Few banks offer higher loans without any pre-approved offers and collateral. This is the cost that is paid with a particular rate of interest and for a definite period. It has become tough to get a business loan with the recent banking situation, but various banks offer this facility with ease. A lot of banks offer loans up to 30 lakhs with and without collateral with pre-approved offers; you would just have to pay a fixed percentage of interest. But, choosing the right bank as per your requirements can be challenging, don’t worry; here in this blog, you would be able to know about the top Business Loan providers in India that would make it easy for you to pick.
Best Banks for Business Loan in India
Best Banks for Business Loan in India
Purpose of Getting a Business Loan
Different people have different reasons for taking a business loan, let us have a look at the primary reasons-
For expansion business For expanding business location For starting a new venture To collate credit for future needs To buy equipment for Business For purchasing more inventories For getting new employees to the Business
Types of Business Loan
There are various types of business loans, depending on your requirements. Some of the significant ones are:
Secured loans- These are loans taken against some type of personal guarantee or any valuable asset as a Mortgage. Unsecured loans- Businessmen usually prefer taking unsecured loans because no collateral is required as they are short-term loans that range from 5 to 15 days.
- Overdraft facility: When you talk about a business loan in India, this is one of the first options that come to their mind. In this type of loan, businessmen can get a considerable amount of money than the amount present in their account as a loan for meeting their business requirements. The sum you can withdraw, interest rate, and span would depend on a mutual consensus between the bank and borrower. 3) Demand loans: If the businessman takes a demand loan for financial requirements, he would have to repay the amount whenever the bank or non-banking financial company (NBFC) asks for it. They can be both secured and unsecured loans. Demand Loans are best for meeting short-term financial needs as the maximum term for this loan type is 12 months; the merchant can also get it reviewed if the bank agrees.
- Letter of credit facility: You can apply for this financing scheme based on the bank’s creditworthiness; this arises when the buyer and seller do not know each other, such as international trade transactions.
- Loan against securities: As the name suggests, you can get a loan against financial securities that are authorized by the bank, such as mutual funds, property, gold, insurance policies, maturity plans, Demat shares, savings bonds, etc. 6) Cash credit facility: It is an overdraft loan that businessmen can get to finance the requirements of working capital by providing its current assets like inventory, receivable, etc., as collateral. The amount you would get would depend on the stock margins fixed by the bank and the tenure time is 12 months that can be renewed if the bank agrees.
- Business loans for women entrepreneurs: For supporting women empowerment, many banks and NBFC’s provide distinctive loan schemes for existing and potential women entrepreneurs. Women can avail of many benefits and discounts on the interest rate, security, and time from these existing schemes. But these loans are only for females who hold over 50% of the shares of the company.
- Bank guarantee: You can get this pre-approved secured loan by giving residential, commercial, or industrial property as a guarantee, whether you hold a public/private limited company or proprietorship/partnership firm. With the help of this loan, companies get down loans, purchase equipment if required, and cover any additional expenses that would aid the business is flourishing. In a bank guarantee, the merchant vows to pay the guaranteed business’s stakeholders in case it defaults. These were some of the loan types, and you can get them from the best banks for business loans in India. Also Read: 10 Best Demat and Trading Account in India
Features of business loans
Before applying for a business loan, it is paramount for you to know the features:
Benefits of Business Loan
Undoubtedly, business loans offer numerous benefits to people who need funds for different business requirements. The reason why people should choose this option is that:
Things to Consider When Applying for a Business Loan
Before applying for a business loan, you should consider a few things about your business needs and banks. Here are some of the significant factors that you should always check on before applying for the loan:
Factors that affect Business Loan Interest Rates
You might have seen a lot of times that the interest rate on business loans varies from Business to Business. Do you know why? Here is a brief explanation for you:
Business Loan Eligibility Criteria
It is substantial for you to check the eligibility criteria of the bank before applying for the business loan:
Partnership or Proprietorship Firm must have a minimum stake of 25% Chartered Accountant / Self Employed Individual must have a diploma or degree in any discipline Self-employed professionals comprise doctors, chartered accountants, company secretaries, architects, etc. This is directed to the applicants who have proof of qualifications and also are practicing their profession. Self-employed non-professionals comprise traders, manufacturers, etc. Entities encompass partnerships, private limited companies, limited liability partnerships, closely-held limited companies, etc. The Income Tax Return for the last 1 year should have been filed. Banks may offer business loans to only certain cities and towns.
