close
Business
close
Finance

Best Banks for Business Loans in India

Created on 15 Oct 2020

Wraps up in 9 Min

Read by 21.3k people

Updated on 03 May 2024

best banks for business loans

At some point in your life, you must have come across the dilemma of whether to have a business of your own or to have that regular 9-5 job. Well, most of the individuals who have big aspirations in their lives dream of having their names printed on the front page of business magazines. The desire to have a Rolls Royce, Lamborghini, a big villa with a swimming pool, a long travel history, and so many more such dreams can usually seem closer if one has their own business, which is going strong.

However, not everyone is lucky enough to inherit a strong, established business from their family. Many times, people, especially those who have started their own businesses, face difficulties like a lack of funds to pay salaries, expand the business to other locations, indulge in a new project, purchase a new asset, etc. And in such cases, banks become the saviours and provide loans to fund the business and its operations.

Numerous banks provide business loans. However, choosing the right bank from such a large pool can often be confusing.

Which Are The Top 10 Best Business Loan Banks In India?

Loan- a word that elicits everyone to make a quick statistical analysis in their minds when choosing a bank from which they should take a loan. A person who needs a loan considers a lot of things before arriving at a decision. Below is a list of some of the best banks in India that provide business loans to enhance the business sector. 

1. HDFC Bank Business Growth Loans

HDFC offers loans for everyone, whether it is self-employed individuals, proprietors, partnership firms, or companies that are involved in the trading, manufacturing, or services business. With HDFC Bank, you can take out a loan of up to ₹50 lakhs (up to ₹75 lakh in few loactions) without collateral or any other security. The other exciting thing about the HDFC business loan is that here, you can get a special benefit like flexible tenure options or an overdraft facility.

As the name says, an HDFC bank business growth loan is suitable for those businesses which already exist and require money for only business expansions.

Eligibility:

  • The minimum turnover of the business must be ₹50 lakhs. 
  • 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. 
  • The minimum experience of individuals in business must be 5 years, with 3 years in the current business. 

On business loans, the minimum interest rate charged by HDFC Bank is 10.7%, and the maximum is 22.5%.

2. Citi Banks Business Loans

Do you own a business which has links with foreign countries? Is it related to import/ export and foreign exchange? If that is the situation, then Citibank can be the right choice for you. Citibank is usually favourable whenever business operations happen overseas. In over 100+ countries, Citi Bank has its networks. 

It offers INR and foreign currency-denominated rates on the amount of your business loans of up to ₹30 lakh. For the management of the working capital, one may also get LIBOR-denominated rates. The best thing about this is that it is cheaper than normal interest rates. 

  • You can avail yourself of overdrafts, working capital loans, and short-term and long-term loans. The interest rate at 11.49%.
  • CitiBank does not disclose the loan amount, its rate of interest and the tenure on its website. This will be revealed to you at the time of application.
  • With Citi Bank, you will have to pay a 2% processing fee on the sanctioned amount. There will be 2% pre-closure charges and 2% renewal fees. 

As mentioned, Citibank's business loans are best for businesses that have overseas operations or forex transactions. Apart from this, Axis Bank acquire Citibank's consumer banking business in India on 1 March 2023. This means Axis Bank bought Citibank's consumer banking operations, including credit cards, loans, wealth management, and retail banking services. Citibank still operates in India through its institutional banking business.

3. IDFC First Bank Business Loans

The best thing about IDFC First Bank is that it helps you with business loans, even for equipment purchases, business upgrades or any other business needs. However, the thing to keep in mind regarding the IDFC business loan is that you will have to pay it back in equal instalments at fixed monthly intervals. Therefore, the bank calls the loan Business Installment Loans (BIL).

  • The Business Installment Loans are available not only for businesses but also for professionals and non-professionals. 
  • It is an unsecured loan requiring no collateral or security. 
  • The loan amount in IDFC first bank depends upon the kind of business, repayment capability and income.  
  • The interest rate is given by the bank on the day of loan processing only.
  • To get a BIL loan from IDFC bank, your business must be of 3 years.

IDFC's first bank business loan is best for those who are in search of unsecured loans. It gives a minimum of ₹10 lakh to ₹1 crore of amount to eligible parties.

4. ICICI Bank Business Loans

ICICI business loans are another great option for loan seekers. It offers business loans for purchasing new plants and machinery or new assets. Also, the loan can be availed from ICICI bank for setting up a new industrial unit or modernizing/expanding/renovating your already existing unit.

  • A business loan from ICICI can be used as working capital, term loans, or composite loans. 
  • The maximum tenure of business loans is 7 years. 
  • 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%. 
  • The requirements of ICICI business loan include the last one-year income tax return, audited financials of the last 3 years, and current year performance and turnover. Also, they ask for the latest bank statements for the last 6 months. 
  • No quantum of the loan is specified.

The ICICI bank business loans are best suited for the existing customers of ICICI banks.

5. SBI Simplified Small Business Loans

As the name suggests, the SBI business loans are a facility for the MSME business. The main aim of the SBI simplified small business loans is to help small businesses build their current assets and fixed assets. Interest rate ranges from 9.75% to 12%.

The minimum loan amount that could be taken by the MSME businesses is ₹10 Lakh, while the maximum amount for the same is ₹25 lakh. The interesting thing about the SBI simplified small business loans is that they require 40% of the collateral security, and the interest is linked to the MCLR (Marginal Cost of Funds Lending Rate).

