Finance

The best bank for a business loan in India

Business loans are useful when you don’t want to start your new business and you don’t want to borrow money from angel investors who need shares in your business.

You can take out a business loan to start a new project, expand your existing business into a new location, and buy new equipment, procurement offices, and assets.

Banks allow companies to take out loans, pay salaries and bring new talent into the business. 

To help you, we have analysed and compiled a list of the top 11 banks / financial institutions for business loans in India 2021 

Be familiar with commercial loans and other procedural steps, such as the documents required to approve commercial loans. 

#1. HDFC bank business loan

HDFC Bank offers business loans up to Rs. 40 lakh (50 lakh in certain places) without warranty, guarantee, or security requirements.

A commercial loan is for freelancers, homeowners, associations, and companies involved in manufacturing, services, or commercial business.

HDFC business loans have special benefits such as overdraft facilities and flexible options for up to 48 months.

Make use of the loan 

  • Your business has a minimum turnover of 40 lakhs
  • People must have been in the current business for at least 3 years and must have a total of 5 years of experience.
  • Your business should be profitable for the previous 2 years
  • According to the ITR of the business, the minimum annual income should be Rs. 1.5 lakh a year

HDFC Bank charges a minimum of 11.90% and a maximum business loan rate of 21.35%. 

The good sides

  • Minimum interest rate of 11.90% 
  • 60-minute loan receipt
  • Transfer the loan balance option
  • Loan offered unsecured, unsecured and unsecured

Disadvantages

  • Due diligence and a long process of documentation
  • Maximum limited to Rs. 50 lakh
  • Earnings of last 2 years

Better: Existing companies that need money to expand their business and increase working capital.

#2. ICICI bank business loan

ICICI Bank offers commercial loans for the purchase of new factories and machinery or commercial assets, the creation of a new industrial unit, or the expansion/modernization of your existing unit.

The business loan can be used as follows 

  • Working capital 
  • Term loans 
  • Composite loan (unpaid loans +) 

The maximum term of the business loan is up to 7 years. ICICI Bank interest rate based on repo rate, repo rate it raises 6 + 0% / 7.10%. The current replacement rate is 4%, which means the interest rate is between 10 and 11%, 10%. 

However, the interest rate on each loan is determined by the assessment of the business, the economy, the loan amount, and the term of office.

Business loan conditions

  • The final year statements of the income tax return
  • Audited / provisional funding for last 3 years
  • Last banknotes of last 6 months
  • Current annual performance and expected turnover 

The good sides

  • Online portal, applications, TV services for loans and banking needs
  • A formula based on the interest rate charged
  • Term of 7 years

Disadvantages

  • Requires audited accounts for the last 3 years
  • No loan amount was specified

The good: Clients’ existing ICICI Bank. 

#3. IDFC FIRST Bank Business Loan

You can use IDFC First Bank business loans to upgrade existing businesses or purchase equipment or other business needs. IDFC First Bank designates the loan as a “Partial Loan” (BIL) as it must be repaid in equal instalments at fixed monthly intervals.

The TWO loans have no security or security guarantees and are available to companies, professionals, and non-professionals. 

The amount of the loan depends on the type of business, income, and repayment ability. IDFC Bank First offers a maximum of Rs. 40 Lakh and in some cases up to Rs. 75 lakh loan. The interest rate is conveyed by the bank at the time of processing the loan.  

To get one BACK loan from IDFC Bank First, your business must have been operating for the last 3 years.

The good sides

  • Unsecured loan, max. 75 lakh
  • Available for business, professional and unprofessional organizations
  • Related mobile application to receive portions and alerts of upcoming EMI dates

Disadvantages

  • Interest rates and processing fees were reported during processing

#4. Citibank Business Loan

You must take out a Citibank Business loan if your business needs are related to foreign exchange and import/export financing.

CitiBank has a network in more than 100 countries and offers INR and currency types designated with your business loan. You can also get short-term LIBOR rates for managing from capital movements that can be cheaper than local interest rates. 

Citibank offers commercial loans, equity loans, overdrafts, short-term and long-term loans, and financing for import/export.

