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written by | April 15, 2022

How to Compare Business Loan Interest and Apply For a Loan?

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Business loans are very normal nowadays. You do not have to struggle to get a loan. As our government supports small businesses, availing of bank loans is no big deal. If you are happy to pay business loans interest for the growth of your startups but are a little confused about commercial business loan interest, assume this article is made for you only.

This article will discuss business loan interest. You will get an in-depth idea of business loans and what is the most convenient way to apply for them. I will make it easier for you to understand which banks are best for you. I will thoroughly compare them so that all the differences are clear.

Consider reading the article if you want to have a clear idea of how the industrial business loan interest rates work and which organisation you should opt for.

Did you know?

The state of Punjab topped the highest debt GSDP in the financial year 2021, increasing by 6.6% from the previous year.

Easy Steps to Know About Commercial Loan Interest and How to Apply

What is a Business Loan?

 When a business owner, self-employed or any professional like a doctor /teacher takes loans to start his own business, it is called a commercial or business loan.

Business loans are of two types, one is secured, and another is unsecured. For example, when someone goes for a loan against depositing some of his valuable things, it is called a secured loan. In that case, the lender keeps collateral or security. On the other hand, unsecured loans do not need to deposit anything.

Also Read: How to Apply for an e-Commerce Business Loan in India?

Why Do You Need a Business Loan?

 There are some aspects you must understand before opting for a business loan. Various organisations like banks, NBFCs or other lenders offer various commercial loan interest rates for various reasons. 

  • Business loans are important to renew your old business. After a certain period, a business needs more investment to achieve higher goals. Depending upon only the business profit might take a long time to achieve that. Here business loans are so helpful.
  • Have you heard the phrase called ‘money earns money? Business loans do so. Suppose you have cracked a big deal from a company, and now you need more human resources and raw materials. The more you opt for business loans, the more you can grow. You have to pay back the business loans interest.
  • Business loans are very important for the economy too. When a business loan is borrowed, it creates a deficiency for the lender. However, it is for a short time. Every borrower needs to pay the money back at a particular time. Therefore, it keeps the flow of cash.
  • The man force is always a big yes to a farm. The more work you have, the more your work is done. This is also a kind of business. To hire more human resources, you might need more cash. Business loans can help here.

Comparison of Business Loans by Banks

Many banks are happy to serve commercial business loans. However, different banks are serving different business loan rates. Among them, what are the low-interest business loans you should opt for, will be discussed here.

1. HDFC Business Loan Rate

HDFC banks are giving business loans with many features. Whether you are a business owner or doing a partnership business, you can upgrade your business with a loan. However, you need to clear business loan interest after a certain period.

The maximum you can borrow is up to 40 lakhs whereas in some places it is 50 lakh. Without any collateral, you can get the loans. They have a few eligibility criteria:

  • A business owner needs to have turnovers of 40 lakhs.
  • Those with at least 5 years of business experience can borrow the loans.
  • The applicant should be at least 21 years old and not more than 65 years.

Business loan rates of HDFC banks- 

  • Business loan rates range from 11.90 % to 21.35%
  • Charges for Loan processing: It is up to 2.5 % of the loan, which is a minimum of 1000 to a maximum of 25,000.

2. IIFL Business Loans Rate

IIFL Finance is also offering you business loans online. You do not need to go to any of the branches.

Business Loan rates

  • The range is between 11.75% - 25.75%
  • Loan processing charges range between 2%-4% of the loan.

3. Fullerton India Business Loan Rate

Fullerton India is providing loans up to 50 lakhs. The loan repayment tenure is 12-60 months, depending on the amount.

Business Loan Rates

  • Loan range between 17-21 %
  • The processing fee is 6.5% of the amount.

4. DHFL Business Loan rate

You can get customised loans from DHFL. They are offering up to 35 lakhs with prepayment offers.

Business Loan rates

  • You can avail of loans with customised loan rates.
  • You have to pay 2% as the processing fee.

