Top Banks Offering Lowest Business Loan Interest Rate In India

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Factors Affecting Commercial Loan Interest Rates

Credit score

In India, it is used as a qualification criterion for obtaining business loans. If the business owner’s credit score is above 700, the loan application is more likely to be accepted. In contrast, loans to small businesses with poor credit history seem to cost more in the form of higher interest rates.

Business background

Your work experience is important when trying to advance in your career, and your work experience is important when considering starting a new business or expanding an existing one.

Annual sales

The average earning potential of a small business is measured by its annual profits. Banks and lenders typically research financial statements by looking at the sales details of the business over a period of several years. The average income of a small business is measured using the same data.

Collateral

The interest rate for a business loan varies depending on whether the borrower opts for secured or unsecured loans.

Type of lender

Different types of credit institutions, such as banks, NBFCs, and institutions similar to NBFCs, will charge different interest rates.

Business loan requirement

Business loan requirement

Applicants must be between the ages of 25 and 55 to be considered. Below are the basic documents required for a business loan to be sanctioned. However, the list of documents varies depending on the bank and the type of business loan.

Last year’s income tax returns

Last 3 years Audits / Provisional Finances

Latest bank statements for the last 6 months

Performances for the current year and forecast turnover

Declaration of sole proprietorship or certified copy of the partnership deed

A certified copy of the constituting act and the articles of association

PAN card for business, business or individual

Proof of identity

Proof of address

Important things to know about the business loan

Important things to know about the business loan

  • Individuals and businesses who take out secured loans have collateral such as inventory, goods, equipment, etc. The interest rate will be lower here.
  • Unsecured loans allow businesses to borrow money without having to provide collateral. Interest rates are high because the risk of banks is high.
  • Commercial loan processing fees can vary from 2% to 6% of the sanctioned amount, depending on
  • on the bank or financial institution. Some companies may also charge a fixed fee as a processing fee.
  • Interest rate, processing fees, pre-closing fees, paperwork fees, partial payment fees, default fees, and other fees are all imposed on business loans.
  • Banks and other financial companies will not fund 100% of your business loan needs. They look for margins ranging from 10% to 30% of the total amount of money required for the business.
List of banks offering the lowest interest rates for business loans

List of banks offering the lowest interest rates for business loans

Name of the bank Interest rate
SBI 11.20% – 4.30 p.m. (linked to MCLR)
Bank of Maharashtra 14.50% from
HDFC Bank 15% – 21.35%
Axis Bank 15.5% from
ICICI Bank 16% and more
Kotak Bank 16.00%
Corporate bank 13.55% from
Bank Dhan Laxmi 12.90% from
RBL Bank corporate loan rates 16.25%
IndusInd Bank 14.00%
Conclusion

Conclusion

The interest rate on a business loan is determined by your business, the loan amount requested, and your previous relationship with the bank. Most banks charge a minimum processing fee of 2% to 3% on loans. Since many business loans are unsecured, it is a good idea to obtain an insurance policy on behalf of the borrower. Banks usually charge prepayment or foreclosure fees, which can be as high as 5%. Check and see if the low interest rate you receive is followed by hefty prepayment penalties or foreclosure. Note that some business loans cannot be repaid on time.


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