Starting a business is a very cumbersome job. It requires labour, entrepreneurial skills, and most importantly, the capital. When you are starting as a start-up, or even hitting some rough patches, finances are of the utmost importance. Here is where business loans help these budding as well as stumbling businessmen. A business loan is an amount of credit that the lender gives to the business. In return, the borrower repays the principal amount with an amount of interest, depending on the rate given. There are a variety of business loans that can be availed of in India. Some of them include:
- Term loan
- Startup loan
- Working Capital loan
- Loan against SMEs (Small and Medium-sized Enterprises)
One of the most important things on which these loans depend is the interest rate. The rate, again, depends on several factors like the borrower’s credit score, how the business is doing, the type of business, and so on. It varies from bank to bank and hence, we will take a look at some of the banks in India that offer the most attractive offers for businesses in need of credit.
With a very flexible repayment period (12-48 months), the bank provides business loans right up to Rs. 50 Lakhs. It also offers the businesses the option of availing overdraft facility, which allows a lot of flexibility for the borrower. The rack interest rate ranges from about 11.90% to 21.35%, on which the bank may decide to apply some discounts.
This is another bank that offers some of the best deals when it comes to business loans. They offer the same as a Working loan, Term loans, and a Composite loan. The maximum tenure period they offer is 7 years. Their interest rate depends on the repo rate and also on the financial status of the business, loan amount, etc.
The IDFC bank believes in fulfilling people’s dreams and helping them sustain their businesses. Their bank loan package requires no collateral from the borrower’s side and it entails a very low processing fee. They offer business loans through three packages:-
- Loan to Doctors
- Loan to other professionals
- Loan to non-individuals
Their interest rates are quite competitive and depend on many factors, which are communicated between the bank and the applicant. The bank offers a loan of up to Rs. 40 lakhs and up to Rs. 75 Lakhs in some cases.
They offer business loans for a variety of reasons to different enterprises. They provide up to Rs. 50 Lakhs as a loan and they have a tenure period of 12-60 months. They usually charge an interest rate of 17-21%.
Even their loan goes up to an amount of Rs. 50 Lakhs which does not require any collateral. Their business loan rates depend on financial assessment, business profile, past track, and other factors. Their range of interest rate is usually around 10.75-21%.
Apart from the aforementioned financial institutions, there are other banks too that offer lucrative business loan offers in India, especially in 2021. Some of them are:-
- Kotak Mahindra Bank- 16% onwards.
- Tata Capital Finance- 18-24%
- Bajaj Finserv- 19-23%
- YES Bank- 15.5-21%
- Aditya Birla- 20-26%
There are other methods for a business to gain much-needed financial help. These include crowdfunding and government business loan schemes. Nonetheless, business loans are a more common method. The business loan rates, as seen, are much higher than that of a home loan or a personal loan. The simple reason is the risk. Running a business is quite unpredictable, and the banks are very much aware of that. That is why it is very important to carefully research the different packages and deals being offered. The interest rate is a key determining factor in whether you should apply for a particular bank loan. Hence, before applying for one, always scope the market for a better deal.