If you're a business owner, no matter what kind of business you have—like a shop, a company, a factory, or any other type—you might find yourself needing a business loan. This loan can help you with your everyday business needs, expenses, and keep your cash flow running smoothly. That's why it's important to learn about different loan providers, their interest rates, what you need to qualify, the documents you'll need, and more.
| Bank | Interest Rate | Processing Fee | Max Tenure | Max Loan Amount |
|---|---|---|---|---|
|
8.50% p.a | Up to 1% of the limit | 1-4 Years | Up to 500 core |
|
10.75%- 22.50% p.a | Up to 2% of the sanctioned loan amount | 1-5 Years | Up to 75 lakhs |
|
Up to 17% p.a | Up to 2% (Plus applicable taxes) | Up to 7 Years | Up to 2 crore |
|
10.75% p.a | 0.75% to 2% of the loan amount | 1 – 5 years | Up to 10 crore |
|
14% p.a. onwards | 2% of the loan amount | 1 –35 years | Up to Rs. 15 lakh |
|
10.5% - 18% | 1% of the loan amount | 1 – 7 years | ₹50,000 – 10,00,00,000 |
|
8.85% - 11.85% | 0.50% of the loan amount | 1 – 10 years | Rs. 2,00,000/- to Rs.2,00,00,000/- |
|
9.00%- 25% p.a | Up to 3.54% of the loan amount | 1-8 Years | 80 lakhs |
|
12.65% to 16.50%. | 1.8% + taxes | 1 – 5 years | Min ₹ 50,000 and Max ₹ 15 L... |
|
15.00- 40% p.a | Up to 5% | Up to 7 years | Minimu Rs. 5 lakh and Max Rs. 75 lakh |
|
16.00% p.a | Up to 2% | Up to 7 years | 3 Lakhs to 1 crore |
|
Rs. 2783 per Lakh | Up to 3.5% of loan amount | 12-48 months | 10 lakhs to 1 crore |
Interest rates of the business loan are subjected to change as per the guidelines of RBI. Before you are applying for a business loan, keep all the track records of the interest rates offered by the lenders, loan tenure, and other charges related to it such as the processing fees, foreclosure fees, and many more. So, it's always advisable to analyze the business loan interest rate for getting an affordable loan for growing or starting the business.
Always try to get a business loan that has the lowest level of interest rates. In general, the business loan interest rates are divided into two types such as flat rate of interest and reducing the rate of interest. Several factors affecting the interest rates of the business loan such as monthly revenue, CIBIL ranking, age of the business, collateral, and credit score of the business. Before you are finalizing the business loan, check the reliability of the loan lender and their minimum requirements.
Now the banks and financial institutions have a business loan EMI calculator on their website for calculating the interest rates and EMI of their loan. Apart from others, the business rate is calculated based on the following formula:
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| Year | Principal(A) | Interest(B) | TOTAL PAYMENT(A + B) | BALANCE |
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If you have a business or want to start one, you need to apply online by visiting the official websites of banks. Be sure to check the interest rates, fees, and loan terms.
If you need any help to make a wise decision, feel free to reach out to this email- support@eazybankloan.com. Our financial expert will get in touch with you immediately.
| Category | Document Type | Details |
|---|---|---|
| Self-employed Partnership Firms | Identity Proof of Private Limited Company | Sales tax, service tax, VAT, IT return, etc. |
| Individual Identity Proof | Submitted with the authorized signature of two or more partners. | |
| Self-employed Professionals | Identity of Sole Proprietorship | PAN ID, IT return of the concerned department. |
| Individual Identity Proof | Passport, driving license, photo PAN card, voter’s identity card. | |
| Proof of Residence Address | Driving license, passport, voter’s identity card. | |
| Self-employed Non-Professionals | Identity of Sole Proprietorship | |
| Income Tax Return and Sales Tax Return | Three years of income tax return and sales tax return. | |
| Creditors Statements | Latest three months creditors statements. | |
| Bank Statement | Last six months bank statement for the term loan. |
A good personal and business credit score is usually required. Lenders use this to assess your creditworthiness and risk. 750 or above is a good credit score.
Lenders often want to see a minimum level of revenue to ensure your business can afford the loan payments. This may vary depending on the loan amount and type. Preferred turnover starting from 100,000 to 250+ crore
Some lenders prefer businesses that have been operating for a certain period, typically at least 2-3 years. Startups may find it harder to qualify for traditional business loans.
