Cash crunches always lie parallel to any budding business aiming to thrive in their respective domain. Here, a business loan is one viable option to help you keep the balls rolling. However, it becomes crucial to choose the loan that suits your business to maximise its efficiency, in turn propelling your business to newer heights. In this blog, we explain the concept of business loans while comparing the rate of interests from various financial institutions in India.
Types of business loans:
Business term loans:
Term loans are straightforward loans without additional benefits. Such loans generally have a short loan tenure of 1-5 years and repayments are done in regular predetermined intervals.
Working Capital loans:
Working capital business loans are also loans that generally come with a tenure of 1-5 years. Businesses avail such loans to fulfil short-term liabilities such as daily or approaching expenses like rent or employee salaries.
Start-up loans:
As startups have become widely popular in India, platforms such as Tap Capital give access to funding for start-ups looking to expand their current business. These loans do not require pledging any valuable asset as collateral and offer repayment flexibility to budding entrepreneurs.
Commercial Business Loans:
Commercial business helps businesses with higher turnover get access to get loans. These loans offer immediate capital up to Rs 50 lakh generally with a tenure of 3-5-years. The loan is for enterprises that have been at least running for a year and are profitable.
Equipment financing:
This type of loan allows business owners to raise immediate capital to buy equipment such as machinery or technology. Tap capital effectively helps you raise funds for these purposes with schemes such as asset leasing.
Business loans offered by different banks in India
Bank's Name---------------Rate of Interest------------------Processing Fee-----------------Loan Amount
SBI --- 9.50% - 16.30% p.a-------------------- ₹7500 Up to ₹20 Crores
TATA Capital from 19% p.a----------------- 2.75% of loan + GST ₹5 Lac to ₹50L
LendingKart 1% - 2% p.a------------------- 1% to 2% (only once) ₹50,000 to ₹2Cr
ZIP Loan 23% - 29% p.a---------------------- 3% of Loan ₹1 Lac to ₹5 L
IDFC First Bank 19% - 24% p.a-------------------- Up to 3.5% of Loan Up to ₹40 L
ICICI Bank 16% - 22% p.a--------------------- Up to 2% Up to ₹1 Cr
HDFC Bank 12.50% - 19.50% p.a-------------------- 2% of Loan Up to ₹50 L
Axis Bank 14.25% - 20% p.a----------------- 1.25% to 1.50% Up to ₹50 L
Central Bank of India 8.70% - 12.80% p.a-------------------- NIL Up to ₹5 L
South Indian Bank MCLR (1 Year) + 4.2%----------------- Up to 2% ₹5 Lac to ₹1Cr.
Yes Bank 16.25% onwards------------------- 2% of Loan ₹5 Lac to ₹50 L
Kotak Mahindra Bank 17% - 28% p.a--------------------- 2% of the amount ₹3 Lac to ₹2Cr
DCB Bank 10.25% - 18.67% p.a------------------ 2% of Loan Up to ₹10 L
RBL Bank 20% onwards p.a----------------- 3% of Loan ₹10 L to ₹35 L
Bandhan Bank 10.55% - 18.80% p.a------------------- 1% + GST Up to ₹25 L
Bajaj Finserv 18% onwards p.a----------------- 2% of Loan Up to ₹30 L
Fullerton India 13% - 21% p.a-------------------- Up to 6.5% Up to ₹50 L
Aditya Birla 17% - 26%-------------------- Up to 2% of Loan Up to ₹15 L
Punjab National Bank +1.25% p.a------------------ Mini. ₹500 ₹50000 to ₹15 L
Pay Sense 2% - 3% p.m-------------------- 3% + GST ₹5000 to ₹5 L
Best Financial Institutions for Business Loans in 2024
HDFC Bank:
Minimum paperwork and formalities makes HDFC bank stand out from various other lenders. The rate of interest varies from 12.50% to 19.50% p.a with tenures of repayment of up to 48 months. You can also get a loan of up to ₹50 Lacs under several excellent conditions.
LendingKart:
Preferred by a vast majority for business loans, LendingKart is the only financial institution that charges the rate of interest on a monthly basis. You can easily get the business loan from Lendingkart at the rate of 1% to 2% chargeable every month. LendingKart issues a minimum loan amount of ₹50,000 to ₹2 Crores and the processing fee of 1%-2% is charged only once.
Yes Bank:
With loan amounts starting from ₹5 Lac to a limit of ₹50 Lacs and interest rate averaging from 16.25% per annum, Yes Bank is one of the most popular among business loan lenders. Yes Bank charges the processing fee of 2% on the loan amount of loan sanctioned and every borrower gets a period of 6 months to clear the loan amount.
IDFC Bank:
IDFC First Bank has interest rates starting from 19% on business loans that can go up to 24% p.a. The maximum loan amount from IDFC First Bank is ₹40 Lacs and the process is pretty straightforward. The processing fee of IDFC First Bank Business Loan is 2% on the loan amount and the bank allows a repayment period of 3 years.
Bajaj Finserv:
Bajaj Finserv offers business loans up to ₹30 Lacs at interest rates starting from 18% per annum. They charge a processing fee of 2% on the loan amount sanctioned and tenures for repayment range between 1 year to 4 years.
Conclusion:
The inevitable cash crunches that exist within any modern day business gives rise to a need for an effective solution to counter this. With diverse business loans that cater to your needs, priorities and risks, choosing the right business loan is no more a wild goose chase.
If you are looking for the perfect place to fund your business, Tap Capital offers you diverse schemes such as asset leasing and invoice discounting to efficiently cover those tight funding requirements.
Tap into hassle free funding today!
FAQs Business Interest Loan:
1. How are business loan interests calculated?
Business loan interests are typically calculated on a reducing balance method, where interest is charged only on the outstanding loan amount. However, there are also various business loan calculators online to help you with it.
2. What is the average interest rate for business loans in India?
The average interest rate for business loans in India ranges from 12% to 22%, depending on the lender and borrower's risk profile.
3. Are there any collateral requirements for business loans in India?
Collateral requirements vary among lenders. Some may require collateral for large loan amounts, while others offer unsecured loans based on the borrower's creditworthiness.
4. What are the typical loan repayment tenures for business loans in India?
Loan repayment tenures for business loans in India usually range from 1 year to 5 years, although longer tenures may be available for specific types of loans.