Best Bank for Business Loan in India in 2022
If you are looking to start a new business, expand an existing project or purchase new equipment, but have limited or no funds, a business loan may be one of the best options for you. This is a great way to raise financing for many business needs. Business loans are created to help small businesses and entrepreneurs meet their capital needs.
Some banks offer higher loans without any pre-approved offers and collateral. It is the cost which is paid at a particular interest rate and for a fixed period. With the recent banking situation it has become difficult to get a business loan, but various banks provide this facility easily.
Many banks offer loans up to Rs 30 lakh with pre-approved offers and without collateral; You just have to pay a certain percentage of interest. But, choosing the right bank as per your needs can be challenging, don't worry; Here in this blog, you will get to know about the top business loan providers in India that will make it easy for you to choose.
Purpose of getting business loan
Different people have different reasons for taking a business loan, let's have a look at the primary reasons-
for business expansion
for expansion of business
to start a new venture
To collect credit for future needs
buy equipment for business
to buy more goods
to bring new employees into the business
Business Loan Types
There are different types of business loans depending on your needs. Some of these are important:
1) Term loan: If borrowers opt for term loan, they have two options: Secured and unsecured loans:
Secured Loans- These are loans taken against a valuable asset in the form of some kind of personal guarantee or mortgage.
Unsecured Loans- Businessmen generally prefer to take unsecured loans as no collateral is required as they are short-term loans which range from 5 to 15 days.
2) Overdraft facility: When you talk about business loans in India, this is one of the first options that come to their mind. In this type of loan, businessmen can get much more than the amount in their account in the form of loan to meet their business needs. The amount you can withdraw will depend on the interest rate and tenor mutually agreed between the bank and the borrower.
3) Demand Loan: If the businessman takes a demand loan for financial needs, he will have to repay the amount on demand by a bank or a non-banking financial company (NBFC). They can be both secured and unsecured loans. Demand loans are best for meeting short-term financial needs as the maximum tenure for this type of loan is 12 months; The merchant can also get it reviewed if the bank agrees.
4) Letter of Credit Facility: You can apply for this financing scheme based on the creditworthiness of the bank; It arises when the buyer and seller do not know each other, such as in international business transactions.
5) Loan Against Securities: As the name suggests, you can get loans against financial securities that are authorized by the bank, such as mutual funds, property, gold, insurance policies, maturity plans, demat shares, savings bonds , Etcetera.
6) Cash Credit Facility: It is an overdraft loan that businessmen can avail to meet their working capital requirements by providing their current assets like inventory, receivables, etc., as collateral. The amount you will get will depend on the stock margin decided by the bank and the tenure is 12 months which can be renewed if the bank agrees.
7) Business Loans for Women Entrepreneurs: To support women empowerment, many banks and NBFCs offer specific loan schemes for existing and potential women entrepreneurs. Women can avail various benefits and discounts from these existing schemes on interest rate, security and timely. But these loans are only for those women who have more than 50% shares of the company.
8) Bank Guarantee: You can get this pre-approved secured loan, whether you are a public/private limited company or a proprietorship/partnership firm, by guarantying residential, commercial, or industrial property. With the help of this loan, companies reduce debt, buy equipment if necessary, and cover any additional expenses that help the business thrive.
In a bank guarantee, the merchant undertakes to make payments to the stakeholders of the guaranteed business in the event of default.
These were just a few types of loans, and you can get them from the best banks for business loans in India.
Features of Business Loan
Before applying for a business loan, it is paramount for you to know its features:
1) Approval of a business loan depends on several factors such as the revenue it generates annually, an estimate of the business, and the number of years it has been in operation.
2) If you need to get a business loan, it is essential up to you to examine all your options and then choose one.
3) Banks and financial institutions that provide business loans offer a wide range of doorstep service to their customers. Moreover, many of the top business loan providers in India mostly do not demand any deposit, guarantor or collateral from the appellant.
