs About Business Loan
Ques. ✅ What are the minimum and maximum loan amount I can get as a business loan?
Ans. The minimum loan amount offered in a business loan is Rs. 5,000 and the maximum loan amount can extend up to Rs. 2 crores, depending on the requirements and eligibility.
Ques. ✅ What is the age limit of availing a business loan?
Ans. The age limit is usually 21-65 years for availing a business loan.
Ques. ✅What is the tenure period for business loan repayment?
Ans. You can repay the loan amount in a minimum of 12 months and maximum up to 5 years, depending on the respective bank or NBFC. Some institutes may even extend the tenure period.
Ques. ✅ Do I need to submit any collateral to the bank before applying for a business loan?
Ans. No, collateral is not required to avail a business loan from a bank or NBFC.
Ques: ✅ For what purpose can a business loan be availed?
Ans: Business loans can be availed by any small or large scale businesses. If you are looking to start a new business or even expanding the existing business, buy plant or machinery and other capital goods, or purchase new equipment you can apply for a business loan from your preferred lender.
Ques: ✅ Are there any business loans available for women entrepreneurs?
Ans: Yes, women entrepreneurs too can avail a business loan which is specifically designed for women, with better deals and offers. Most of the banks and NBFCs offer women entrepreneur centric business loans.
Ques: ✅What are the charges for an unsecured business loan?
In addition to the rate of interest charged, banks and NBFCs also charge the following two kinds of fees on your loan amount:
Processing fee: The first kind of fee is the processing fees that are necessarily charged when you apply for a loan. The processing fee can range up to 3% of the loan amount and can be negotiated down, depending on the lender. If you apply for a loan through an online market place like DialaBank, then we will offer you the best and lowest interest rate from the bank. On some cases, banks and NBFCs also do not charge you any sort of processing fee for your application.
Pre-closure fee: This fee is charged when you want to close your loan before the completion of the loan tenure. Banks impose a penalty fee to cover the loss for pre-closure. Preclosure charges can range up to 5% of the outstanding loan amount, depending on your lender.
Ques: ✅What security is required to get a business loan?
For business loans, banks and NBFCs do not ask for any sort of security or collateral to approve your loan, though banks need complete documents to evaluate your eligibility.
Ques: ✅Am I eligible for a business loan despite having a low credit score?
Yes, are you may be eligible for availing a business loan even with a bad credit score but, the lenders may charge you with a higher rate of interest on your loan and may ask you to apply for the loan along with a co-applicant who can take the responsibility in your absence. Applying with a co-applicant will increase your eligibility and will ensure a lower rate of interest.
Ques: ✅How long does it take for a business loan to get disbursed?
Business loan disbursement can take a maximum of 15 working days to get disbursed after all the documents are submitted. If you meet the eligibility requirements and submit proper documents at the earliest some banks and NBFCs may approve and disburse your loan within a few hours. The lenders can give you an in-principle approval subject to verification of documents submitted by you and the results of their field visits. In this case, the loan disbursement process can be as quick as a week.