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Business Loan Interest Rates updated May, 2019

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Lowest Business Loan Interest Rates from Top 25 Banks / NBFCs

Business Loan Interest Rates Comparison of Top Banks / NBFC (updated 27 May,2019)

Bank/NBFC Institution Type Minimum Loan Amount Maximum Loan Amount Minimum Tenure Maximum Tenure Interest Rates Fees & Charges
Axis Bank Bank ₹50,000 ₹50,00,000 1 Year 15 Years  Custom Up to 2% + GST as applicable
Aditya Birla Finance Ltd. NBFC ₹50,000 ₹15,00,000 1 Year 3 Years 16.85% - 17.85% Up to 2% + GST as applicable
Arohan Financial Services Ltd. NBFC ₹5,00,000 ₹75,00,000 9 Months 2 Years 20.70% - 26.99%  1% + GST as applicable
Bajaj Finserv NBFC ₹1,00,000 ₹30,00,000 1 Month 8 Years 18% - 40% Up to 3% + GST as applicable
Capital First NBFC ₹10,00,000 ₹75,00,000 1 Year 5 Years 16.00% - 24.00% Up to 2% + GST as applicable
Clix Capital Services Pvt. Ltd. NBFC ₹10,00,000 ₹50,00,000 1 Year 3 Years 12% - 15% Up to 2% + GST as applicable
Deutsche Bank Bank ₹ 10,00,000 ₹50,00,000 2 Year 4 Years 24% Up to 3% + GST as applicable
Edelweiss Financial Services Ltd. NBFC ₹3,50,000 ₹25,00,00,000 4 Years 10 Years 20.50% 2% - 3.5% + GST as applicable
Equitas Small Finance Bank Bank ₹5,00,000 ₹75,00,000 1 Year 5 Years 18% 2% + GST as applicable
Fortune Financial Services - Kapital Tech NBFC ₹2,00,000 ₹150,00,000 3 Months 2 Years 15% - 24% 1.5% - 2% + GST as applicable
Fullerton NBFC ₹10,00,000 ₹50,00,000 1 Year 4 Years 13% - 16%  Up to 6.5% + GST as applicable
HDB Financial Services Ltd. Bank ₹ 1,00,000 ₹30,00,000 1 Year 5 Years 12% - 36% 2% + GST as applicable
HDFC Bank Bank ₹50,000 ₹50,00,000 1 Year 4 Years 15.65% to 21.20% Up to 2.50% + GST as applicable
ICICI Bank Bank ₹1,00,000 ₹10,00,00,000 1 Year 5 Years 12.9% - 16.65% Up to 2% + GST as applicable
IDFC Bank Bank ₹1,00,000 ₹40,00,000 1 Year 5 Years 11.69% - 15% 1.5% + GST as applicable
India Infoline NBFC ₹1,00,000 ₹50,00,000 1 Year 5 Years 18% - 25% Upto 3% + GST as applicable
IndusInd Bank Bank ₹1,00,000 ₹15,00,000 1 Year 5 Years 10.6% -18% 0.5% + GST as applicable
Kotak Mahindra Bank Bank ₹3,00,000 ₹2,00,00,000 1 Year 3 Years 16.00 % to 19.99% Up to 3% + GST as applicable
Lendingkart Finance Ltd. NBFC ₹50,000 ₹100,00,000 1 Month 1 Year 18% - 27%* 2% + GST as applicable
Magma FinCorp Ltd. NBFC ₹3,00,000 ₹2,00,00,000 1 Year 4 Years 17%  - 21% 2% + GST as applicable
Neo Growth NBFC ₹2,00,000 ₹75,00,000 6 Months 2 Years 12% - 36% 2% + GST as applicable
RBL Bank Ltd. Bank ₹10,00,000 ₹35,00,000 1 Year 3 Years 16.00% - 27.00% 2% + GST as applicable
Standard Chartered Bank Bank ₹10,00,000 ₹75,00,000 1 Year 5 Years 13.5% - 20% Up to 2% + GST as applicable
Tribe Tech Private Limited NBFC ₹1,00,000 ₹20,00,000 1 Year 3 Years 12% - 36% 2% + GST as applicable
Yes Bank Bank ₹20,00,000 ₹400,00,000 1 Year 5 Years 13.25% - 19.99% Up to 2.5% + GST as applicable
Business Loan Interest Rates Details

Fees & Charges on Business Loans (updated 27 May,2019)

Nature of Charges Details
Processing Fees Up to 2% (plus applicable tax) of facility amount
Interest Rate
    • For secured facilities: Up to I-MCLR-6M+4.75%
    • For unsecured facilities (not under CGTMSE cover): Up to I-MCLR-6M + 8.50%
    • For facilities backed by CGTMSE: Up to I-MCLR-6M + 4.0%

The interest rate for every loan is determined based on evaluation of business, loan amount, financials and tenure.</p

Stamp Duty and other statutory charges

As per applicable State law
The Commission on the Letters of Credit & Bank Guarantee
Up to 2.5% p.a. commission will be charged on a pro-rata basis as per the tenure and amount of non-fund based facility being availed

Commitment fees

The average usage of about <50% - 0.50% p.a. on the difference between the actual utilization and average quarterly utilization of 50%. Charges will be imposed on quarterly basis. Applicable mainly for OD/CC facility

Foreclosure Charges

Charged up to 4% of total limits set-up in system, in case facilities are taken over by different bank during the contract of loan. These charges are applicable only in case of Balance Transfer (BT)

Working capital facilities pre-paid or the closed ones from own sources will not attract foreclosure charges

Business Loans Interest Rates

It doesn’t matter how small or big the business, to carry out all functions funding is essential. Funding is not just required in the form of one time investment-capital but also as a working capital at regular intervals. Not everyone will have money at all times to pool into business as and when required. Also, some days there will a need for a lot of money, while others days, there is absolutely no need at all. All of us will be happy to take a business loan that has less interest rate. Here are some information about business loan and its interest.