4) Unsecured business loans offer businesses to meet their specific requirements and pay off their loan value in easy monthly installments. You can take advantage of these loans for a number of purposes, including but not limited to business expansion, working capital, etc.
5) Business loan services come with many benefits that you should always double check before applying for a loan, such as SMS, web chat, phone banking, etc. In addition, many banks have extended excellent high loan amounts to their self-employed customer base.
6) Nowadays many banks offer their customers the facility of availing business loan eligibility within a few minutes. They can apply for the loan online or at any of their nearest branch. Quick approval ensures that customers do not spend time waiting for a reply from banks regarding the status of their loan requests.
| Features | Business Loan |
| Interest Charged | Monthly in arrears |
| Interest Rate | Fixed or variable |
| Interest Only Option | Yes |
| Maximum Loan | 80% of the value (less existing debt) |
| Minimum Loan Term | Fixed for fixed-rate term |
| Maximum Loan Term | 15 years |
| 25 years (residential security) | |
| Repayment And Access Types | Business Term Loan |
| Repayment Type | Principal & interest or interest only paid in arrears |
| Repayment Frequency | Yearly, monthly |
| Additional Repayments | Yes |
| ATM Access | No |
| Internet Banking Access | Yes |
| Age Criteria | Min. 18 years and Max. 65 years |
| Eligible Entities | Individuals, SMEs, MSMEs, Sole Proprietorship, Partnership firms, public and private limited companies, limited liability partnerships, retailers, traders, manufacturers engaged in only services, trading, and manufacturing sectors |
| Business Vintage | Min. 2 years and in profit |
| Business experience | Min. 2 years, business location to remain same |
| Annual Turnover | Min. Rs. 10 lakh and above for existing enterprises |
| CIBIL Score | 700 or above |
| Nationality | Indian citizens, should not have defaulted on any previous loan(s) |
| Additional Criteria | Applicant must own either a residence, office, shop, or go down. |
- 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
- A loan balance transfer facility is provided.
- Prepayment of loan is allowed after repayment of 6 EMIs.
- Their interest rate ranged from 15.00% to 21.20% per annum
- You can check eligibility online or at HDFC Bank branch in few seconds.
- The last two years of business must be profit-making years
- 1.5 lakh ITR. The business should have minimum annual income as per
- 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: 4 years
- Individuals should have minimum experience of 5 years in the business, 3 years in the present occupation.
- Delayed EMI interest: 2% per month on the deferred amount and minimum charges of Rs.200
- Processing fee and 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 in case of check bounce.
- Check Swapping Fee: Rs.500
- 4% prepayment charges for loan closure between 7 months - 24 months
- 3% prepayment charges for loan closure between 25 months - 36 months
- Amortization Schedule Fee: Rs.200
- Business owners, professionals and self-employed individuals can apply for this loan
- The minimum loan that an MSME can take is Rs.10 lakh, and the maximum is Rs.52 lakh
- they need
- At least 40% of the collateral and its interest is clubbed with the marginal cost of funds based lending rate)
- You must have a business existence of at least 5 years
- It is mandatory to have a current account with any bank for the last 2 years
- You should show a minimum average monthly balance of Rs. 1 Lac
- Repayment period- 5 years to 15 years
- The repayment period of SBI Simplified Small Business Loan is up to 60 months.
- Processing Fee: 1% of the loan amount, subject to a maximum of Rs. 10 lakh
- Interest Rate: 9.05% - 16.30% (linked to MCLR)
- The entire fee for processing fee, inspection charge, documentation charge, remittance charge and commitment charge is just Rs 7,500.
- ICICI Bank follows an excellent documentation methodology to make repayment manageable and simple
- Business loan from ICICI can be availed as working capital, term loan or composite loan
- They provide loans up to ₹2 crore
- Minimum loan amount: Rs 1 lakh and maximum loan amount is Rs 40 lakh
- The maximum tenure you can repay the business loan is 7 years
- Relationship Manager Dedicated to Deliver Comprehensive Financial Solutions
- You also get the facility of overdraft under this plan.
