Staff Desk
29 May 2024 28,506 5 mins read
Read this blog to learn about the best banks in India where you can get business loans without any hassles.
Table of Contents
Selecting the best banks for business loans from a huge number of options can be difficult. Many people, particularly those who have begun their own business, encounter challenges such as a shortage of finances to pay salaries, expanding the company to new places, embarking on a new project, purchasing a new asset, etc. Banking Institutions step in as saviors in such situations by providing loans to raise funding and activities.
A loan is a term that prompts everybody to perform a brief statistical analysis in their heads before deciding the best bank for business loans in India to borrow from. Before making a choice, a person in need of a loan analyses many factors. And a business loan can help a business owner greatly. So here are some of the best banks for business loans in India.
Top 10 Best Banks for Business Loans
The following is a list of some of the finest Indian banks that offer business loans to help India’s corporate sector grow:
1. SBI (Small Business Loans)
The SBI commercial loans are a facility for small and medium-sized businesses. They are designed to assist small enterprises in increasing their assets. The lowest loan amount available to MSME enterprises is above ₹10 lakh, with a maximum of ₹25 lakh. The SBI small company loans are unique in that they need 40% annual property as collateral and have an interest rate that is tied to the Marginal Cost of Funds based Lending Rate (MCLR).
Highlights
SBI streamlined small business loans that have a sixty-month repayment duration.
The loan amount equals tentimes the average month-to-month balance in the current account for the past year.
The loan is obtained through SBI business loans depending on the business’s existing account balance.
To be approved for an SBI business loan, the company must have been in operation for at least five years and have a current account at least two years old.
2. HDFC Bank (Company’s Growth Loans)
HDFC Bank provides loans to a range of individuals and businesses, including self-employed individuals, entrepreneurs, partnership firms, and enterprises engaged in commerce, manufacturing, or services. Existing enterprises looking to fund their growth can benefit from the bank’s business development loans. HDFC Bank is a leading bank in India that offers business loans up to ₹40 lakhs without requiring collateral, guarantors, or documentation. The bank provides a hassle-free and simple application process and attractive offers for its customers.
Highlights
The company’s annual turnover must be at least ₹40 lakhs.
Earnings years must be the last 2 years of the business.
According to the ITR, the business’s minimum yearly income must be ₹1.50 thousand.
Individuals must have five years of business experience and three years in the existing business.
3. ICICI Bank (Commercial loan)
It is one of India’s third-largest banks and can be a good alternative for anyone looking for a loan. Their lending framework is designed so that consumers can easily select the option that best suits their business demands.
Highlights
Commercial loans have a maximum term of seven years. The ICICI commercial loan can be used for capital investments, loans, or a hybrid loan. The last 1-year tax return audited financial statements from the previous three years and current year performance and turnover is required for an ICICI commercial loan. They also require the most recent six-month bank statements.
4.Citibank (Commercial Loans)
It is one of India’s leading commercial loan providers, offering a wide range of business loans for efficient working capital management. Citibank is usually a good choice when it comes to international commercial transactions. Citibank has networks in over a hundred nations. Citibank offers Indian rupees and currency exchange rates on the total business loan amount. The best part is that it is less expensive than standard interest rates.
Highlights
Overdrafts, term loans, and short- and long-term loans are all offered.
Citibank does not reveal the loan amount, interest rate, or term on its website. This will be shown to you during the registration process.
5. IDFC Bank (Commercial Loans)
It is an excellent bank that provides loans for purchasing fixed assets, company expansions, and other company needs. When taking out a loan from IDFC Bank, keep in mind that you will be required to repay the amount in equal monthly installments.
Highlights
Not only for enterprises but also experts and non-experts, Corporate Instalment Loans are offered.
It’s a no-collateral, no-security loan.
The amount of a loan from IDFCBank is classified by enterprise characteristics, repayment ability, and revenue. The bank only gives the interest rate when the loan is finalized.
6. Kotak Bank (Commercial Loan)
Kotak Bank was founded in 1985, making it India’s fourth-largest private bank. They have, however, spread far and wide. If you need a business loan, you may trust Kotak Bank because they have reasonable rates and policies.
Highlights
They offer a variety of payment choices that are both flexible and simple.
To process this loan, the lender only requires minimum documents.
They offer no-collateral loans.
The good news is that they have offerings tailored to corporate and female entrepreneurs.
This loan is available to enterprises, self-employed entrepreneurs, and providers.
7. Bajaj Finserv Loan (MSME)
Bajaj Financial Services loans have several advantages. It provides MSME loans to help small firms grow and satisfy their financial demands, such as infrastructure improvements, overhead costs, managing working capital needs, and machinery procurement.
Highlights
The company must be at least three years old to be eligible.