You should minimum have 1,50,000 p.a
Depending on the type of loan, lenders may require collateral such as property, equipment, or inventory to secure the loan.
You'll likely need to provide legal documents such as business licenses, registrations, and any relevant contracts or agreements.
| Types of Loan | Description | Description |
|---|---|---|
| Term Loan (Short & Long-term Loan) | A fixed amount borrowed and repaid over a predetermined period. Can be short-term (less than a year) or long-term (several years). | Pros: Flexible repayment terms, suitable for various purposes like equipment purchase or expansion Cons: May require collateral, longer approval process. |
| Letter of Credit | A bank guarantee ensuring the payment to suppliers. Businesses use it to assure suppliers of payment upon delivery of goods or services | Pros: Builds trust with suppliers, helps secure goods without upfront payment. Cons: Requires good credit, may involve fees. |
| Invoice Financing | Borrowing money against unpaid invoices. Businesses get cash upfront and repay when customers settle their invoices. | Pros: Improves cash flow, helps cover immediate expenses. Cons: Equipment tied to loan until repayment, potential depreciation of equipment value. |
| Working Capital Loan | Short-term loan to cover day-to-day operational expenses like salaries, rent, and inventory. | Pros: Keeps business running smoothly during lean periods. Cons: May have higher interest rates, short repayment terms. |
| Business Loan Against Property | Loan secured against property owned by the business. Uses property as collateral, providing lenders with security. | Pros: Lower interest rates compared to unsecured loans, higher loan amounts. Cons: Risk of losing property if unable to repay, lengthy approval process, property valuation required. |
| Startup Loan | Financing for new businesses to cover initial costs like equipment, inventory, and operational expenses. | Pros: Helps kickstart new ventures, provides necessary funds for growth. Cons: High risk for lenders, may require personal guarantees or collateral, strict eligibility criteria. |
| Project Loans | Funding specifically for a particular project or investment. The loan is tied to the project's revenue or assets. | Pros: Tailored to specific projects, offers financing for large-scale initiatives. Cons: Limited to project scope, requires detailed project plans and financial projections. |
| SBA Loans | Loans partially guaranteed by the Small Business Administration (SBA), offering favorable terms and rates. | Pros: Lower down payments, longer repayment terms, and better rates. Cons: Strict eligibility criteria, lengthy application process, may require collateral or personal guarantees. |
| Fee/Charge | Description |
|---|---|
| Processing Fee | A one-time fee charged by the lender for processing the loan application. At max 6% of loan amount |
| Origination Fee | Similar to processing fee, it covers the administrative costs of loan origination. 0.5% to 1% |
| Prepayment Charges | Fee levied if the borrower repays the loan before the agreed-upon tenure. 2% to 5% |
| Late Payment Charges | Penalty charged for delayed payment of EMIs or other dues. It might ranging from 1% to 2% of the EMI |
| Documentation Charges | Fee for preparing legal documents related to the loan agreement. It depends on the lender |
| Legal and Appraisal Fees | Charges associated with legal verification and property appraisal. It depends on the lender |
| Annual Maintenance Charges | Ongoing fee for maintaining the loan account, usually charged annually. Usually 0.25% |
| GST | Goods and Services Tax levied on various fees and charges. Usually 18% |
| Insurance Premium | Premium for optional loan insurance, covering risks like death or disability. It depends on the lender |
| Bounce Charges | Penalty for bounced EMIs or checks due to insufficient funds. It depends on the lender |
Understand your personal and business credit scores as they significantly impact loan approval and terms.
Familiarize yourself with different loan types (e.g., term loans, lines of credit) to choose the one that best suits your business needs.
Pay attention to all fees, interest rates, repayment terms, and any other conditions associated with the loan.
Evaluate your business's cash flow to ensure you can comfortably repay the loan along with interest.
Explore various lenders and their offerings to find the most favorable terms and rates for your business.
Understand if collateral is required for the loan and assess what assets you're willing to use as security.
Gather necessary documents such as financial statements, tax returns, and business plans to streamline the application process.