- ICICI Business Loan terms include Income Tax Return for the last one year, Audited Financials of the last 3 years and Current year performance and turnover. Also, you need to provide bank statements for the subsequent 6 months
- Quick and hassle free upgrades with minimal documentation
- It charges interest rate based on the repo rate. The current repo rate is 4%, which means the interest rate is 10% to 11.10%
- Processing Fee: Up to 2% on the loan amount
- Guarantee Fee: 0.75% - 0.85% for Women Enterprises in North Eastern Region and 15 for Others
- Foreclosure Fee- Pricing is to be done as per the terms and conditions mentioned in the acceptance letter.
- To get business loan from Axis Bank it is mandatory that his minimum annual turnover is 30 lakhs. Ho
- Must have at least 3 years business experience
- Repayment period is maximum 15 years
- The business must be a Partnership, Proprietorship, LLP, Private. Ltd., Company Business.
- You can get a loan from Rs 50000 to a maximum of Rs 50 lakh
- The bank determines the interest rate based on your business profile, financial assessment, past track record and tenure.
- Your age should be between 21 to 65 years to avail business loan.
- Equitable mortgage of goods to be financed through payment of title deeds
- Balance transfer facility is provided with additional finance.
- Processing Fee: 1.25% - 1.50%.
- ₹500 as check bounce charges and applicable taxes
- Penal interest rate of 2% at the present rate of interest.
- Minimum login fee of Rs 4000 will be charged
- Their interest rate starts from 15%
- No collateral is required.
- You can avail overdraft, working capital loan, short term and long term loan.
- You can deposit minimum loan amount of Rs.1000000 and maximum amount of Rs. 15000000
- Tenure period ranges from 12 months to 120 months
- The best part is that you can get a loan with them within 48 hours
- No collateral or guarantor required
- Citibank does not disclose the loan amount, interest rate and tenure on its website. However, this will be disclosed at the time of applying.
- Conditional pre-closure and partial payment options are available after 12 months.
- Other charges:
- Prepayment charges are 4%.
- Processing Fee: 2% on the loan amount sanctioned
- Renewal Fee: This 2% is attached to the business loan
- April: 49% - 20.75%
- Professional installment loans are available for businesses as well as professionals and non-professionals
- You can get business loan from ₹1 lakh to ₹9 lakh
- It is an unsecured loan where you do not need to provide any collateral or security.
- You have to repay the business loan in 4 years
- Loan amount in IDFC First Bank will totally depend on the nature of business, repayment capacity and income
- You can also get comprehensive loan insurance on the sanctioned amount
- Your business should be 3 years old to get BIL loan from IDFC Bank
- You do not need to visit the bank to submit the documents as IDFC Bank has door-to-door pickup option available.
- The interest rate is around 16% to 24% per annum
- Processing fee is 2.49% of the loan amount
- The foreclosure fee is 5% of the remaining principal amount.
- You can avail loans from ₹3 lakh to ₹75 lakh
- They have flexible and easy repayment options
- Minimum documentation required by the lender to process this loan
- They provide business loans without collateral
- The good thing is that they have customized offers for corporate and women professionals.
- Manufacturers, self employed business persons and service providers can apply for this loan.
- Repayment period is 48 months
- Online loan application option also available
- If the applicant submits all the required documents, the bank confirms the business loan within 72 hours.
- The vintage time of business should be 3 years.
- They charge an interest rate of around 18% to 23% per annum.
- Processing Fee Charges: Up to 2%
- Documentation Fee: Maximum Rs.10,000 plus taxes
- Their check dishonor fee is Rs 750 plus tax per incident
- They charge for copies of reports; This is Rs 500 plus tax per instance
- Rs.500 plus tax for repayment mode/account swap charges
- If you want to get duplicate NOC, then you have to pay Rs 500 and tax
- The closing fee is 5% or 6% of the current limit.