However, Citibank does not show on its website the loan amount, interest rate, and duration of the outpost. You will know this when processing your loan application.

You must pay a 2% processing fee for the loan amount granted. Similarly, the closing costs of the pre-loan (2%) and the types of renewal (2%) belong to the loan business.

The good sides

  • Commercial loans in foreign currency
  • Rates designated by LIBOR
  • Support services and experts in foreign exchange trading

Disadvantages

  • It does not advance the loan amount or interest rate
  • 2% of loan closing costs 

Top: business transactions with and foreign or regular Currency transactions.

#5. Axis Bank business loan

Axis Bank provides business loans to doctors, engineers, and certification bodies to acquire equipment, offices and expand their practice.

The amount of business loan offered is Rs. 50 Lakh without warranty requirements.

Your business must qualify for an Axis bank loan

  • Be at least 3 years old and run
  • Have minimum annual turnover. 30 lakes 
  • Be in the 21 to 65 age group

Axis Bank determines interest rates depending on your business profile, the financial evaluation of the history of the amount, and the term of the loan. Significant rates on business loans granted in the past ranged from 10, 75% to 21%.

The good sides

  • Free collateral loan
  • Minimum loan. 50,000
  • Minimal documentation

Disadvantages

  • You need 3 years of business ownership
  • Interest rates up to 21%

Best: Professionals with a 3-year3-year business with a turnover of at least 30 lakh.

#6. Fullerton India business loan

Fullerton India offers loans of up to Rs. 50 lakh for various capital requirements like

  • Circulate needs
  • Purchase or replenish the inventory
  • Purchase of equipment
  • Marketing a business
  • Office expansion, and even
  • Pay additional staff

The business loan suits your needs, the loan is not guaranteed and you have the flexibility to repay the loan in one 12 to 60 month period. Fullerton India rises at an interest rate of between 17% and 21%.  

Here are the terms of Fullerton’s business loan in India

  • Have worked in the current business for at least three years and a total of five years of business experience
  • Minimum turnover 10 lakh
  • Benefits of the last two years a 
  • Minimum annual income, according to RS. 2 lakh per annum

The good sides

  • Easily download applications and documents online
  • Personal loans with the flexibility to repay within 60 months

Disadvantages

  • Commission for processing 6% of the loan amount
  • High-interest rate from 17% to 21%

Best- Self-employed professionals, small businesses, and individuals with a profitable business. 

#7. Tata Capital Business Loan

Tata Capital offers custom business loans for one low amount such as 5 lakh and up to Rs. 75 lakh at the top. Commercial loans are not fully secured without security requirements.

The loan has an interest rate of 19% and has a repayment period of 12 to 36 months.  

You can use Tata Capital’s business loans for mobile equity loans, machine loans, and SME loans. Each loan can be customized to your business needs with structured EMI options. This will help you plan performance on your cash flow.

The good sides

  • Potential amortization of EMI structures
  • Easy online application and document upload
  • Unsecured loan

Disadvantages

  • Maximum repayment period of 36 months
  • Target score of 700 or higher
  • A balance requirement that must be audited by a registered certified entity.

The best: to more than 700 companies with Cibil ratings and short-term cash requirements.

#8. IIFL Finance business loans 

To be eligible for IIFL commercial loan financing, you must have at least a three-year commercial existence, have a net worth, and good repayment history of existing loans.

IIFL Finance offers business loans from Rs. 1 Lakh to Rs. 50 Lakh, with a fixed rate of between 16% and 30%. You do not need to provide any warranty and the return period is 12 to 48 months.

There is one processing cost of 3% of the amount of sanctioned loan. 

The good sides

  • Up to Rs. 50 Lakh of unsecured loan
  • Flexible repayment option up to 48 months

Disadvantages

  • Interest rates up to 30%

Better: small businesses with one positive equity

#9. SBI Simplified Small Business Loan

SBI’s Small Business Simple Loan is for MSME companies to help build current and fixed assets. The minimum loan is Rs. 10 lakh you can get and the maximum 25 lakh. 

Small business loans require a 40% guarantee and the interest rate is tied to the MCLR. The return period is 60 months.

