Starting or expanding a business often requires substantial capital, and a business loan is one of the most effective financial tools to make that possible. Whether you’re a small business owner, a startup founder, or a woman entrepreneur, understanding how to apply for the best business loan in India is essential for growth and sustainability.
In this comprehensive guide, we’ll explain how to get a business loan in India, explore various types, eligibility, interest rates, and even highlight business loan by government schemes. Let’s dive in.
Looking for expert help? Finaccle’s Business Loan Advisory Service offers personalized assistance for startups, MSMEs, and women entrepreneurs.
What is a Business Loan in India?
A business loan is a financial product offered by banks, NBFCs, and other lending institutions to meet the funding needs of a business. These loans can be used for:
- Expanding operations
- Purchasing inventory or equipment
- Managing working capital
- Hiring staff or investing in marketing
When asking what is business loan in India, it simply means borrowing money to support or scale your enterprise, with repayment usually over months or years with interest.
Types of Business Loan in India
Understanding the types of business loan in India helps you choose the right option for your business goals. Here are the main types:
- Term Loans
- Fixed loan amount for a specific period
- Suitable for equipment or asset purchases
- Fixed loan amount for a specific period
- Working Capital Loans
- Helps manage daily operations or cash flow gaps
- Helps manage daily operations or cash flow gaps
- Overdraft Facility
- Withdraw more than the account balance up to a certain limit
- Withdraw more than the account balance up to a certain limit
- Invoice Financing
- Loans against unpaid invoices or receivables
- Loans against unpaid invoices or receivables
- Equipment Financing
- Used to buy new machinery or business tools
- Used to buy new machinery or business tools
- Startup Loans
- Special loans for new businesses, often without a strong credit history
- Special loans for new businesses, often without a strong credit history
- Business Loan for Women
- Exclusive schemes encouraging women entrepreneurs with special rates and benefits
- Exclusive schemes encouraging women entrepreneurs with special rates and benefits
- Unsecured Business Loan in India
- No collateral needed; based on creditworthiness and income
- No collateral needed; based on creditworthiness and income
Each type serves a unique purpose, and choosing the right one is key to securing the best business loan for your needs.
Business Loan Interest Rate in India (2025)
The business loan interest rate can vary based on your credit profile, lender, type of loan, and tenure. Here’s a general range:
| Loan Type: | Interest Rate (Approx.) |
| Term Loan | 9% – 17% p.a. |
| Working Capital Loan | 10% – 18% p.a. |
| Startup Loan | 11% – 19% p.a. |
| Unsecured Loan | 12% – 24% p.a. |
| Business Loan for Women | 8% – 14% p.a. (often subsidized) |
Tip: Always compare rates and check the best bank for business loan in India before applying.
Business Loan for Women Entrepreneurs
India has seen a rise in business loans for women, encouraging them to become financially independent. These loans usually offer:
- Lower interest rates
- No or minimal collateral
- Higher approval chances
- Flexible repayment terms
Some popular government schemes include:
- Mudra Loan (Shishu, Kishor, Tarun)
- Stand-Up India Scheme
- Mahila Udyam Nidhi Scheme
If you’re a woman entrepreneur, you can access the best business loan in India with favorable terms through both private lenders and government initiatives.
Business Loan by the Government in India
Several Indian government schemes support MSMEs and startups. Here’s a list of business loans by government initiatives:
1. MUDRA Loan (Micro Units Development & Refinance Agency)
- For micro-enterprises and small businesses
- Loans up to ₹10 lakh
- No collateral required
2. Stand-Up India
- Focuses on SC/ST and women entrepreneurs
- Loans between ₹10 lakh to ₹1 crore
3. Credit Guarantee Fund Scheme (CGTMSE)
- Offers collateral-free loans to MSMEs
- Credit guarantee provided to lenders
4. PMEGP (Prime Minister’s Employment Generation Programme)
- Combines subsidy and loan for self-employment projects
These schemes make it easier to get a business loan in India at low interest and minimum risk.
How to Get a Business Loan in India: Step-by-Step Process
Now, let’s break down the step-by-step process to apply for a business loan successfully:
Step 1: Define Your Loan Purpose
Clearly outline why you need the loan — expansion, equipment purchase, hiring, etc.
Step 2: Check Your Eligibility
Lenders typically assess:
- Age (21–65 years)
- Credit Score (usually above 650)
- Business turnover and profit
- Vintage (typically 1–3 years of operation)
- For women: identity verification and women-centric schemes
Step 3: Choose the Right Loan Type
Choose from the types of business loan in India based on your need:
- Unsecured business loan in India if you lack collateral
- Business loan for women if you’re eligible
- Startup loans for new businesses
Step 4: Compare Lenders and Interest Rates
Use online tools to compare:
- Business loan interest rate
- Processing fees
- Foreclosure charges
- Repayment flexibility
Find the best bank for a business loan in India that fits your needs.