Business loan interest rates are mainly of two types which are reducing or diminishing Rate of Interest and Flat Rate of Interest. These are explained in detail here:

a. Reducing or Diminishing Rate of Interest

Reducing or Diminishing balance rate means the interest rate which is calculated each month on the remaining loan amount. In this technique, the EMI comprises interest that is payable for outstanding amount of loan for each month along with the principal of repayment. After each EMI payments, outstanding amount of loan gets reduced. Thus, the rate of interest for the following month is the calculation of interest only on outstanding amount of loan. Formula for calculating this reducing-balance interest is Interest Payable per Payment = Interest Rate per Payment * Remaining Loan Amount.

For example, if a person has taken a loan for amount Rs 1, 00,000 with reducing rate of interest method of 10% p.a. for about tenure of 5 years, then the EMI amount would decrease with every month’s repayment. The first year the borrower will have to pay Rs 10,000 as interest; but in the second year it will reduce to Rs. 8,000 on the reduced principal amount of Rs. 80,000 and so on, until the final year, which is when the borrower will have to just pay Rs. 2,000 as interest. This is a total opposite of fixed interest payment method.

b. Flat Rate of Interest

Flat interest rate means the interest rate which is calculated on full loan amount during the course of its tenure without considering that monthly EMIs would gradually decrease the principal amount and thus the interest rate. Therefore, the Effective Interest-Rate is prominently higher than nominal Flat-Rate. The formula for calculating fixed rate of interest is Interest Payable per Payment = (Original Loan Amount * No. of Years * Interest Rate p.a.) / Number of Payments.

For example, if a borrowers has taken a loan for amount Rs 1, 00,000 with the option of flat rate of interest of about 10% p.a. for a tenure of 5 years, then he would have to pay Rs 20,000 which is the principal repayment for the amount of (1, 00,000 / 5) + Rs 10,000 -interest at 10% of this 1, 00,000is equal to a total of Rs 30,000 year after year or about Rs 2,500 each month. Over the tenure of the loan, the borrower will end up paying Rs. 1, 50,000 that is (2,500 * 12* 5).

In addition, all interest rates charged by banks/NBFC’s which Finance Buddha works with follow a written down value principle. For more details on the amortization schedule please click here.

The rate of interest in business loans broadly range between 15%-24% p.a. The final rate of interest is dependent on the profile of the borrower, credit score, financials, existing leverage, business stability, industry outlook and various other risk assessment parameters.

Factors Deciding Business Loans Interest Rates

There are main factors that determine the business loan interest rate. However, the top 4 among the list are mentioned below:

  • Credit Score: All applicants who have good credit score can walk into any bank to get a business loan. The better you score is you can avail more benefits and the interest rate will also depend on the same.
  • Time in Business: Irrespective of what type of business it is, the minimum operation period is of two years or more. The longer a business has been in existence the more is the probability of getting a loan.
  • Monthly Revenue: Return or income is always a key factor for any type of loan. For business loan the consistency is a main factor. All business has different revenue at different period, but having a consistency is crucial. The average daily balance is analyzed by banks to determine the loan amount and repayment capability.
  • Collateral: It is the security that is pledged with a bank to avail loan, the more the collateral value is, the benefits are more. This gives a security for the banks to offer bigger amount as the risk is low. The different types of collaterals are deposits, home equity, investment real estate and equipment.

Things to Compare Before Applying for a Business Loan

  • Per Month's EMI: For this factor, not just present status is considered, the past records of financial stability holds lot of value in deciding the capacity to pay per month EMI. It is a key to success in all fields if you have good financial records, this can decide the interest rate percentage, loan amount and tenure when applying for new loan. Make sure you are paying your EMI with the excess fund that is not affecting your basic needs requirements. It is essential to make sure this payment is made without any default as it will affect the CIBIL score.
  • Processing Fee: It is a onetime payment made to the bank to get them to process the loan amount. It’s the additional cost incurred for the service charges. This is not refundable and no interest will be provided on the same. No matter what loan you are looking for, this charge is unavoidable and is expected to be paid at the initial stages.
  • Prepayment: If ever there of a chance to pre close the loan amount before its tenure, it can be done so with an additional prepayment charges. This is calculated on the outstanding balance by the bank to check the service charges and other factor.
    Make use of the business loan option to start your journey towards your dream. Money should never be a show-stopper to start any business in this era when there are ample options available.

Best Way to Compare Business Loans

Before making the final decision on your business loan provider, make sure the various factors are compared with other banks and NBFCs. The factors that should be considered are interest rate, processing fee and other charges, EMI, which type of interest rate method is used, what are eligibility criteria, is there a need for collateral or not. How reliable the bank is, what minimum requirement criteria are and so on.

ReviewsView All

Amit Roy

5 / 5

I have a small textile factory in Mumbai. I wanted to expand my business. Hence, I opted for Bajaj Finserv Business Loan. The processing was a bit longer with included lots of paperwork. But I am happy that they approved my loan without much hassle.
Malathi C.

5 / 5

I went with Bajaj Finance Business Loan when I was in need of funds for my small business. The interest rate charged was nominal as compared to the other lenders in the market. Got it within 20 working days.
Prasanna Ashok

5 / 5

I was searching for a business loan actively when I came across Finance Buddha. From here I applied for Axis Business Loan. Service was satisfactory and minimal paperwork was required. Executives were assigned to help me throughout the process. Overall happy with it.
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