The SBI does not require financial statements to process the loan but is valued on the current account balance of the loan. 

SBI meets the following requirements for a single streamlined small business loan

  • 5 years of business existence 
  • Current bank account for any of the last 2 years
  • Minimum average monthly balance 1 Lakh

The good sides

  • Indian Presence PAN
  • Rs. 7,500 processing costs
  • Interest rates based on MCLRs

Disadvantages

  • The borrowing process can take time
  • Average monthly balance is 1 Lakhs in the current account
  • 40% guarantee
  • Maximum loan is Rs. 25 lakhs

Best of all: small MSME businesses that need nearby banking facilities.

#10. Bajaj Finserv offers MSME loans 

Bajaj Finserv offers MSME loans for financial needs as growing companies 

  • Comply with traffic conditions
  • Investment in infrastructure
  • Installation of machinery 
  • Paying overheads

The maximum loan you get is Rs. 20 Lakh without collateral or confiscation of assets. You can place an order online and processing takes about 24 hours at Bajaj Finserv.

The duration of the loan ranges from 12 months to 60 months and the interest rate is over 18%.

To avail of the BaMEj Finserv MSME loan, your business must have a civil rating of 750 by default. 

Other eligibility criteria

  • 3 years of business existence
  • IT rebates shipped at least last year

The good sides

  • Download application and document online
  • 24-hour lending process 

Disadvantages

  • Requires 750 CIBIL maximum score

Best: Existing MSME units with a civil rating higher than 750

#11. Lendingkart home business loan

Lendingkart offers business loans between Rs. 2 basic cores to start your new business. The minimum loan is Rs. 50,000.

You need to apply for an initial loan online and attach all the necessary documents during the application. The Lendingkart takes about 3 days to complete. 

The loan in the course of Lendingkart covers a period that can be extended from 2 to 4 years depending on your initial performance. The interest rate is between 15% and 27% and repayments can be arranged in weekly or monthly instalments.

The good sides

  • Amount of loan up to Rs. 2 million
  • Online application and 3-day penalty
  • Option two weeks return

Disadvantages

  • The banking and financial situation of the last 2 years is necessary
  • Maximum interest rate of 27%

Best: start-ups doing business for 2 years

FACTORS YOU SHOULD KNOW WHEN TAKING OUT A BUSINESS LOAN

#1. INTEREST RATES AND PROPERTY

The higher the interest rate, the higher the EMI on your business loan. Interest rates and property directly affect the amount you repay. 

Must negotiate at a rate with the financial institution. Scores of Cibils, monitoring of business performance, and skills will help you negotiate a repayment rate.

#2. EDGE NUMBER 

Banks and financial institutions will not fund 100% of your business loan needs. They look for margins ranging from 10% to 30% of all required business.

You must pre-fund a margin of between 10% and 30% out of pocket. The rest is given as a business loan of 70% to 90% of the amount.

You need to look for a financial institution that requires a smaller profit.

#3. NUMBER OF LOANS

Different financial institutions offer different restrictions on the number of business loans. 

Before you finish banking, you need to know what kind of business you need and how much money you need. 

#4. PROCESSING OF CONSIGNMENTS AND OTHER CONSIGNMENTS

Banks and financial institutions charge a fee for processing commercial loans, ranging from 2% to 6% of the penalty amount. Some may even charge a certain amount as a processing fee. 

The lower the processing costs, the more money your business will have. Other than that, you need to know the past and renewal charges. 

#5. APPLICATION AND ACCEPTANCE PROCESS

The business loan application and the penalty process that the funding institutions follow needs to be checked. 

Online applications reduce the time and effort you encounter with private loans. Government banks follow a process of physical documentation, which is time-consuming.

#6. GUARANTEED OR UNSECURED LOAN

With collateral, you will be able to get a higher number of loans compared to a commercial unsecured loan. 

Business loans are taken to acquire equipment, plant, and fixed assets will be subject to collateral for the newly funded assets.

CONCLUSION

Getting a business loan becomes easy when you are notified of the loan process, document requirements, and advance notice. 

Depending on your eligibility and the loan amount, you can choose the bank that offers the best interest rates and suits your business financing needs.