Documents required for applying for a Business Loan
The banks do document verification to ensure that the customers meet the business loan eligibility criteria stated by the respective bank. To apply for a business loan, you will need the following documents:
Identity Proof- Copy of Aadhar Card, Passport copy, Driving License, and Voter’s ID copy PAN card for company, firm, or individual Duly filled application form with Passport-sized Photographs Resident Proof- Utility Bills of the last 3 months Bank statement of the last 6 months Proof of stability of the business for self-employed individuals Salary slip of the last 3 months for salaried individuals Latest ITR along with the computation of income, Balance Sheet, Income & Profit & Loss a/c for the last 2 yrs. (All financials must be CA certified or audited) Sole Proprietorship Declaration or a Certified true copy of Memorandum & Articles of Association of Business Ownership Any other document required by the lender
How to apply for a Business Loan?
These days applying for a loan have become pretty quick and easy. If you submit the documents and meet the eligibility criterion, the amount will be credited to your account within a couple of days. Here are a few steps on how to apply for a business loan in India:
11 Best Banks for Business Loans in India
11 Best Banks for Business Loans in India
After doing a lot of research, this list of best banks in India for a business loan has been made so that it becomes easier for you to pick one:
1) HDFC Bank Business Loan
It is one of the best banks in India; they provide business loans for up to Rs.40 lakhs without any collateral, guarantor, or need of security. They have an easy and quick approval method, plus they also provide attractive offers for its customer. Key Highlights:
A loan balance transfer facility is granted. Pre-payment of the loan is permitted after 6 EMIs are paid. Their interest rate ranged from 15.00% to 21.20% yearly You can check eligibility either online or at an HDFC Bank branch in just a couple of seconds. The last two years of the business must be the profit-building years 1.5 lakhs must be the minimum annual income of the business as per ITR Gives a repayment period of 12 months – 48 months. Minimum Loan Amount:₹ 50,000 Maximum Loan Amount:₹ 5,000,000 Minimum Tenure Period:1 year Maximum Tenure Period:4 year Minimum experience of individuals in business must be 5 years, with 3 years in the current business.
Other Charges:
Late EMI interest: 2% per month on the delayed amount and a minimum fee of Rs.200 Processing Fees & Charges: Up to 2.50% + GST as applicable Pre-payment charges: 2% when the loan is settled after 36 months. Stamp duties: ₹550 is charged when a check is bounced. Cheque swapping charges: Rs.500 Pre-payment charges of 4% if the loan is closed between 7 months – 24 months Pre-payment charges of 3% if the loan is closed between 25 months – 36 months Amortization schedule charges: Rs.200
2) SBI Simplified Small Business Loan
It is the largest public sector bank in India that has more than 24000 bank branches and over 59000 ATMs across the country. Their primary aim behind offering business loans is to support small businesses create their current assets and fixed assets. Key Highlights:
Business owners, professionals, and self-employed individuals can apply for this loan A minimum amount of loan that MSME can take is Rs.10 lakh, and the maximum is Rs.52 lakhs They need a minimum 40% of the collateral and the interest of it is combined to the Marginal Cost of Funds based Lending Rate) You should have a minimum of 5 years of business existence It is a mandate to have a current account at any bank for the last 2 years You should show a minimum average monthly balance of Rs. 1 Lakh Repayment Tenure- 5 years to 15 years The repayment duration of SBI simplified small business loans is up to 60 months.
Other charges:
Processing Fee: 1% of the loan amount, max up to Rs 10 Lakh Interest Rate: 9.05% – 16.30% (Linked to MCLR) The entire fee for processing fees, inspection charges, documentation charges, remittance charges, and commitment charges is just Rs.7,500.
