At some point in your life, you must have come across the dilemma of whether to have a business of your own or to have that regular 9-5 job. Well, most of the individuals who have big aspirations in their lives dream of having their names printed on the front page of business magazines. The desires of having a Rolls Royce, Lamborghini, a big villa with a swimming pool, a long list of travel history, and so many more such dreams can usually seem closer if one has their own business, which is going strong.
But, not everyone is lucky enough to inherit a strong, established business from their family. Many times, people, especially those who had started their own business often face difficulties like lack of funds to pay salaries, expansion of the business to other locations, to indulge in a new project, to purchase a new asset, etc. And in such cases, banks become the saviours and provide loans to fund the business and its operations.
There are numerous banks that provide the facility of business loans. However, choosing the right bank from such a large pool can often be confusing.
Which Are The Top 10 Best Business Loan Banks In India?
Loan- a word, that elicits everyone to make a quick statistical analysis in their minds for choosing a bank from which they should take a loan. A person who needs a loan considers a lot of things before arriving at a decision. Below is a list of some of the best banks in India that provide business loans for the enhancement of the business sector in India.
1. HDFC Bank Business Growth Loans
HDFC bank offers loans for everyone whether it is self-employed individuals, proprietors, partnership firms or companies that are involved in the business of trading, manufacturing or services. With HDFC bank you can take a loan up to Rs. 40 lakhs, without collateral or any other security. The other exciting thing about the HDFC business loan is that here you can get a special benefit like flexible tenure options or an overdraft facility.
As the name says, HDFC bank business growth loan is suitable for those businesses which already exist and require money for only business expansions.
- Minimum turnover of the business must be Rs. 40 lakhs.
- Last two years of the business must be the profit-building years.
- Rs. 1.5 lakhs must be the minimum annual income of the business as per ITR.
- Minimum experience of individuals in business must be 5 years, with 3 years in the current business.
On business loans, the minimum interest rate charged by HDFC bank is 11.90%, and the maximum is 21.35%.
2. Citi Banks Business Loans
Do you own a business which has links with foreign countries? Is it related to import/ export and foreign exchange? If that is the situation, then Citibank can be the right choice for you. Citibank is usually favourable whenever business operations happen overseas. In over 100+ countries, Citi bank has its networks.
It offers INR and foreign currency-denominated rates on the amount of your business loans. For the management of the working capital, one may also get LIBOR denominated rates. The best thing about this is that it is cheaper than normal interest rates.
- You can avail, overdrafts, working capital loans, short term and long term loans.
- CitiBank does not disclose the loan amount, its rate of interest and the tenure on its website. This will be revealed to you at the time of application.
- With Citi bank, you will have to pay 2% processing fee on the sanctioned amount. There will be 2% pre-closure charges and 2% renewal fees.
As mentioned, Citi bank's business loans are best for businesses which have overseas operations or forex transactions.
3. IDFC First Bank Business Loans
The best thing about IDFC first bank is that it helps you with the business loans even for equipment purchases, business upgrades or any other business needs. But the thing to be kept in mind regarding the IDFC business loan is that you will have to pay it back in equal installments with fixed monthly intervals. Therefore, the loan is termed by the bank as Business Installment Loans (BIL).
- The Business Installment Loans is available not only for the businesses but also for professionals and non-professionals.
- It is an unsecured loan requiring no collateral or security.
- The loan amount in IDFC first bank depends upon the kind of business, repayment capability and income.
- The interest rate is given by the bank on the day of loan processing only.
- For getting a BIL loan from IDFC bank, your business must be of 3 years.
IDFC first bank business loan is best for those who are in search of unsecured loans.
4. ICICI Bank Business Loans
ICICI business loans are another great option for loan seekers. It offers business loans for purchasing new plants and machinery or new assets. Also, the loan can be availed from ICICI bank for setting up a new industrial unit, or modernizing/expanding/renovating your already existing unit.
- The business loan from ICICI could be availed as working capital, term loans, or composite loan.
- The maximum tenure of business loans is 7 years.
- It charges an interest rate based on the repo rate. The current repo rate is 4% that means the rate of interest is 10% to 11.10% ( repo rate: + 6.0% / 7.10 %).
- The requirements of ICICI business loan include the last one-year income tax return, audited financials of the last 3 years, and current year performance and turnover. Also, they ask for the latest bank statements for the last 6 months.
- No quantum of the loan is specified.
The ICICI bank business loans are best suited for the existing customers of ICICI banks.
5. SBI Simplified Small Business Loans
As the name suggests, the SBI business loans is a facility for the MSME business. The main aim of the SBI simplified small business loans is to help the small businesses in building their current assets and fixed assets.
