Business Loan Interest Rates

A Business loan interest rate could directly impact the cost of capital for a business initiative. These rates vary depending on factors such as the lender, loan amount, tenure, and the applicant's creditworthiness. The interest rates influences periodic cash outflows, could help in enhancing financial performance and cost efficiencies.

Let’s uncover different rates that banks, NBFCs, and government schemes, detailing amounts, terms, and influencing factors have to offer you over a business loan. Through it, you can start your business loan journey with tips on securing favourable rates, emphasising credit scores and negotiation.

Business Loan Interest Rate Highlights

Here are the business loan details offered by banks and NBFCs:

Loan Amount Up to ₹1 Crore
Interest Rate 9.25% - 30.00% p.a.
Tenure Up to 96 months
Processing Fees Up to 3%
Prepayment Fees Up to 4%
Note- The interest rates are dynamic and subject to change based on your creditworthiness and prevailing market rates. Please check the official website for more accurate information.

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Comparing Business Loan Interest Rates Across Lenders

It is crucial to compare business loan interest rates offered by different lenders. As it will help business owners find the best financing option for their business. Here are the various banks and NBFCs offering business loans along with their interest rates:

Business Loan Interest Rates by Banks

Check the business loan interest rate offered by different banks from the table below.

Banks Interest Rates (p.a.) Loan Amount (₹) Tenure
Axis Bank 9.25% - 20.00% p.a. ₹50,000 - ₹75 lakhs 6 - 60 months
HDFC Bank 10.75% - 22.50% p.a. Up to 75 lakhs 12 - 48 months
ICICI Bank 12.50% - 13.60% p.a. Up to ₹2 Cr Up to 7 years
Kotak Mahindra Bank 16.00% - 26.00% p.a. ₹3 Lakhs - ₹1 Cr Up to 60 months
State Bank of India 8.90% p.a. onwards Up to ₹50 Cr Up to 15 years

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Note- The interest rates are dynamic and subject to change based on your creditworthiness and prevailing market rates. Please check the official website for more accurate information.

Business Loan Interest Rates by NBFCs

NBFCs Interest Rates (p.a) Loan Amount (₹) Tenure
Mahindra Finance 7.2% - 22.00% p.a. ₹1 lakh - ₹25 lakhs 12 - 48 months
Bajaj Finserv 9.75% - 30.00% p.a. ₹2 lakhs - ₹80 lakhs 12 - 96 months
IndiaLends 10.25% - 29.99% p.a. Up to ₹1 Crore 12 - 60 months
LendingKart 12.00% - 46.5% p.a. ₹50,000 - ₹2 Crore 1 - 36 months
IIFL 12.75% - 44.00% p.a. Up to ₹30 lakhs Up to 60 months

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Note- The interest rates are dynamic and subject to change based on your creditworthiness and prevailing market rates. Please check the official website for more accurate information.

Government Business Loan Scheme Interest Rates

Government business loan schemes offer financial assistance to entrepreneurs and businesses at competitive interest rates. These schemes aim to promote entrepreneurship, job creation, and economic growth by providing affordable funding options to eligible borrowers. Government business loan schemes offer lower interest rates than traditional lenders helping women entrepreneurs and others get access to capital for small and medium-sized enterprises (SMEs) to encourage their development and expansion.

These loan schemes offered by the government are:

Loan schemes Interest Rates (%) Loan Amount (₹)
Pradhan Mantri Mudra Yojana 8.00% p.a. onwards ₹50,000 to ₹10 lakhs
CGTMSE 8.00% p.a. onwards ₹500 lakhs onwards
Udyogini Scheme 10.00% - 12.00% p.a. Up to ₹3 lakhs
PSB loans in 59 minutes 6.8% p.a. onwards ₹10 lakhs to ₹5 Cr
Stand Up India Scheme The rate must not exceed the MCLR + 3% + tenor premium. ₹10 lakh to ₹1 Cr

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Note- The interest rates are dynamic and subject to change based on your creditworthiness and prevailing market rates. Please check the official website for more accurate information.

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Unsecured Business Loan Interest Rates

Unsecured business loans are a type of financing option where borrowers do not need to provide any collateral or security to obtain the loan. These loans are based on the borrower's creditworthiness and business performance rather than assets. Government schemes like Mudra loan, Udyogini, Stand Up India Scheme and others offer collateral-free business loans to support micro, small and medium businesses and women entrepreneurs. These schemes aim to promote entrepreneurship and economic development by providing financial assistance without any need of collateral.