3) ICICI Bank Business Loan
It is one of the biggest Private Banks in India and can be an excellent option for loan seekers. Their loan structure is made in such a way that it is convenient for choosing the option that suits the business needs effectively for customers. Key Highlights:
ICICI Bank obeys an excellent documentation method making repayment manageable and straightforward The business loan from ICICI could be availed as working capital, term loans, or composite loan They provide a loan of up to ₹2 Crore Minimum Loan Amount: Rs 1 Lakh and maximum loan amount is Rs.40 lakhs The maximum duration in which you have to repay the business loan is 7 years Dedicated relationship managers to give comprehensive financial solutions You also get an overdraft facility under this scheme An ICICI business loan conditions include the last one-year income tax return, audited financials of the last 3 years, and current year performance and turnover. Plus, you also need to provide the bank statements for the latter 6 months Quick and trouble-free renewals with minimum documentation
Other charges:
It charges an interest rate based on the repo rate. The current repo rate is 4%, which means the rate of interest is 10% to 11.10% Processing fee: Up to 2% on the loan amount Guarantee fee: 0.75% – 0.85% for women enterprises in the North Eastern Region and 15 for others Foreclosure Charges- To be priced as per the terms and conditions mentioned in the sanction letter.
Also Read: Different Types of Banks in India
4) Axis Bank Business Loan
They offer loans at competitive interest rates and are well-known for their convenient services. They render business loans to professionals like engineers, doctors, CA’s for practicing their service, office space, or purchasing equipment. Key Highlights:
For getting the business loan from Axis Bank it is mandated to have a minimum annual turnover of 30 Lakhs It is essential to have a business running experience of a minimum of 3 years The repayment period is a maximum of 15 years The business must be a partnership, proprietorship, LLP, Pvt. Ltd, Company business. You can get a loan from Rs.50000 to a maximum amount of Rs 50 lakhs The bank determines the interest rate based on your business profile, financial assessments, former track record, and tenure. You must be of the age group 21 to 65 years to take a business loan. Equitable Mortgage of the goods to be funded by way of payment of title deeds Balance Transfer facility is given with extra finance.
Other charges:
Processing fee: 1.25% – 1.50%. ₹500 as cheque bounce charges plus applicable taxes A penal interest rate of 2% on the current rate of interest. Minimum login charges of Rs 4000 will be charged Their interest rate starts from 15% No collateral is required.
5) Citi Bank Business Loans
It is one of the top Business Loan providers in India that provides you with a plethora of business loans for efficient working capital management. This loan is best suited for you when business operations happen overseas as they have a network in more than 100 countries. Key Highlights:
You can avail of overdrafts, working capital loans, short-term and long-term loans. You can get a minimum loan amount of Rs1000000 and a maximum amount of Rs. 15000000 The tenure period ranges from 12 months to 120 months The best part is that you can get a loan within 48 hrs with them No collateral or guarantor required CitiBank does not reveal the loan amount, rate of interest, and tenure on its website. However, this will be unveiled to you at the time of applying. Conditional pre-closure and part payment options are available after 12 months.
Other charges:
Pre-payment charges are 4%. Processing fee: 2% on the loan amount sanctioned Renewal fees: It is 2% associated with the business loan APR:49% – 20.75%
6) IDFC First Bank Business Loans
It is an excellent bank that offers business loans for you to purchase equipment, do business upgrades, or for any other business requirement. While taking a loan from IDFC Bank, you need to keep in mind that you would have to pay it back in equal installments with fixed monthly intervals. Key Highlights:
The Business Installment Loans is available for businesses plus professionals and non-professionals as well You can get a business loan from ₹1 Lacs to ₹9 Lacs It is an unsecured loan where you need not provide any collateral or security. You need to repay the business loan in 4 years The loan amount in IDFC first bank would solely depend on the nature of business, repayment capacity, and income You can also get comprehensive loan insurance on the approved amount Your business must be of 3 years for getting a BIL loan from IDFC bank You need not go to the bank to submit the documents as a doorstep pickup option is available with IDFC Bank.
Other charges:
The rate of interest is around 16% to 24% per annum The processing fee is 2.49% of the loan amount The foreclosure fee is 5% of the principal amount that is remaining
Also Read: Loan under Pradhan Mantri Jan Dhan Yojana (PMJDY)
7) Kotak Bank Business Loan
It is the fourth-largest private bank in India, started in 1985, and is relatively new from the others on the list. However, they have proliferated and have more than 650 branches all over the country. You can rely on Kotak Bank to take a business loan as they offer competitive prices and transparent policies. Key Highlights:
You can avail of a loan starting from ₹3 Lacs to ₹75 Lacs They have flexible and easy repayment options The lender needs minimal documentation to process this loan They provide business loans without collateral The good part is that they have customized offers for corporate & women professionals. Manufacturers, self-employed business persons, and service providers can apply for this loan. The repayment tenure is 48 months Online loan application option is also available If the applicant submits all the needed documents, then the bank confirms the business loan within 72 hours. The business vintage time must be 3 years.