The minimum amount of loan that could be taken by the MSME businesses is Rs 10 Lakh, while the maximum amount for the same is Rs. 25 lakh. The interesting thing about the SBI simplified small business loans is that it requires 40% of the collateral security and the interest of it is linked to the MCLR (Marginal Cost of Funds based Lending Rate).
- The repayment period of SBI simplified small business loans is up to 60 months.
- Under SBI business loans, the loan is accessed based on the balance in the existing current account of the business.
- To be eligible for the business loan from SBI, there must be a 5-year existence in the business; the current account should at least be 2 years old.
- The Quantum of the loan (Min/Max) 10 times of average monthly balance in the current account in the previous 12 months subject to:
Min: Above Rs. 10 lacs.
Max: Less than Rs. 25 lacs.
As said above, it is best for the small MSME businesses that require banking facilities.
6. Tata Capital Business Loan
Tata capital business loan is another great option for the seekers of business loans. It offers custom-built business loans at an exciting amount that is as low as Rs. 5 lakhs and goes up to Rs. 75 lakhs. Tata capital business loan is also among those bank loans which require no security.
The loan could be availed from the Tata capital business loan as a working capital loan, machinery loan, MSME loan, or SME loan. It could be customized as per the business needs.
- The interest rate of Tata capitals business loans starts at 19% with a repayment period of 12 to 36 months.
- This business loan requires the balance sheet to be audited by a registered Chartered Accountant.
- It is easier to avail the loan, especially for those who have a cibil score of 700 and above.
- The other good thing in Tata capital's business loan is that it helps you to plan repayment as per your cash flows.
7. IIFL Financial Business Loan
IIFL financial business loan is the one which beliefs in the clean history of the businesses. It means that it avails a loan to those businesses which have 3 years of business existence with positive net worth and a good replacement history on existing loans.
In the IIFL financial business loan, there is always a loan processing charge of 3% on the sanctioned amount of loan.
- With this loan, you can avail a minimum amount of Rs. 1 lakh with a maximum limit of Rs. 50 lakh.
- The loan is given on a fixed interest rate, that ranges from 16% to 30% per annum.
- The tenure of the IIFL financial business loan ranges from 12 months to 48 months.
- It does not require any collateral.
IIFL is best suited for those businesses which are small and have a positive net worth.
8. Bajaj Finserv MSME Loan
Bajaj finserv MSME loan comes up with various benefits for the businesses. It offers MSME loans to help businesses grow and help them with their financial needs like investing in the infrastructure, overheads, meeting working capital requirements, and installing the machinery.
Without giving away any collateral or asset, a loan amount up to Rs. 20 lakhs can be borrowed.
- Eligibility criteria require the business to be at least 3 years old.
- The loan tenure ranges from 12 to 60 months.
- Interest rate starts from 18%.
9. Axis Bank Business Loan
Axis bank is popular for its convenient services and various facilities it offers to its customers. The amount of business loan that you can avail from Axis Bank is Rs. 50 lakh (maximum), with no amount of collateral.
- To be eligible to take a loan from the Axis Bank, you must have a business running experience of a minimum of 3 years.
- You must be in the age group of 21 to 65 years to take a loan.
- The interest rate is fixed by the bank based on your business profile, financial assessments, past track record, and tenure.
- The indicative rates for business loans in the past were ranging from 10.75% to 21%.
- It also gives loans to professionals like doctors, engineers, and CAs.
10. Fullerton India Business Loan
The Fullerton India Business Loan is a good choice if you wish to get a business loan without much documentation. Fullerton India provides loans of up to Rs. 50 lakhs for several capital requirements which include:
- Paying salaries and wages to staff.
- Marketing of business.
- Office expansion.
- Working capital requirements.
- Purchasing or replenishing inventory.
- And, purchasing equipment.
The repayment period ranges from 12 to 60 months, and interest rates vary from 17 to 21%.
However, these benefits from Fullerton India can be availed by only those who have a minimum turnover of Rs. 10 lakhs and are generating profits from the last 2 years.
It is best suited for the self-employed, small businesses, professionals, and individuals having a profitable business.
Many individuals come into the business world and try their hands on earning quick money. They invest, they borrow, and they take up loans to get their business operations on track. However, history has shown that among those who avail loans, only those people get success who use the facility of loans very wisely.
There is a list of examples which include Vijay Mallya, Nirav Modi, Subrata Roy and many more, which show that irresponsibly taking loans from the banks has proven to be a curse for the businessman. Running a business is nothing but a test of the brain on how efficiently and wisely; you can use your personal or borrowed funds.
The above-mentioned banks for business loans are really very great help. However, it is important to keep in mind that there is a difference between taking a loan for initiating a new startup and for expanding an exciting one. Loans have to be returned and with interests. So, it is important to make sure that borrowed funds are used wisely and are not exploited.
A bank loan is surely a blessing, but it might as well become a big problem. In the end, it all comes down to how you use the facility.