Business Loan

A business loan is a financial product designed to provide funding for businesses to help them grow and use their resources more effectively.

With the increasing start-ups,Business Loan in India is becoming a popular option for many entrepreneurs & getting an instant business loan is just a matter of a few absolutely instant.Low-interest business loans are also available to help save money on interest payments. Businesses can use the loan to buy inventory, expand, or cover short-term expenses.

Bank-Wise Business Loan

Business Loan could vary based on several factors from Bank to Bank. Here’s a list of top Banks that offer Business Loan

Bank Interest Rate (p.a.)
State Bank of India(SBI) 8.90% onwards
HDFC Bank 10.00% - 22.50% p.a.
ICICI Bank 12.50% - 13.60% p.a.
Axis Bank 14.65% - 18.90% p.a.
Kotak Mahindra Bank 16% - 26% p.a.

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Note: The above mentioned rates are subject to change with the finance market and differ marginally with the respect to the individual banks

Business Loan from NBFCs

You can avail business loans from NBFCs as well, several of them over varied loan options with interesting interest rates. Check out the tabular column for some popular NBFCs that offer business loans.

Business Loan by NBFC Interest Rate (p.a.)
Bajaj Finserv Business Loan 9.75% - 30% p.a.
Protium Business Loan 18% p.a. onwards
IndiaLends Business Loan 10.25% p.a. onwards
Incred Business Loan 12% p.a. onwards
IIFL Finance Business Loan 11.25% - 33.75% p.a.

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The above mentioned rates are subject to change with the finance market and differ marginally with the respect to the individual sectors

Business Loan Interest Rates & Charges

Business loan fees and charges are important to consider while you weigh your options on competitive interest rates. It impacts borrowing costs and affordability. Understanding their calculation and implications is crucial for borrowers. Rates can vary, affecting the overall borrowing cost.

  • Fixed - Remains constant throughout the loan term.
  • Variable - Fluctuates based on market conditions, offering lower initial rates that increase over time.
Features Rates
Interest Rates 10% - 21%
Loan Amount Rs. 50,000/- to Rs.50,00,000/-
Loan Processing Fees Rs 1000 - 75000/-
Loan Tenure Up to 10 years
Prepayment Charges Up to 4% on the balance
Note that,Business loan interest rates are influenced by various factors such as creditworthiness, loan terms, market rates, and business risk. Evaluate rates carefully to align with your goals, repayment capacity, and financial sustainability.

Features & Benefits of Business Loan

Business loans in India help fuel growth, offer flexibility, and aid cash flow management for businesses. Timely repayments enhance credit history and future financing options.

Minimal Paperwork

Get your loan approved
within minimum

Low Interest Rates

Starting at 8.90% p.a.

No Collateral

Get the financial assets
without risk.

Start-ups and Women

Lending privileges for
women & assistance to

Flexible Loan Amount

Avail the loan amount you
need to upscale your

Flexible Repayments

Avail the repayment tenure
that suits you the best.

Business Loan Eligibility Criteria

To get a business loan approved, you must meet a set of eligibility criteria. Refer to the table below to know whether you are eligible for a personal loan.

Age Min 21 - Max 65 (at the time of loan maturity)
Business Vintage Min 2 years or above
Annual Turnover As per banks
Credit Score 750 or above
Nationality Indian

Business Loan EMI Calculator

Business loan EMI calculator is a convenient tool for entrepreneurs to estimate monthly repayments on the loan amount you want to opt. Helps calculate loan amount, interest rate, and tenure to provide you with accurate EMI calculations.

Using an EMI Calculator to calculate Business Loan EMI, is the simplest way to calculate. Gain clarity on repayment schedule, affordability assessment, budgeting and overall financial planning for the business.

Monthly EMI 86
Principal Amount 1,000
Total Interest 32
Total Amount 1,032.00

Year Month Principal (A) Interest (B) EMI (A+B) Balance Loan Paid to Date (%)

Documents Required to Apply for Business Loan

Here are some basic documents that you need to get while getting started with a Business Loan -

  • Identity Proof: Passport, driver's licence, Aadhaar card, Voter ID
  • Address Proof: Utility bill (electricity, water, or gas), bank statement
  • Income Proof: Recent payslips, Income Tax Returns (IT returns)
  • Photographs: Recent passport-sized photographs

Business Loan by Government

Business Loan by government offer a viable alternative to private lenders. These loans play a crucial role in financing business ventures, with a range of tailored products available under various government schemes to meet the diverse needs of entrepreneurs and enterprises.

Here are some government schemes for business loan-

1.Pradhan Mantri Mudra Yojana (PMMY)

  • Pradhan Mantri Mudra Yojana (PMMY) is a government scheme in India that provides financial assistance to small and micro enterprises through loans up to Rs. 10 lakh, promoting entrepreneurship and job creation.

2.Credit Guarantee Fund Scheme (CGTMSE)

  • The Credit Guarantee Fund Scheme (CGTMSE) is a government initiative in India that provides credit guarantees to financial institutions to encourage them to extend collateral-free loans to small and medium-sized enterprises (SMEs), facilitating their access to credit and promoting entrepreneurship.