- You can take a Professional Installment Loan for a tenure of up to 36 months
- No collateral/security is required to avail this loan
- Tenure ranges between 3 to 5 years
- If you need finance for business expansion or working capital requirement then you can get loan
- The cash security is basically between 30% to 50% of the total loan amount. You can prepay the loan after 1 year of the loan tenure
- Minimum 3 years of experience in current business required, and 5 years of total business experience required
- The age of the appellants should be between 25 years to 55 years
- Banks can provide business loans only to select cities and towns
- The business should be making profit for the last 2 years.
- For business, the installment loan interest rate starts from 17.5 per cent per annum
- For availing loan against property, the interest rate will be around 10.75%
- For Loan Against Property Home Saver Variable, interest starts from 11%
- Pre-closure fee- 5% of the outstanding amount.
- multiple loan program
- The interest rate of Tata Capital Business Loan starts from 19% with repayment tenure of 12 to 36 months.
- hassle free loan disbursement
- For business loans, they require the balance sheet to be audited by a registered CA.
- Flexi EMI
- It is easy to get a loan if your CIBIL score is 700 or above.
- No security is required to be provided to avail this loan
- Another good thing about Tata Capital Business Loan is that it helps you plan your repayment as per your cash flow.
- Individuals in the age group of 25 years to 65 years can avail this loan.
- Its PDC fee is Rs 850
- Bounce fee Rs.450. Huh
- Cancellation fee 2% of the loan amount borrowed or Rs.5,750, whichever is higher
- Duplicate NOC is Rs 550
- Swapping fee is Rs 600
- Four-closure fee is 5% of the outstanding loan amount plus GST
- Duplicate Repayment Schedule Fee Rs.550. is
- round the clock customer support
- You can borrow up to Rs 1,500,000 for any business requirement
- They offer personal loan quotes as per various business requirements
- They have flexible repayment options, starting from 12 months to 60 months
- You have the option to check instantly whether you are eligible for the loan or not
- They collect the required documents from your given address
- Online loan request option available
- low interest rates
- quick loan disbursement
- Processing Fee - 0.5% -2%
- Pre-payment charges- 4% after 12 EMI withdrawals
- Interest Rate- 14%-23%
Comparison of Business loan between Banks
| Lender | Interest Rate | Loan Amount | Loan Tenure |
| HDFC Bank | 15.65% p.a. to 21.20% p.a. (Rack interest rate) | Rs.50,000 to Rs.50 lakh | 12 months to 48 months |
| FL | 18% p.a. to 25% p.a. | Rs.1 lakh to Rs.50 lakh | 12 months to 48 months |
| Fullerton India | 13% p.a. to 16% p.a. (floating) | Up to Rs.50 lakh | 12 months to 48 months |
| DHFL | As per the lender’s terms and conditions | Up to Rs.20 crore | Up to 5 years |
| Magma Fincorp | As per the lender’s terms and conditions | Rs.2 lakh to Rs.2 crore (will vary based on the scheme type) | 12 months to 60 months (will vary based on the scheme type) |
| Kotak Mahindra Bank | 13% p.a. onwards | Rs.3 lakh to Rs.2 crore | 12 months to 60 months |
| Karnataka Bank | 10.3% p.a. onwards | Up to Rs.500 lakh (will vary based on the type of scheme) | Up to 120 months (will vary based on the type of scheme) |
| Tata Capital | 19% p.a. onwards | Rs.5 lakh to Rs.50 lakh | 12 months to 36 months |
| State Bank of India (Simplified Small Business Loan) | 8.25% p.a. onwards | Rs.10 lakh to Rs.25 lakh | Up to 60 months |
| Mahindra Finance (Unsecured Business Loans for SME) | 17% to 19% p.a. onwards | Rs.1 lakh to Rs.5 lakh | Up to 12 months |
| Federal Bank (Asset Power Scheme – Business Loans for Professionals) | 12.3% p.a. to 15.35% p.a. | Up to Rs.2 crore | Up to 84 months |
| Standard Chartered Bank (Business Installment Loan) | 17.25% p.a. onwards | Rs.10 lakh to Rs.75 lakh | Up to 60 months |
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.
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.