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✓Minimal Documentation ✓Flexible Repayment ✓Collateral Free Loan | Apply for Business Loan Now!

At Finserv MARKETS, you can avail business loan at affordable interest rates & processing charges. By getting business loans at lower interest rates, your business is sure to scale greater heights.

Business Loan Interest Rates and Charges

Leading financial institutions offer competitive interest rates on business loans that can be repaid through a flexible repayment tenure, thereby facilitating affordable EMIs. The listed informative table helps you attain a detailed understanding of the latest business loan interest rates, processing fees, and foreclosure charges that you can avail through leading Indian banks and NBFCs.

Bank/NBFC

Interest Rate

Processing Fee

Prepayment/Foreclosure Charges

Bajaj Finance

18% onwards

Up to 2% of the loan amount

Part-payment: 2% on the amount part-paid and 4% foreclosure charges

Lendingkart Finance

18% onwards

Up to 2.5% of the loan amount

Nil

Tata Capital

17% onwards

1-2.5% of the loan amount

Foreclosure charge of 4.5% on principal loan outstanding

IDFC First Bank

20% onwards

Up to 2.5% of the loan amount

Foreclosure charge of 5% on Principal loan outstanding

State Bank of India (SBI)

11.2% onwards

1% of the sanctioned limit 

Depends on the loan amount

HDFC Bank

16% onwards

Up to 2.5% of the loan amount

 

Prepayment charge of up to 4% of the outstanding principal amount

ICICI Bank

18% onwards

Up to 2% of the loan amount

Charged as per the Bank’s terms and conditions

RBL Bank

19% onwards

Up to 3% of the loan amount

Foreclosure barred before repayment of 6 EMIs

 

Important Note: Do note that the given percentages can change at the lender’s discretion.

Types of Interest Rates

There are two types of interest rates associated with a business loan.

Fixed Interest Rate: The fixed interest rate is calculated by considering the entire loan amount, over the repayment tenure. The interest is not altered based on the fact that you will be paying a monthly EMI that would, in turn, decrease the principal amount with each payment. Simply put, the interest rate remains standard throughout the duration of the loan. 

Reducing Balance Interest Rate: This type of interest rate is calculated on the diminishing principal loan amount. The payable EMI is altered each month as it comprises the interest on the outstanding loan amount. Thus, the EMI you pay for subsequent months reduces as you near the closure of the loan.

How to avail Business Loan at Low Interest Rate?

If you are looking to secure a business loan at a low interest rate, you must follow some practical techniques that include: 

  • Maintain a high credit score that ranges above 750

  • Ensure financial stability 

  • Maintain a good loan repayment history

  • Ensure timely bill, EMI, and credit card payments 

  • Ensure a stable income

  • Build a healthy relationship with a bank or lender over time

  • Maintain old bank accounts and credit cards

  • Apply for a business loan through reputed lenders or banks

  • Submit valuable collateral when securing the business loan

Factors that Affect Business Loan Interest Rates

Some important factors affect the interest rates levied on a business loan:

  • Business Vintage: The business vintage is a significant factor that lenders consider when offering a business loan. It reflects the number of years that your business has been in existence. Typically, lenders require a business vintage of a minimum of 2 years. The possibility of getting a lower interest rate business loan is much higher when your business has been around for an extended period. 
  • Nature of the Business: The nature of your business will significantly determine the rate of interest on your business loan. Business loans are usually classified under the priority sector and non-priority sector. Loans secured for a business belonging to the priority sector are offered at a much lower interest rate and vice versa. 
  • Business Turnover: Your business turnover helps the lender evaluate how well your business is doing. It is a critical factor for lenders when assessing the eligibility for a business loan. Maintaining consistency in the turnover is imperative. This is because the lenders feel more confident about offering a loan to a business that enjoys consistent profits. 
  • Credit Score: The credit score is a major driving factor when applying for a business loan. It reflects your creditworthiness and is determined by your credit history. You can maintain a good score by repaying your debt responsibly. If you have a good credit score (750 or above), it will help you secure the best deal on your business loan. 
  • Loan Collateral: The loan collateral is the security you pledge to the lender when getting a business loan. You can choose to pledge different assets as security, including equipment, machinery, home equity, real estate, and more. The bank has a lower risk exposure when disbursing a loan against collateral.

FAQs on Business Loan Interest Rates and Charges

✔️What factors decide the business loan rate of interest?

The interest rate depends on the borrower’s nature of the business, credit score, business turnover, business vintage, and loan collateral.

✔️How easy is it to get a business loan?

If you have an excellent credit score, good business vintage, and a stable turnover, it is very easy to get a business loan.

✔️Is there any need to provide collateral to avail a business loan?

A business loan is an unsecured loan. Hence, you typically need not provide any collateral. Regardless, in some cases, wherein the credit score, business vintage, or business turnover is not as per the lender’s eligibility standards, the borrower might have to pledge a collateral.

✔️What is the repayment period of a business loan?

The repayment period of a business loan typically ranges from 1-5 years.

✔️How is interest on a business loan calculated?

The interest rate is determined based on the borrower’s credit score, the loan amount, the repayment history, relationship with the lender, and other business particulars such as turnover, vintage, etc.