Lending partners of Buddy Loan also offer unsecured business loans to borrowers. Lenders like Paysense, SBI, Fibe, Axis Bank, KreditBee, Standard Chartered, and others provide competitive interest rates and extended repayment periods for business loans. These loans provide flexibility and convenience for businesses looking for quick financing without the need for collateral.

Business Loan EMI Calculator

A Business Loan EMI Calculator is a tool that helps business owners understand their loan repayment obligations. It allows them to estimate how much they'll need to pay each month towards their loan, through factors like the loan amount, interest rate, and repayment period.

Understanding the EMI helps in planning their budget effectively and managing cash flow. With the calculator, they can compare different loan options easily, assess affordability based on their financial situation, and decide on the repayment period that works best for them. By using this tool, borrowers running businesses can plan their repayments and choose the right financing options.

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 (%)

To use it, simply input the loan amount, interest rate and tenure and you will get the estimated EMI for your loan amount and duration.

For example, if borrow a loan amount of ₹. 50,000 at 11% interest for 1 year, your repayment amount is nothing more than ₹. 53,029/- for a monthy EMI of ₹. 4,419/-

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Factors Affecting Business Loan Interest Rates

Several factors can influence business loan interest rates which can in turn impact the cost of the business loan. Here are some of which can directly impact the cost of capital and cash flows,

  1. Creditworthiness: The borrower’s credit score and financial history is very important when lenders are determining the interest rate. As it indicates the level of risk the lenders are taking for giving the loan.
  2. Loan Amount and Repayment Period: The duration and loan amount will affect the interest rate. Larger loan amounts will lead to higher interest rates and longer repayment terms will lead to lower interest rates.
  3. Economic Conditions: Prevailing market rates, social political events, rupee stability and overall economic conditions will also influence interest rates.
  4. Type of Loan: The type of business loan availed also affects the interest rates. Secured loans, backed by collateral, will have lower interest rates compared to unsecured loans. Government schemes also offer lower interest rates as compared to loans offered by Banks and NBFCs.
  5. Collateral: The type and value of the collateral offered can impact the interest rates. With valuable collateral the interest rate can often be lower.

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Tips to Avail Business Loans at Low-Interest Rates

It is always great to get a good deal out of a loan, especially if you are a business owner. Here are some tips on how to get a lower interest rate on your business loan:

  • Maintain a Good Credit Score: Having a higher credit score will show your creditworthiness, and responsibility towards loan repayment. This increases the likelihood of getting a loan at lower rates.
  • Research and Compare: Always research and compare interest rates offered by different lenders to find the most competitive option.
  • Offer Collateral: Providing collateral can reduce the risk of lending for lenders, this will result in lower interest rates.
  • Opt for Shorter Loan Terms: Shorter repayment periods often come with lower interest rates compared to longer-term loans. Although a shorter loan term will mean a higher EMI amount.
  • Improve Financial Health: Strengthen your business's financial position by improving profitability, reducing debt, and maintaining healthy cash flow.
  • Negotiate with Lenders: Always negotiate terms and interest rates with lenders, especially if you have a strong credit profile and a great business track record.

How to Get a Business Loan from Buddy Loan

Getting a business loan is now possible from Buddy Loan, here are the easy steps that you can follow:

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.
  • 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.

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How Credit Scores Impact Business Loan Interest Rates

A credit score has a major impact on business loan interest rates, as it indicates how responsible a borrower is when repaying back a loan. Here is how a credit score can impact the business loan interest rates:

  • Higher credit scores will lead to lower interest rates, because it shows lower risk for lenders.
  • Lower credit scores will result in higher interest rates as borrowers may be at higher default risk due to their repayment history.
  • A good credit history along with timely payments and effective credit management will improve credit scores.

Lower credit scores may also limit loan options or require collateral for security. Thus, maintaining a good credit score is crucial for businesses to secure favourable loan terms and lower borrowing costs.

Frequently Asked Questions

You can get the lowest interest rate on a business loan by having a good credit score, providing collateral or having a shorter tenure.

The repayment period from a business loan is anywhere between 6 months to 120 months.

The pre-closure or foreclosure charges for business is up to 3%.

You can calculate your interest or EMI by using the EMI calculator. All you need to do is input the available slots and click calculate.

Lenders can charge a fee of up to 4% on early repayment of a business loan.

Yes, if you have an excellent credit score, you can negotiate for better interest rates.

Yes, generally prepaying business loans will incur a penalty of up to 4%

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