  • The repayment period of SBI simplified small business loans is up to 60 months.
  • Under SBI business loans, the loan is accessed based on the balance in the business's existing account.
  • To be eligible for the business loan from SBI, there must be a 5-year existence in the business; the current account should be at least 2 years old.
  • The Quantum of the loan (Min/Max) is 10 times the average monthly balance in the current account in the previous 12 months subject to:

As said above, it is best for small MSME businesses that require banking facilities.

6. Tata Capital Business Loan

Tata Capital business loan is another great option for business loan seekers. It offers custom-built business loans at an exciting amount that is as low as ₹5 lakhs and goes up to ₹75 lakhs. Tata capital business loans are also among those bank loans which require no security. 

The loan could be availed from the Tata capital business loan as a working capital loan, machinery loan, MSME loan, or SME loan. It could be customized to the business needs. 

  • The interest rate of Tata Capital business loans starts at 13% with a repayment period of 12 to 36 months. 
  • This business loan requires the balance sheet to be audited by a registered Chartered Accountant. 
  • It is easier to get a loan, especially for those who have a Cibil score of 700 or above. 
  • The other good thing about Tata Capital's business loan is that it helps you plan repayment according to your cash flows.

7. IIFL Financial Business Loan

IIFL financial business loan is the one which believes in the clean history of the businesses. It means that it avails a loan to those businesses which have 3 years of business existence with positive net worth and a good replacement history on existing loans.

In the IIFL financial business loan, there is always a loan processing charge of 3% on the sanctioned amount of the loan. 

  • With this loan, you can avail yourself of a minimum amount of ₹1 lakh with a maximum limit of ₹50 lakh.
  • The loan is given at a fixed interest rate that ranges from 12.75% to 40% per annum.
  • The tenure of the IIFL financial business loan ranges from 12 months to 48 months.
  • It does not require any collateral.

IIFL is best suited for small businesses with positive net worth.

8. Bajaj Finserv MSME Loan

Bajaj finserv MSME loan comes up with various benefits for the businesses. It offers MSME loans to help businesses grow and help them with their financial needs like investing in the infrastructure, overheads, meeting working capital requirements, and installing the machinery.

Without giving away any collateral or asset, a loan amount of up to ₹80 lakhs can be borrowed.

  • Eligibility criteria require the business to be at least 3 years old.
  • The loan tenure ranges from 12 to 60 months.
  • The interest rate starts from 18%.

9. Axis Bank Business Loan

Axis Bank is popular for its convenient services and the various facilities it offers to its customers. The amount of a business loan that you can avail yourself of from Axis Bank is ₹50 lakh (maximum), with no collateral amount. 

  • To be eligible to take a loan from the Axis Bank, you must have a business running experience of a minimum of 3 years. 
  • You must be in the age group of 21 to 65 years to take a loan.
  • The interest rate is fixed by the bank based on your business profile, financial assessments, past track record, and tenure. 
  • The indicative rates for business loans in the past were ranging from 14.25% to 20%. 
  • It also gives loans to professionals like doctors, engineers, and CAs. 

10. Fullerton India Business Loan

The Fullerton India Business Loan is a good choice if you wish to get a business loan without much documentation. Fullerton India provides loans of up to ₹50 lakhs for several capital requirements, which include:

  • Paying salaries and wages to staff.
  • Marketing of business.
  • Office expansion.
  • Working capital requirements.
  • Purchasing or replenishing inventory.
  • And purchasing equipment.

The repayment period ranges from 12 to 60 months, and interest rates vary from 17 to 21%. 

However, these benefits from Fullerton India can be availed by only those who have a minimum turnover of ₹10 lakhs and have generated profits from the last 2 years. 

It is best suited for the self-employed, small businesses, professionals, and individuals who have profitable businesses. 

The Bottom Line

Many individuals come into the business world and try their hands on earning quick money. They invest, they borrow, and they take up loans to get their business operations on track. However, history has shown that among those who avail of loans, only those people who succeed use the facility of loans very wisely.

There is a list of examples, including Vijay Mallya, Nirav Modi, Subrata Roy, and many more, that show that irresponsibly taking loans from banks has proven to be a curse for businessmen. Running a business is nothing but a test of the brain on how efficiently and wisely you can use your personal or borrowed funds.

The above-mentioned banks for business loans are really a great help. However, it is important to keep in mind that there is a difference between taking a loan to initiate a new startup and expanding an exciting one. Loans have to be returned and with interest. So, it is important to make sure that borrowed funds are used wisely and are not exploited.

A bank loan is surely a blessing, but it might as well become a big problem. In the end, it all comes down to how you use the facility.

comment on this article
share this article
Photo of Shristi Jain

An Article By -

Shristi Jain

39 Posts

3.7m Views

38 Post Likes

Shristi is the Yuvraj Singh of the Finology team. There is absolutely nothing that she cannot do. From beating the bests in table tennis to starting random Twitter spaces for product teams, she has got everyone's back! While she is a great mother to Finology Ticker, she also likes to write sometimes. As a side job, she likes to roast people. 

Topics under this Article

Share your thoughts

We showed you ours, now you show us yours (opinions 😉)

no comments on this article yet

Why not start a conversation?

Looks like nobody has said anything yet. Would you take this as an opportunity to start a discussion or a chat fight may be.

Under Finance

"A few" articles ain't enough! Explore more under this category.

close
Share this post
share on facebook

Facebook

share on twitter

Twitter

share on whatsapp

Whatsapp

share on linkedin

Linkedin

Or copy the link to this post -

https://insider.finology.in/finance/best-banks-for-business-loan-in-india

copy url to this post
Copied