Whether you are looking to establish a start-up or expand your existing business, obtaining a business loan comes in handy in this situation. While financial institutions offer business loans with terms and conditions, you must compare the business loan interest rate in order to find the most affordable one.
Business loans now require minimal documentation and companies have adopted rapid approval methods in order to provide a more user-friendly experience to their customers. Your CIBIL score plays a crucial role in procuring a business loan as it is the first factor lending institutions take into consideration before approving or rejecting your loan application.
What is a Business Loan?
A business loan is also known as a commercial loan. Any salaried or self-employed individual with his/her own firm can opt for a business loan. You may also utilise this loan to improve the infrastructure of your organisation as well as to buy pieces of machinery, and so on.
A business loan comes in two different types: Secured and Unsecured. A secured loan is one where the borrower applies for a loan in exchange for depositing some of his valued possessions. In that situation, the lender maintains the security or collateral. Unsecured loans, on the other hand, do not require any deposits.
Additionally, it is advisable that your CIBIL score must be 700 or above (may vary across the lenders). Doing so will make you eligible for acquiring a loan at a reduced business loan interest rate.
Need of a Business Loan
There are certain things for which you can undoubtedly use a business loan. Below are the details about the same.
- A firm needs additional investment after a specific amount of time to reach loftier aspirations. Hence, to revitalise your existing firm, you’ll need business financing.
- This loan will help your business grow by aiding you in buying more raw materials and hiring human resources.
- It helps in fulfilling your long-term goal by establishing your own company.
Business Loans by Financial Institutions
Several lending institutions offer business loans to help entrepreneurs. However, business loan interest rates vary amongst institutions. Here, it will be described which low-interest business loans you should choose from among them.
1. Bajaj Finance Business Loan
Bajaj Finance business loans are collateral-free, which means you are not required to provide any asset as a security to procure it. You can apply for a loan of up to ₹30 Lakhs and the interest rates begin at 18% per year.
Eligibility Criteria
- You must be an Indian citizen.
- You must be a self-employed person.
- Your age must be between 26 and 66.
- You must have three years of business experience.
- Your company income tax return for at least two years is also necessary.
2. Lendingkart Business Loan
Lendingkart offers reasonable business loan interest rates and minimal processing fees. You can secure a loan of up to ₹50 Lakhs. These loans often have annual interest rates of 15 to 24%, or 1.25% to 2%, respectively. However, they may vary depending on the size of the loan and the kind of business you are in.
Eligibility Criteria
- Your company must have been in existence for at least six months.
- Your firm must have a minimum annual revenue of ₹12 Lakhs to be eligible for the loan. The documentation that will be offered as proof for the claim should show that the company has been successfully satisfying the turnover criterion for the last three months.
- Your age should be at least 25 and no older than 60.
3. KreditBee Business Loan
KreditBee is an RBI-recognised Non-Banking Finance Company (NBFC) that provides incentive financing options to individuals in need. With KreditBee, you may acquire a loan of up to ₹4 Lakhs at the interest rate of 15% per annum.
Eligibility Criteria
- You must be an Indian citizen.
- You should be 21 years or above.
- Your net income must be ₹10,000 monthly.
- Your mobile number should be linked with your Aadhaar card.
4. NeoGrowth Business Loan
The NeoGrowth Business Loan is the ideal speculative investment for growing your business to new levels. NeoGrowth offers company loans at some of the market’s most competitive interest rates, which are 18% per annum. You have the option of borrowing up to ₹75 Lakhs.
Eligibility Criteria
- You must be an Indian citizen.
- The minimum age of the applicant should be 18 years.
- A CIBIL score of at least 680 is required.
- At least two years of business experience are required.
- If you sell products online, you must generate more than ₹2 Lakhs in monthly sales through internet methods.
5. Prefr Partners Business Loan
Prefr Partners’ business loans can help you grow by financing the acquisition of new machinery, the settlement of debts, or the expansion of operations. These loans have incredibly low-interest rates, starting at 10% annually, making the loan application procedure simple.
Eligibility Criteria
- You must be an Indian citizen.
- You must be between the ages of 21 and 55.
- You should be a self-employed professional.
6. FlexiLoans Business Loan
FlexiLoans provides loans to small and medium-sized enterprises. FlexiLoans business loans’ primary goal is to provide financing to small enterprises based on their capital requirements. You can acquire a loan of up to ₹50 Lakhs as a company owner. These loans have an extremely low-interest rate of 12% per year.
Eligibility Criteria
- The applicant must be an Indian national.
- You must be between the ages of 21 and 65.
- Your company’s yearly revenue must be at least ₹12 Lakhs.
- A business maturity of at least one year is required.
7. IIFL Business Loan
IIFL Finance Limited (formerly known as India Infoline) is a well-known Indian financial services firm. It provides business loans for those wishing to develop their firm or pay off debts, among other things. There is no need to provide any collateral or security for an IIFL business loan. Moreover, you can get a loan of up to ₹30 Lakhs and the annual interest rate begins at 16.50%.
Eligibility Criteria
- The applicant must be an Indian citizen.
- The applicant’s age should be between 23 and 60 years.
- The applicant’s CIBIL score must be 700 or above, or the applicant must be a new-to-credit client.
How to Get a Business Loan at a Low-interest Rate?
The following are the points that will help in securing a business loan at a low- interest rate:
- Your CIBIL score should be excellent, i.e 700 or above (may vary across the lenders).
- Keep a good track of your payback history as the lending organisation determines if you are creditworthy by examining your ability to repay debts.
- Keeping a reliable source of money may benefit you.
- If you apply for a long-term business loan, your interest rate may be low.
Concluding Comments
Entrepreneurship and startups expand work opportunities for others and have an impact on the country’s economy. The Indian government has been encouraging citizens to create businesses.
Many banks and non-banking financial organisations (NBFCs) now provide attractive interest rates on business loans. If you are eligible and have the necessary paperwork, you may take advantage of the finest business loan solutions.
Sources
- https://khatabook.com/blog/business-loan-interest-rate/
- https://www.bajajfinservmarkets.in/loans/business-loan.html#parentHorizontalTab1