What interest rates can I expect for a business loan?

The interest rates charged for business loans in India vary significantly depending on several factors. Here is an overview of the typical range of interest rates offered by different loan providers:

• NBFCs: Non-banking financial companies provide loans at competitive interest rates compared to most banks as they cater to small business owners and offer quick disbursal of funds.
• Banks: Public sector banks typically charge lower interest rates compared to private banks. The rates can vary widely based on the loan terms.
• MFIs: Micro Finance Institutions offer collateral-free small business loans to low-income entrepreneurs but charge higher interest rates due to the small ticket size of loans.
• Fintechs: Financial technology firms and online lenders provide quick business loans with minimal documentation but charge higher interest rates to account for faster processing and convenience.
• Government Schemes: Government bodies offer business loans under special schemes at subsidised interest rates. However, eligibility norms apply.

The key factors that impact interest rates offered by various loan providers include:

• Your credit score and financial history
• The loan amount and the repayment period
• Type of business and associated risks
• Collateral or security offered
• Existing relationship with the financial institution

The exact interest rate offered to you will depend on your individual profile and loan requirements. It is advisable to connect with multiple loan providers, compare their rate offerings and other charges, and choose the most affordable loan option that aligns with your business needs.