Corporate Loans

Fund the business with debt, not with your equity

A bank loan carries a fixed, nominal rate of return. Venture capital can cost you five to ten times your investment. For most MSMEs, proprietorships and private limited companies, debt is simply the cheaper way to fund the first few years.

8.00%p.a. onwards ₹25 crturnover ceiling 3 yearstax relief for new units
Check your eligibility +91-9810454531
The owner of a new small business at her counter No equity dilution the business stays yours
21 – 65 yrs Applicant age at maturity
750+ Credit score preferred
₹25 crore Maximum annual turnover
4 structures Proprietorship, firm, Pvt/Public Ltd, LLP

Business loans for new enterprises

Ever since the Startup India campaign was announced in 2015, the number of new Micro, Small and Medium Enterprises has been on the rise. The campaign is built on an action plan aimed at promoting bank financing for startups and new businesses — encouraging ventures that in turn create jobs, build equity and contribute to socio-economic growth.

Several leading financial institutions now offer startup loans for new businesses at low interest rates. What follows is the eligibility you need to meet, the rates on offer, and the documentation banks expect.

Where we come in. A new business has no track record for a credit officer to lean on, so the project report does the persuading. Ours are prepared by people who used to assess them — which is the difference between a file that gets read and one that gets returned.

Eligibility criteria for a new business loan

Age
Minimum 21 years, and a maximum of 65 years at the time of loan maturity
Work Status
The applicant should be self-employed
Business Structure
Sole proprietorship, partnership firm, private or public limited company, or a Limited Liability Partnership (LLP)
Credit Score
750 or above
Default History
Applicants with no previous loan defaults with any bank are viewed more favourably
Annual Turnover
Total annual turnover of the firm should not exceed ₹25 crore

Interest rates across banks and NBFCs

The spread here is the widest on this website — from 8% to 40% per annum. That range is exactly why the choice of lender matters more on a business loan than on any secured product.

Indicative business loan interest rates, as published 2024
Bank / NBFCInterest rate
HDB Financial Services Ltd.8% – 26% p.a.
UGRO Capital9% – 36% p.a.
IDFC First Bank10.50% p.a. onwards
Axis Bank10.75% p.a. onwards
HDFC Bank10.75% – 25% p.a.
Tata Capital12% p.a. onwards
Lendingkart12% – 27% p.a.
NeoGrowth Finance15% – 40% p.a.
Kotak Mahindra Bank16% – 26% p.a.
Flexiloans1% per month onwards
Indifi1.50% per month onwards
Mcapital2% per month onwards

Swipe the table sideways to see all columns.

Watch the monthly rates. “1% per month” is not 1% per annum — it works out to roughly 12.7% a year compounded, and 2% per month is over 26%. Always convert a monthly quote to an annual one before you compare it against a bank.

Consider a government scheme first

Before taking a commercial business loan, check whether your unit qualifies under a government-backed scheme. The terms are materially better, and most borrowers never hear about them.

  • Mudra Loan — up to ₹10 lakh for micro enterprises, collateral free and covered by a credit guarantee fund.
  • CGTMSE — guarantee cover of 75% to 85% that replaces collateral entirely, on facilities up to ₹5 crore.
  • PMEGP — a margin money subsidy of 15% to 35% of project cost for new units.
  • Stand-Up India — ₹10 lakh to ₹1 crore for greenfield projects by SC/ST and women entrepreneurs.

Documents required

  1. Duly filled application form with passport-sized photographs.
  2. KYC documents of the applicant and co-applicants — passport, Aadhaar card, Voter’s ID card, driving licence, PAN card and utility bills such as telephone and electricity.
  3. Last 12 months’ bank statement.
  4. Last 1 year’s ITR.
  5. Business incorporation certificate.
  6. Business address proof.
  7. Any other document required by the lender.

Why a bank loan beats the alternatives

  • Tax relief for three years — new entrepreneurs are granted tax relief for the first three years.
  • No equity dilution — venture capital investors typically look for five to ten times their money back. A bank loan costs you a fixed, nominal interest rate and nothing else. The business stays entirely yours.
  • Banks are approachable — with the number of banks and NBFCs across India, it is straightforward to walk into a local branch and put a funding request in front of someone.
  • An established process — Indian banks have a well-structured framework for processing entrepreneurs’ funding requests, so applications move quickly on minimum documentation.
  • The profit is yours — and so is the loss. You are not answerable to the bank for how the business performs, only for the repayment.

How we handle your file

Scheme check first

Before anything else we check whether your unit qualifies under Mudra, CGTMSE, PMEGP or Stand-Up India. A subsidy or guarantee beats a lower headline rate almost every time.

Project report and projections

For a new business this document does the work your track record cannot. We prepare it with the financials a credit officer will actually test.

Lender matching

Rates range from 8% to 40% for the same borrower. We place the file where its structure and sector are understood.

Sanction, disbursement and after

We follow the file to sanction and disbursement, then stay on for limit renewals and expansion as the unit grows.

Business Loan FAQ

Questions founders ask us

If yours is not here, ask it on the phone — you will get a straight answer, not a sales pitch.

Still need an answer?

Speak to one of our ex-bankers directly. No call centre, no scripts.

Call +91-9810454531

Yes — that is precisely what startup loans are for. Without a trading history the bank relies on your project report, your promoter profile and your credit score. Government schemes such as PMEGP and Stand-Up India are specifically designed for greenfield units and should be checked first.

Not necessarily. Under CGTMSE, guarantee cover of 75% to 85% replaces collateral entirely on facilities up to ₹5 crore, and Mudra loans up to ₹10 lakh are collateral free by design. A plain commercial business loan above those limits will usually want security.

750 or above is the benchmark for a business loan, and having no previous defaults with any bank counts for a great deal. Since the business itself may have no history, your personal credit conduct as promoter carries most of the weight.

A term business loan funds expansion, equipment or setting up — repaid over years in EMIs. Working capital funds the day-to-day gap between paying suppliers and getting paid, usually as an overdraft or cash credit limit renewed annually. Most growing units end up needing both. See our working capital page.

No. The three-year relief available to new entrepreneurs has conditions attached around incorporation date, turnover and the nature of the business, and it must be claimed. Confirm the current position with your chartered accountant before you rely on it in your projections.

Related

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Working Capital Loan For day-to-day operational cash flow CGTMSE Loan Collateral-free, guarantee backed Mudra Loan Up to ₹10 lakh for micro units

Check the schemes before you take the loan

A subsidy or a guarantee cover is worth more than a percentage point off the rate. Tell us about the business and we will tell you what it qualifies for.

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