3.Stand-Up India Scheme

  • The Stand-Up India Scheme supports women and SC/ST entrepreneurs by providing bank loans between ₹10 lakh and ₹1 crore for setting up greenfield enterprises in various sectors.

4.National Small Industries Corporation (NSIC)

  • NSIC supports the growth of MSMEs in India through marketing, technology assistance, credit facilitation, and training programs.

5.Startup India Scheme

  • The Startup India Scheme fosters entrepreneurship in India by providing funding, tax benefits, and simplified regulations to support the growth of startups.

6.Make in India Soft Loan Fund (MUDRA)

  • Make in India Soft Loan Fund (MUDRA) provides financial assistance to small businesses in India, promoting entrepreneurship and sectoral growth.

7.Export Credit Guarantee Corporation (ECGC)

  • The Export Credit Guarantee Corporation (ECGC) is a government organization in India that provides export credit insurance services to exporters and banks.
  • It helps mitigate the risks associated with exporting goods and services, facilitating international trade.

8.SIDBI Make in India Loan for Enterprises (SMILE)

  • SIDBI's SMILE program provides financial assistance and support to small and medium enterprises (SMEs) under the Make in India initiative.
  • It aims to foster entrepreneurship, innovation, and job creation by offering loans and other financial products tailored to the needs of SMEs.

9.Stand-Up India for Women Entrepreneurs

  • Stand-Up India is a government scheme that empowers women entrepreneurs by providing financial support and resources to start and grow their businesses.

10.National Bank for Agriculture and Rural Development (NABARD)

  • NABARD is a financial institution in India that focuses on agricultural and rural development, providing credit, loans, and support to farmers, rural communities, and agricultural enterprises.

Please note that this is not an exhaustive list, and there are other government schemes available to support business loans in India. It's always advisable to explore specific scheme details and eligibility criteria to determine the most suitable option for your business.

Types of Business Loan In India

In India, several business loans are available to cater to different financial needs. Here are some common types of business loans offered:

1. Term Loans - For expansion, purchasing assets, or working capital needs.

2. Working Capital Loans - Working capital loans fund day-to-day operations and bridge cash flow gaps for expenses like inventory, payroll, and supplier payments.

3. Machinery and Equipment Loans - Finance purchasing or leasing machinery, equipment, or vehicles necessary for business operations.

4. Small Business Administration (SBA) Loans - Small business loan backed by the government.

5. Business Line of Credit - Provides a revolving credit facility, allowing businesses to withdraw funds as needed.

6. Invoice Financing - This loan type enables businesses to access funds by selling their unpaid invoices to a lender, also known as accounts receivable financing.

7. Trade Finance - Trade finance loans facilitate international trade transactions by providing financing for import or export activities, including letters of credit, export financing, and supply chain financing.

8. Startup Business Loan - Designed to support new businesses in their early stages.

Tips Before Applying for Business Loan

Applying for a business loan can be confusing for a first timer, that's why few tips help you to go in the right direction. Check out these tips before applying for a business loan to help you out-

  • Assess loan needs and determine the required amount.
  • Check and improve your credit score.
  • Research and compare lenders for competitive rates and terms.
  • Gather necessary documents and ensure organisation.
  • Maintain clear communication with the lender throughout the process.

Steps to Apply for a Business Loan

Here’s the step-by-step process that you can follow to apply for a business loan on Buddy Loan:

  • Step 1: Visit or Download & install the Buddy Loan app (Android or iOS).
  • Step 2: Open the Business Loan Application Page. Enter your mobile number and OTP.
  • Step 3: Specify the desired loan amount and email. Next, choose the Business Loan option.
  • Step 4: Choose if you have a Business Proof (Yes/ No)
    • If ‘Yes’ (If you have a business proof), enter your business and personal details.
    • Or
    • If ‘No’ (If you do not have a business proof), choose the profession type and enter your personal details.
  • Step 5: Provide income details and Click the ‘Submit’ button.

FAQs on Business Loan

Consider lenders who offer quick loan approvals. Fintech companies and online lenders may have streamlined processes and faster turnaround times than traditional banks.

The maximum amount of a business loan can vary depending on the lender, borrower's eligibility, and other factors, but it can range from a few lakhs to crores of rupees.

Getting a business loan as a fresher can be challenging due to the lack of established track record and financial stability. However, with a strong business plan and collateral or a co-signer, it's possible to increase the chances of obtaining a loan.

The interest rate of a business loan can vary depending on factors such as the borrower's creditworthiness, loan amount, loan tenure, and prevailing market conditions.

The processing fee for a business loan can vary among lenders and is typically a percentage of the loan amount.

The specific documentation requirements for a business loan in State Bank of India (SBI) may vary based on the type of loan and the borrower's profile. However, the general list of documents i.e. required which can be referred from above.

The business loan amount itself is not taxable as it is considered a liability and not an income.

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