Be ready to explain how you'll use the loan funds and how it will benefit your business to reassure lenders of your ability to repay.
| Government Scheme/Subsidy | Description |
|---|---|
| Prime Minister's Employment Generation Programme (PMEGP) | Provides financial assistance for setting up micro-enterprises in the manufacturing and service sectors. |
| Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) | Offers credit guarantee cover to lenders for loans up to ₹2 crore extended to micro and small enterprises. |
| Stand-Up India Scheme | Facilitates bank loans between ₹10 lakh and ₹1 crore to at least one Scheduled Caste/Scheduled Tribe borrower and at least one woman borrower per bank branch. |
| Credit Linked Capital Subsidy Scheme (CLCSS) | Provides capital subsidy for technology upgradation of micro and small enterprises in certain sectors. |
| Mudra Yojana (Pradhan Mantri Mudra Yojana - PMMY) | Offers loans up to ₹10 lakh to non-farm, non-corporate small/micro enterprises. |
| Legal and Appraisal Fees | Charges associated with legal verification and property appraisal. It depends on the lender |
| Annual Maintenance Charges | Ongoing fee for maintaining the loan account, usually charged annually. Usually 0.25% |
| GST | Goods and Services Tax levied on various fees and charges. Usually 18% |
| Insurance Premium | Premium for optional loan insurance, covering risks like death or disability. It depends on the lender |
| Bounce Charges | Penalty for bounced EMIs or checks due to insufficient funds. It depends on the lender |
Figure out how much money you need and what's it's for.
Make sure your personal and business credit scores are good.
Search for banks online lenders or credit unions that might give you a loan
Gather Documents like tax returns, bank statements and financial statements for your business
Reach out to the bank or lender you've chosen to ask about their loan options and requirement.
Access both secured and unsecured business loans
Interest rates vary based on credit profile, business type, loan type, and collateral.
Existing borrowers can get top-up loans.
Overdraft facilities are available for existing borrowers.
Pre-approved business loans with instant disbursal are offered.
Concessional rates are available for women borrowers.
Apply online for quick approval and swift disbursal with minimal documentation.
Bank Loan FAQsBusiness loans come in various types such as term loans, working capital loans, equipment financing, invoice financing, business lines of credit, and Small Business Administration (SBA) loans.
The maximum loan amount depends on factors like the lender's policies, your business's financial health, creditworthiness, and the purpose of the loan.
Interest rates vary based on factors like the type of loan, lender's policies, market conditions, and your business's creditworthiness. Fixed or variable interest rates may apply. It might vary from 10.50% to 24% p.a
Loan tenure typically ranges from a few months to several years, and it can often be customized based on your business's needs and financial capabilities.
Eligibility criteria may include factors like the business's revenue, profitability, credit score, business vintage, industry type, and collateral availability.
Commonly required documents include business registration documents, financial statements, tax returns, bank statements, ID proofs, address proofs, and business plans.
The loan approval process duration can vary from a few days to a few weeks, depending on the lender's processes, documentation requirements, and your business's profile. It might vary from 3 to 30 business days
Collateral or security requirements vary based on the type of loan, loan amount, and lender's policies. Collateral can include assets like property, equipment, or inventory.
While it may be challenging, some lenders offer options for business loans even with a low credit score, although terms may be less favorable.
Yes, additional fees such as processing fees, origination fees, prepayment charges, late payment fees, and documentation charges may apply.
Repayment options typically include monthly and the lender may have the flexible options to choose fixed or flexible repayment schedules.
Interest paid on business loans is often tax-deductible, providing potential tax benefits to your business. However, consult with a tax advisor for specifics.
Many lenders allow prepayment of the loan, but they may charge prepayment penalties or fees. Check your loan agreement for details.
Defaulting on a loan can lead to adverse consequences like damage to your credit score, legal action, asset seizure, and difficulties in obtaining future financing.
Business loans can typically be used for various purposes like working capital, expansion, equipment purchase, inventory, marketing, or debt consolidation
Yes, some lenders or government agencies offer special schemes, incentives, or subsidies for specific industries, startups, women-owned businesses, or minority entrepreneurs.
Many lenders offer the convenience of applying for a business loan online through their website or mobile app. However, some may require visiting a branch for in-person verification.
Lenders assess creditworthiness based on factors like credit history, financial statements, cash flow, debt-to-income ratio, business plan, and industry risk.
The turnaround time for disbursing the loan amount varies among lenders and can range from a few days to several weeks, depending on the approval process and documentation.
Yes, various government schemes and subsidies exist to support businesses with access to finance, such as PMEGP, CGTMSE, Stand-Up India, CLCSS, and Mudra Yojana.
