Small businesses are the backbone of the economy and help the country flourish by creating employment opportunities and keeping the wheels of the economy rolling. The recent pandemic, however, has caused untold havoc on small-scale businesses and caused their incomes to drop significantly. Some businesses have had to even shut shop. The small and medium businesses are the worst hit due to the Covid 19 pandemic as many have even had to close their businesses on account of frequent lockdowns. In such a scenario, the Government of India has introduced many measures to provide relief to the businesses to ensure their survival and their growth in these trying times.
Besides the government measures, businesses can always get a business loan to keep them going and access much-needed capital during these stressful times. Banks or NBFCs provide loans to businesses for various purposes like working capital loans, loans for business growth, loans for buying a new plant or machinery, etc.
Borrowers can apply for a loan for any of the eligible purposes and get a loan if they meet the lender’s criteria. It is necessary for the borrowers to first determine the purpose of the loan and then select the lender based on their terms and conditions and interest charged on the loan.
Additional Reading : Different Types Of Business Loans
In this guide, we list the top 5 business loans in India for 2021. Check the features, eligibility criteria and decide if it’s the right choice for you.
- HDFC Business Loan
HDFC is among the topmost banks in the lending market. The business loans of the bank are tailor-made to suit the needs of businesses of all sizes. The details of the loan are mentioned below.
| Category | Details |
| Eligibility | Eligible persons – Self-employed individuals, Proprietors, Private Ltd. Co. and Partnership Firms involved in the business of Manufacturing, Trading or ServicesMinimum turnover – Rs. 40,00,000Minimum business experience – 3 years current business (5 years in total)Profit-making business for the past 2 yearsMinimum annual income (ITR) – Rs. 1,50,000Minimum age – 21 years, Maximum age – 65 years at the time of maturity of the loan |
| Maximum Loan amount | Rs 40,00,000 (Rs. 50,00,000 in select locations) |
| Tenure | Minimum – 12 months, Maximum – 48 months |
| Rate of interest | Minimum – 11.90%, Maximum – 48 months |
| Processing Fees | 2.50% of loan amount (minimum Rs. 1,000), Maximum Rs. 25,000 (for salaried customers) Rs. 75,000 (for self-employed customers) |
| Prepayment charges | 0-6 months – not allowed6-24 months – 4% of the outstanding principal25-36 months – 3% of the outstanding principal > 36 months – 2% of the outstanding principal |
- SBI Small Business Loan
SBI is the largest public sector bank in the country and has some of the best loan products across each segment. The details of the business loan of SBI are given below.
| Category | Details |
| Eligibility | Existing business in the same locality for at least 5 yearsEligible persons – the applicant should be the owner of premises or has a valid rent agreement (residual period of minimum 3 years), The current account holder for a minimum of 2 years (Proprietorship, Company and Partnership Firms) Minimum monthly average balance – Rs. 1,00,000 in last 12 yearsMinimum monthly threshold – Rs. 1,000 |
| Loan amount | Minimum – Rs. 10,00,000Maximum – Rs 25,00,000 |
| Tenure | Maximum – 60 months |
| Rate of interest | The interest rate is linked to MCLR |
| Processing Fees | Rs. 7,500 (including all charges) |
- Kotak Mahindra Business Loan
Kotak Mahindra Bank is among the top private sector banks in India and provides a host of loans for every segment. The details of the business loans by the bank are mentioned below.
| Category | Details |
| Eligibility | Eligible persons – Sole Proprietor / Partnership firm / Private Ltd Co. / Trust / LLP involved in the business of Manufacturing, Trading or Services Minimum turnover – Rs. 40,00,000Minimum business experience – 3 years current business Minimum 1-year profit-making entity Minimum age – 25 years, Maximum age – 65 years at the time of maturity of the loan |
| Loan amount | Minimum – Rs. 3,00,000Maximum – Rs 75,00,000 |
| Tenure | Maximum – 48 months |
| Rate of interest | 15% onwards (subject to bank regulations) |
| Processing Fees | 2% of the loan amount |
- Karnataka Bank Business Loan
Karnataka Bank is the largest private sector bank in India. It offers many types of business loans depending on the need and type of business. The basic details of the MSME loans of the bank are mentioned below.
| Category | Details |
| Eligibility | Any legal entity as per the MSME guidelines |
| Loan amount | Maximum – Rs. 15,00,00,000 |
| Tenure | Term loan – Maximum 120 monthsWorking Capital – Maximum 18/15/12months |
| Rate of interest | 9.41%-12.56% |
| Processing Fees | Up to Rs. 5,00,000 – NILAbove Rs. 5,00,000 – 0.50% of loan amount |
- IIFL Business Loan
IIFL is a leading name in the lending market providing business solutions for eligible entrepreneurs. The business loans of IIFL are available at competitive interest rates and among the favoured loan products in this segment. The basic details of the IIFL Business Loans are mentioned below.
| Category | Details |
| Eligibility | Any legal entity as per the MSME guidelines |
| Loan amount | Maximum – Rs. 10,00,000 |
| Tenure | Term loan – Maximum 60 months |
| Rate of interest | 16% to 30% |
| Processing Fees | Up to 3% of the loan amount (excluding GST) |
Conclusion
Business loans are a huge boon to small businesses and help meet the financial demands of millions of borrowers in India. These loan options mentioned are easily available, provided you meet all the eligibility criteria and submit the necessary documentation.
Business loans are processed relatively faster than other loans to enable the smooth functioning of the businesses and relieving them of any financial stress. Like every other loan, lenders review the credit score of an applicant for business loans too. Customers can easily check their credit score through CreditMantri for free and avoid any rejection or delay in the sanction of business loans from lenders.
