What are the interest rates and charges for a business term loan?

Interest rates and charges applicable for business term loans vary across lenders and depend on factors like:

• Loan Amount: Generally, higher loan amounts attract lower interest rates.
• Tenure: Longer repayment tenures usually have higher interest rates.
• Type of Lender: Interest rates are usually lowest for Public Sector Undertakings (PSU) Non-Banking Financial Companies (NBFCs) and banks, and generally higher for private banks and fintech lenders.
• Applicant's Credit Score: A better credit score can get you a lower interest rate.
• Collateral: Loans against collateral-like property or fixed deposits get lower interest rates.
• Industry Segment: Established sectors may get better rates than new-age businesses.

In addition to interest rates, lenders levy the following charges:

• Processing Fee: Typically ranges from 0.5% to 5% of the loan amount plus applicable taxes. This is for processing the application.
• Prepayment Charges: Applied for foreclosing loans before tenure. They are usually a certain percentage of the outstanding amount.
• Penalty on Delayed EMI: Penal interest is charged on delayed repayments/Equated Monthly Instalments (EMIs).
• Other Charges: Cheque bouncing charges, late payment charges, documentation charges, etc.

The exact rates and charges are determined on a case-by-case basis by loan providers on evaluation of individual applications. Check with financial institutions directly regarding prevailing interest rates and applicable charges for business term loans.