When it comes to growing a business, securing the right financing is crucial. A business loan can provide the necessary capital to expand operations, purchase equipment, or manage cash flow. However, understanding the interest rates associated with business loans is key to making an informed decision.

This article provides an in-depth overview of business loan interest rates in 2024, focusing on the rates offered by major Indian banks, including SBI, HDFC, and Axis Bank.

What is a Business Loan?

A business loan is a financial product offered by banks and financial institutions to entrepreneurs and businesses. It provides the capital required for various business needs, such as:

• Expanding operations
• Purchasing equipment or inventory
• Managing working capital
• Funding new projects or ventures

Business loans can be either secured or unsecured. Secured loans require collateral, such as property or equipment, while unsecured loans do not require collateral but usually come with higher interest rates due to the increased risk for the lender.

Factors Affecting Business Loan Interest Rates

Several factors influence the interest rates on business loans:

• Credit Score: A higher credit score usually translates to lower interest rates.
• Business Vintage: Established businesses with a track record are more likely to receive lower interest rates.
• Loan Amount and Tenure: Larger loan amounts and longer tenures may come with different interest rates.
• Collateral: Secured loans often have lower interest rates compared to unsecured loans.
• Bank’s Prime Lending Rate: Banks set their interest rates based on their prime lending rate, which is influenced by the Reserve Bank of India’s policies.
• Economic Conditions: Inflation, economic growth, and market competition also play roles in determining interest rates.

Business Loan Interest Rates in 2024

Interest rates on business loans vary depending on the bank and the type of loan. As of 2024, most major banks in India offer competitive rates to attract customers, with interest rates ranging between 9% and 18% per annum.

Here’s a general overview of business loan interest rates:

Bank	Interest Rate Range
SBI	9.00% to 13.50%
HDFC Bank	10.25% to 16.00%
Axis Bank	10.50% to 17.00%
ICICI Bank	10.25% to 17.50%
Kotak Mahindra	11.00% to 18.00%
Bank of Baroda	9.75% to 14.00%
Punjab National Bank	10.50% to 16.50%

SBI Business Loan Interest Rate

The State Bank of India (SBI) offers a variety of business loans tailored to the needs of small and medium enterprises (SMEs) as well as large corporations. SBI’s business loan interest rates are known for being competitive, making them a preferred choice for many business owners.

• Interest Rate Range: 9.00% to 13.50%
• Loan Amount: Up to ₹5 crores, depending on the product
• Tenure: 12 months to 48 months
• Processing Fee: 2% of the loan amount

SBI offers several types of business loans, including term loans, working capital loans, and loans against property. The interest rate for each loan varies based on factors such as the applicant’s credit profile, loan amount, and tenure.

Example: SBI Term Loan

Feature	Details
Interest Rate	9.00% to 12.00%
Tenure	12 to 60 months
Loan Amount	₹10 lakh to ₹5 crore
Processing Fee	2% of the loan amount

HDFC Business Loan Interest Rate

HDFC Bank offers a range of business loans designed to cater to different business needs, from working capital loans to equipment finance. HDFC Bank is known for its flexible terms and quick approval process.

• Interest Rate Range: 10.25% to 16.00%
• Loan Amount: Up to ₹50 lakhs for unsecured loans
• Tenure: 12 months to 48 months
• Processing Fee: Up to 2.5% of the loan amount

HDFC Bank’s business loan products include options such as Business Growth Loans and Commercial Vehicle Loans, each with specific terms and rates.

Example: HDFC Business Growth Loan

Feature	Details
Interest Rate	10.25% to 14.50%
Tenure	12 to 36 months
Loan Amount	₹5 lakh to ₹50 lakh
Processing Fee	Up to 2.5% of the loan amount

Axis Bank Business Loan Interest Rate

Axis Bank provides various business loans to cater to the needs of SMEs and large corporations alike. Axis Bank’s business loans are known for their flexible repayment options and competitive interest rates.

• Interest Rate Range: 10.50% to 17.00%
• Loan Amount: Up to ₹50 lakh for unsecured loans
• Tenure: 12 months to 48 months
• Processing Fee: 1.5% to 2% of the loan amount

Axis Bank offers different types of business loans, including secured and unsecured loans, overdrafts, and loans against property.

Example: Axis Bank Business Loan

Feature	Details
Interest Rate	11.00% to 15.50%
Tenure	12 to 48 months
Loan Amount	₹5 lakh to ₹50 lakh
Processing Fee	1.5% to 2% of the loan amount

Comparison of Business Loan Interest Rates

To help you choose the best business loan option, here is a detailed comparison of the business loan interest rates offered by SBI, HDFC, and Axis Bank:

Bank	Interest Rate Range	Loan Amount	Tenure	Processing Fee
SBI	9.00% to 13.50%	Up to ₹5 crore	12 to 48 months	2% of the loan amount
HDFC	10.25% to 16.00%	Up to ₹50 lakh (unsecured)	12 to 48 months	Up to 2.5% of the loan amount
Axis Bank	10.50% to 17.00%	Up to ₹50 lakh (unsecured)	12 to 48 months	1.5% to 2% of the loan amount

From the table above, you can see that SBI generally offers the lowest starting interest rate, while Axis Bank provides a broader range that can be beneficial depending on the loan terms and conditions that suit your business needs.

Tips to Secure a Lower Business Loan Interest Rate

Securing a lower interest rate on your business loan can save you a significant amount of money over the loan term. Here are some tips to help you obtain a better rate:

1. Improve Your Credit Score: A higher credit score increases your chances of getting a lower interest rate. Ensure all debts are paid on time and keep credit card balances low.
2. Offer Collateral: Secured loans typically have lower interest rates than unsecured loans. Offering collateral, such as property or equipment, can reduce the risk for the lender and result in a better rate.
3. Choose a Shorter Loan Tenure: Shorter loan tenures often come with lower interest rates. However, ensure that the monthly payments are manageable within your cash flow.
4. Maintain a Good Banking Relationship: Banks are more likely to offer lower rates to existing customers with a positive transaction history. Maintain good relationships with your bank by managing your accounts responsibly.
5. Negotiate: Don’t hesitate to negotiate with your lender. Banks may be willing to offer a better rate to retain or attract customers.
6. Compare Different Banks: Always compare the interest rates and terms offered by different banks before deciding. This will help you find the best deal for your business needs.

Our Recommendation

Understanding business loan interest rates is crucial for any business looking to secure financing. By comparing the interest rates of different banks and understanding the factors that affect these rates, you can make an informed decision that will benefit your business in the long run.

Whether you choose SBI, HDFC, Axis Bank, or another institution, ensure that you thoroughly understand the loan terms and shop around for the best deal. Choosing the right business loan with a favorable interest rate can make a significant difference in the overall cost of borrowing and the financial health of your business.