Other charges:
They charge around 18% to 23% p.a rate of interest. Processing fee charges: Up to 2% Documentation charges: Maximum of Rs.10,000 plus taxes Their cheque dishonor charges are Rs.750 plus taxes per occurrence They charge for copies of reports; it is Rs.500 plus taxes per instance Rs.500 plus taxes for repayment mode/Account swap charges If you want to get a duplicate NOC, you would have to pay Rs.500 plus taxes Concluding charges are 5% or 6% of the running limit.
8) Standard Chartered Bank
People like this bank because the loan application process is very simple and quick, making it the best option for beginners. You can opt for this bank for a business loan because it is a perfect combination of thorough local knowledge along global expertise. Key Highlights:
You can take the Business Installment Loan for a period of up to 36 months No collateral/security is required to get this loan Tenure lies between 3 to 5 years You can get the loan if you need finance for business extension or working capital needs Cash security is basically between 30% to 50% of the total loan amount. You can prepay the loan after 1 year of the loan term A minimum of 3 years experience in the current business is expected, and 5 years of total business experience is required Appellants should be between 25 years to 55 years Banks may render business loans to only selective cities and towns The business should be making a profit for the last 2 years.
Other charges:
For the business, installment loan interest rate begins from 17.5% per year For getting a loan against property, the rate of interest would be around 10.75% To get a loan against the property home saver variable, the interest commences from 11% Pre-closure charges- 5% of the outstanding amount.
9) Tata Capital
This is another best bank for a business loan in India as they provide custom-built business loans at competitive interest rates. The loan amount starts from Rs 5lakhs and goes up to Rs75 lakhs. The good part is that no collateral or security is required on most of the loans they offer. Key Highlights:
Multiple Loan Programs The interest rate of Tata capitals business loans begins at 19%, with a repayment period of 12 to 36 months. Hassle-Free Loan Disbursal For a business loan, they need the balance sheet to be audited by a registered CA. Flexi EMIs It is easier to avail of the loan if you have a cibil score of 700 or above. No security needs to be provided to avail of this loan The other nice thing about Tata capital’s business loan is that it helps you plan repayment as per your cash flows. Individuals between 25 years and 65 years of age can avail of this loan.
Other charges:
Its PDC charges are Rs.850 Bounce charges are Rs.450 Cancellation charges are 2% of the borrowed loan amount or Rs.5,750, whichever is higher Duplicate NOC is Rs.550 Swapping charges are Rs.600 Fore-closure charges are 5% of the outstanding loan amount plus GST Duplicate Repayment Schedule charges are Rs.550
10) IndusInd Bank
This bank is a one-stop solution for all your banking requirements. You can get the lowest interest rates with IndusInd Bank, along with privacy and transparency in their operations. They have more than 380 branches nationwide where entrepreneurs or business owners can apply for a business loan. Key Highlights:
Round the clock customer support You can borrow up to Rs.1,500,000 for any business requirement They render personalized loan quotations as per different business needs They have flexible repayment options, starting from 12 months to 60 months You have the option to instantly check whether you are eligible for a loan or not They collect the documents required from your given address Online loan request option available Low-interest rate Quick loan disbursal
Other charges:
Processing Fee- 0.5%-2% Pre-payment charges- 4% post 12 EMI clearance Interest Rate- 14%-23%
Also Read: List of Banks in India
Comparison of Business loan between Banks
Taking a loan can be very helpful for people who need funds to expand their business, start a new venture, or for buying equipment, etc., but only those people get successful who use this facility of loan very wisely. Taking a business loan in India has become pretty easy, but it depends on how you use it. There are a lot of examples in front of you who used this facility irresponsibly and have proven to be a curse for them, such as Nirav Modi, Vijay Mallya, Subrata Roy, and many more. Recommended: 10 Best Savings Bank Accounts For Children In India You can take a business loan from any bank mentioned above as all of them are reliable, well-known, and offer excellent services. So take this as a blessing and use vigilantly do not misuse this amount.