The loan term varies between Twelve and Sixty months.
The interest rate begins at Eighteen percent.
8. IndusInd Bank
This commercial bank is yet another shop for all of your banking needs. IndusInd Bank provides lower lending rates and safety and openness in its processes.
Highlights
They provide customized loan quotes based on various company requirements.
They provide a variety of repayment alternatives.
You can verify whether you are eligible for a loan right away. They will gather the necessary paperwork from your supplied address.
9. Tata Capital
It’s another good bank for a commercial loan in India because they offer user funding with low interest rates. Working capital loans, equipment loans, Entrepreneurship loans, and Microloans are also provided through Tata Capital. These loans might even be tailored to the demands of the company.
Highlights
The interest rate of Tata capitals business loans starts at 19%
A certified Professional Accountant must audit the financial statement for this business financing.
Another benefit of Tata Capital’s business loan is that it allows you to manage your payments according to your cash flow.
10. Standard Chartered
This bank is famous since the lending process is straightforward and rapid, making it an excellent choice for novices. This bank is a good choice for a company loan because it combines extensive local knowledge with worldwide experience.
Highlights
This loan does not demand any type of security or proof.
If you need funds for an expansion strategy or operating capital, you can seek a loan.
What are the Benefits of a Business Loan?
Capital Infusion
Business loans provide a significant influx of capital, allowing entrepreneurs to fund various business needs. Whether it’s expansion, working capital, or equipment purchase, the loan serves as a financial backbone.
Flexibility in Use
Business loans offer flexibility in utilization. Entrepreneurs can use the funds for diverse purposes, including inventory management, marketing initiatives, technology upgrades or even hiring of additional staff.
Expansion Opportunities
With additional capital, businesses can explore expansion opportunities, whether opening new branches, entering new markets or diversifying their product or service offerings.
Working Capital Management
For businesses facing seasonal fluctuations or temporary cash flow challenges, a business loan can act as a lifeline to manage day-to-day operations and ensure smooth working capital flow.
Competitive Advantage
Access to timely funding through a business loan can give a competitive edge to businesses. It allows them to seize opportunities, stay ahead in the market, and respond to industry trends.
Build Credit History
Timely repayment of business loans contributes to building a positive credit history. This, in turn, enhances the business’s creditworthiness, making it easier to secure future loans and favorable terms.
Tax Benefits
Interest paid on business loans is often tax-deductible, providing a financial advantage to businesses. This can result in lower taxable income, reducing the overall tax burden.
What Are the Eligibility Criteria for Business Loans?
Business Vintage
Lenders often consider the number of years a business has been in operation. Typically, businesses with a longer track record are viewed more favorably.
Annual Turnover
The annual turnover of the business is a key factor. Lenders assess the financial health of the business by evaluating its revenue and growth patterns.
Credit Score
The credit score of the business and its owners plays a crucial role. A higher credit score enhances the chances of loan approval and may lead to more favorable terms.
Purpose of the Loan
Clearly defining the purpose of the loan is important. Whether it’s for expansion, working capital, or equipment purchase, having a specific goal enhances the credibility of the loan application.
Collateral
Some business loans may require collateral. This could be in the form of business assets, personal assets, or a combination of both.
Debt-Service Coverage Ratio (DSCR)
Lenders may assess the DSCR, which measures the business’s ability to cover its debt obligations. A higher DSCR indicates better financial health.
Conclusion
Many people enter the business world intending to make quick money. They borrow, work hard, and take loans to get their companies back on track, and people who use the ways of doing so properly are successful.
A bank loan can benefit individuals who need finances to develop their business, or a loan for their new startup, purchase equipment, etc. Obtaining a bank loan in India has become relatively straightforward nowadays. And now, with this list of the best banks for business loans, the step ahead may become more accessible.
FAQ
What is the maximum loan amount for a loan against property?
The maximum loan amount for a loan against property is determined by the value of the property being offered as collateral. Lenders typically offer a percentage of the property's market value.
Can I repay the loan against the property?
Yes, most lenders allow borrowers to repay the loan against property before the tenure ends. However, there may be prepayment charges or penalties, which vary among lenders.
What is the interest rate for a loan against property?
The interest rate for a loan against property varies among lenders and is influenced by factors such as the loan amount, tenure, and the borrower's creditworthiness.
What is a loan against property called?
A loan against property is also known as a mortgage loan. It is a secured loan where a property owned by the borrower serves as collateral.
What is the processing time for a loan against property?
The processing time for a loan against property can vary. It depends on factors such as the lender's internal processes, documentation completeness, and property valuation.
What is a zero-interest loan?
A zero-interest loan is a loan where the borrower is not required to pay any interest on the principal amount. However, such loans are rare, and there may be associated fees or costs.
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