5. Magma Fincorp MSME Business Loan Rates

Magma fin corp is providing loans of up to 3 crores. The maximum tenure is 48 months.

Business Loan Rates

  • The loan range is 17.5%-21% per annum.
  • It is an unsecured loan.

Some other banks and NBFCs are providing loans. I am making a chart so that you compare the business loan percentage easily.

Bank / NBFC

Loan Range 

Amount 

Tenure 

Kotak Mahindra Business Loan 

Customised 

Up to 75 lakhs 

36 months

Karanataka Bank Business Loan

11.49%

Up to 50 lakhs 

36 months

Tata Capital Business Loans 

19%

Up to 75 lakhs 

12-36 months

SBI Simplified Small Business Loan

10% 

10-25 lakhs

60 months

Mahindra Finance Business Loan

Depending on loan amount 

Up to 40 crore 

72 months

Standard Chatered Account Business Loan 

17.25%

Up to 75 lakhs

36 months

How Can You Get Low-Interest Business Loans?

You can get a business loan at very low interest. It would help if you remembered some facts. Here I will tell you about that.

  • You need to improve your credit score. You should maintain 750.
  • You should maintain your repayment history. It can reward you with low-interest business loans.
  • The lender organisation checks your creditworthiness whether you can pay the loans or not.
  • Maintaining a stable source of income can work for you.
  • Your business loan interest rate can be low if you apply for a long-term business loan.
  • If you open more accounts in the same bank, it will help you get easy loans.
  • You should not close your old accounts. It might impact your business loan rates.
  • To get affordable loans, you can opt for the best private banks or NBFCs. They offer more affordable loans.

Also Read: How to Apply for a Loan for a Travel Agency

What Are the Factors that Work Behind Commercial Loan Interests?

Behind the business loans, there are some factors. They are:

  • The loans are allotted based on the nature of your business. For example, suppose you are the business owner categorised under the priority sector. In that case, you will get business loans at low rates.
  • When you apply for loans, lenders check your history. If your business is running for a longer period, there is a high chance of your loans at low rates.
  • Your monthly turnover also depicts many things. For example, if your business is doing well with more profits, you get a chance for easy loans. On the other hand, lenders check your monthly turnover before allotting the loan. If your company does not show a good profit, the lender might not provide you with the loan.
  •  Business loans also depend on the lenders. If you go through the article, you will see that the business loan interest rates are not the same for each bank and NBFC. The tenure and amounts are also different. What kind of lenders you are choosing will affect your business loans.

What Are the Eligibility Criteria to Apply for a Business Loan?

If you are applying for business loans, you must know the eligibility criteria for applying for business loans.

  • The business owner should be in the age group of 23 - 65.
  • The person should have a turnover of at least 10 lakh per annum.
  • If someone is doing business with partners, their annual turnover must be more than 20 lakhs.
  • Before applying for the loans, make sure you have at least 3 years of business experience.

Conclusion

Startups or entrepreneurship is appreciated all over the world. It increases the job opportunity for others and influences the country’s economy. The Indian government has been inspiring people to have startups.

Business loans are very important for business. Unfortunately, there are various myths regarding business loans, like the interest will be a burden. Still, the fact is, that you can have low-interest business loans.

Some banks and NBFCs provide loans without any collateral or securities. In this article, I have discussed all of them.
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What are the basic criteria to get a business loan interest?

Ans:

To get business loans, you need to be at least 23 years old and have 3 years of business experience. Other than that, your monthly turnover should be good.

Q: Is there any fixed repayment period for business loan interest?

Ans:

It depends on different banks and other lenders. For example, some banks give 36 months, whereas it is 60 months for some lenders.

Q: Are commercial loan interest rates fixed?

Ans:

No, they are not fixed. There are not any particular rules regarding the interests. However, different banks are offering different loan rates.

Q: Can I get low-interest business loans in India?

Ans:

Yes, You can get the business loans in a low amount. However, you need to compare all the business loan interest rates from different banks and NBFCs.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.