What is the minimum and maximum tenure for business loans?

Business loan tenures vary significantly based on loan type, purpose, lender policies, and borrower profiles. Understanding tenure ranges helps businesses align repayment schedules with cash flow patterns and optimise borrowing costs through appropriate term selection.

Working capital loans typically offer shorter tenures ranging from 6 months to 3 years, reflecting their purpose of meeting immediate operational needs. These loans are designed for quick turnover and repayment from business operations rather than long-term asset financing.

Tenure ranges by loan type:

• Working capital loans: 6 months to 3 years
• Term loans for equipment: 3 to 7 years
• Construction loans: 1 to 3 years
• Business expansion loans: 5 to 10 years

Equipment financing and machinery loans offer longer tenures, typically 3-7 years, aligned with asset depreciation schedules. Commercial real estate loans may extend up to 15-20 years, similar to home mortgages, given the long-term nature of property investments.

Secured business loans generally offer longer tenure options compared to unsecured loans due to reduced lender risk. Collateral backing enables extended repayment periods, making higher loan amounts more affordable through lower EMI obligations.

Minimum tenures are often constrained by lender policies and loan processing costs. Very short-term loans may not be economically viable for lenders, leading to minimum tenure requirements of 6-12 months for most business loan products.

Maximum tenures depend on business stability, borrower age, loan purpose, and collateral quality. Established businesses with strong financials typically qualify for longer tenures compared to startups or businesses with limited operating histories.

Choose tenures balancing EMI affordability with total interest costs. Longer tenures reduce EMI burden but increase total interest payments over the loan lifecycle.