Business Loan Interest Rates: Comparison of Interest Rates of All Banks

Business Loan Interest Rates: Comparison of Interest Rates of All Banks.

Business Loan Interest Rates

The offered business loan interest rates by banks/financial institutions start at 9% per annum. Under this scheme, loan amounts of up to 2 crore rupees are provided for up to 5 years. Borrowers do not need to deposit any collateral/security for unsecured business loans provided by banks/financial institutions.

Current Business Loan Interest Rates

The latest unsecured business loan interest rates and key information offered by popular banks and financial institutions in India are as follows:

BanksInterest Rates
Axis Bank 10.49% – 22% p.a.
HDB up to 36% p.a.
Flexi Starting from 1% per month
Bajaj Finserv 11.00% – 25% p.a.
mCapitalStarting at 2% per month
Indifi Starting at 1.50% per month
NeoGrowth Finance 19% – 24% per month
Lendingkart Business Loan 12% – 27% per month
HDFC Bank 10.5% – 24% p.a.
IDFC First Bank 10.99% – 23.99% p.a.
Kotak Mahindra Bank 10.99% – 36% p.a.
Tata Capital 10.99 – 35% per annum
You grow capital 9% – 36% per month

Points Affecting Business Loan Interest Rates

  • Type of Institution: Interest rates on business loans vary from one institution to another. However, comparing interest rates offered by banks and NBFCs, you’ll find that banks generally offer loans at lower interest rates compared to NBFCs.
  • Business Status: The age of your business matters, and generally, the older your business, the better. Regardless of the type of business, it should ideally be at least 2 years old. The longer the business has been operational, the lower the interest rates you might qualify for.
  • Monthly Turnover: Your business’s monthly turnover determines whether your business is making profits or facing losses. In brief, this establishes your eligibility for obtaining a business loan.
  • Credit Score: Your credit score is a parameter of your credit profile, based on your credit history. If you’ve taken a loan before and repaid it on time, or if you consistently pay your credit card bills on time, you’ll have a good credit score. Having a good credit score will assist you when applying for a loan. A good credit score will get you benefits like lower interest rates and longer repayment periods, among others.
  • Security: Security is what the loan applicant pledges to the bank in exchange for the loan. The higher the value of the security, the more benefits you’ll receive. High-value securities like real estate, equipment, machinery, and homes provide banks with security. After verifying the security, the bank can provide you with a higher loan amount.
  • Type of Business: Lending institutions usually categorize loans into priority sector and non-priority sector loans. Interest rates are generally higher for loans falling under the non-priority sector compared to those under the priority sector.

Get Business Loans at low interest rates

To obtain a business loan at a low interest rate, applicants should consider the following suggestions and techniques:

  • Prepare a Business Plan: Develop a comprehensive business plan outlining your business goals, strategies, financial projections, and repayment plans.
  • Maintain Good Loan History with Financial Stability: Maintain a positive track record of previous loans and ensure financial stability in your business operations.
  • Ensure a Source of Income: Have a steady and reliable source of income to demonstrate your ability to repay the loan.
  • Apply for Long-Term Business Loans Instead of Short-Term: Consider applying for long-term business loans rather than short-term ones, as they often come with lower interest rates.
  • Build Relationships with Banks: Establish relationships with banks by opening accounts and maintaining good communication. This can enhance your chances of securing a loan at favorable terms.
  • Do Not Close Old Credit Accounts or Credit Cards: Keep old credit accounts or credit cards open, as they contribute to your credit history and can positively impact your credit score.
  • Increase Company Profitability: Focus on improving the profitability of your company by implementing effective business strategies and increasing revenue streams.
  • Submit all Necessary Documents (Audited by CA): Ensure all necessary documents are submitted, including audited financial statements by a Chartered Accountant (CA), to demonstrate the financial health of your business.
  • Apply for Loans in the Best Private or Public Sector Banks: Apply for loans from reputable private or public sector banks known for offering competitive interest rates and favorable loan terms.
  • Provide Collateral or Security for Secured Business Loans: For secured business loans, be prepared to provide collateral or security to the lending institution, which can help lower the interest rate offered.

Business Loan Balance Transfer Online

Business loan balance transfer is a credit facility where a customer can transfer their existing business loan from one bank to another bank through online transfer. In this process, the outstanding balance of the loan is transferred from one bank to another at comparatively lower interest rates. The main objective of balance transfer is to reduce the EMI (Equated Monthly Installment) and pay lower interest for the outstanding loan amount. Customers can initiate the business loan balance transfer online by selecting the necessary fields through a balance transfer EMI calculator and submitting the application.

FAQs

  1. What is a business loan balance transfer?

    A business loan balance transfer refers to the process of transferring the outstanding balance of an existing business loan from one bank or financial institution to another.

  2. Are there any fees associated with a business loan balance transfer?

    Yes, there may be fees associated with a business loan balance transfer, such as processing fees, prepayment penalties, or administrative charges.

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