Step 5: Prepare the Required Documents
Common documents include:
- Business registration proof
- PAN & Aadhaar
- ITRs for 2–3 years
- Bank statements
- GST registration
- Business plan (for startups)
Step 6: Apply Online or Offline
You can apply directly through:
- Bank/NBFC websites
- Government portals (for schemes like MUDRA, Stand-Up India)
- Loan marketplaces like Finaccle (for guided support)
Step 7: Loan Sanction & Disbursement
Once approved, the funds are usually disbursed within 2–7 days. Fast approval is often possible with proper documentation and a strong credit profile.
Tips to Get the Best Business Loan
- Maintain a good credit score (700+)
- Keep financial records clean and up-to-date
- Choose lenders who offer transparency in charges
- Consider both private lenders and business loan by government options
- Don’t borrow more than you need
For women: explore exclusive business loan for women schemes
Best Bank for Business Loan in India – How to Choose?
Top banks offering the best business loans in India (as of 2025):
| Bank | Features |
| HDFC Bank | Quick processing, working capital solutions |
| ICICI Bank | Custom loan options, overdraft |
| SBI | Government-linked loans like CGTMSE, low-interest |
| Axis Bank | Equipment financing, MSME-focused |
| IDFC FIRST Bank | Unsecured loans for startups |
Business Loan vs Other Funding Options
| Funding Type | Collateral | Speed | Best For |
| Business Loan | Optional (depends) | Fast | Expansion, working capital |
| Investor Funding | No | Slow | Startups with scalability |
| Personal Loan | No | Fast | Small urgent needs |
| Crowdfunding | No | Slow | Social or niche products |
Conclusion: Grow Your Business with the Right Loan
Now you know exactly how to get a business loan in India. From understanding the types of business loan in India to finding the best bank for business loan in India, being informed helps you make smarter financial decisions.
Explore your options, compare rates, and if you’re eligible, don’t miss out on applying for a government business loan by government or a business loan for women scheme.
Explore your options carefully, compare business loan interest rates, and if you’re eligible, take advantage of government-backed business loan schemes or exclusive business loan for women programs designed to empower entrepreneurs across India.
Need Expert Help?
Connect with Finaccle Advisory for personalized guidance on finding the best business loan, understanding your eligibility, and applying stress-free.-Call now for a free consultation!
-Visit: www.finaccle.com
FAQs About Business Loan
1. How to get a business loan from a bank?
To get a business loan from a bank, start by identifying your funding need and business loan type. Check your eligibility based on turnover, business age, and credit score. Prepare all necessary documents like PAN, Aadhaar, GST, and ITRs. Compare interest rates across banks, then apply online or visit a branch. Approval typically takes 2–7 working days after document verification.
2. How to get a loan for a business?
You can get a loan for business by approaching banks, NBFCs, or using government schemes like MUDRA or CGTMSE. Depending on your business profile and loan requirement, you can apply for a secured or unsecured loan. Maintain good credit and submit a strong business plan to improve approval chances.
3. How to apply for a business loan?
You can apply for a business loan online through the official website of banks like SBI, HDFC, ICICI, or NBFCs. Alternatively, apply offline by visiting your nearest branch. Fill out the application form, attach all required documents, and wait for approval. Many portals also offer instant business loan eligibility checks online.
4. Which bank is best for a business loan?
Some of the best banks for business loans in India (2025) include:
- HDFC Bank – quick processing and flexible tenure
- ICICI Bank – startup-friendly loans
- SBI – low interest rates and government schemes
- Axis Bank – MSME financing and working capital solutions
The best bank depends on your business type, loan amount, and interest rate preferences.
5. Which loan is best for business?
The best loan for business depends on your needs:
- Working Capital Loans – for daily operations
- Term Loans – for expansion or equipment purchase
- Unsecured Business Loans – for collateral-free funding
- Government Schemes – for subsidized support
Startups, MSMEs, and women entrepreneurs may benefit from targeted schemes.
6. How many types of loan are there for businesses?
There are at least 6–8 types of business loans in India:
- Term Loan
- Working Capital Loan
- Overdraft Facility
- Equipment Finance
- Invoice Discounting
- Business Credit Cards
- Startup Loan
- Business Loan for Women
Each serves a different purpose based on business stage and requirement.
7. Which type of loan has the lowest interest rate?
Generally, secured business loans have the lowest interest rates, as they involve collateral. Among government schemes, MUDRA and Stand-Up India loans offer low-interest loans for eligible borrowers. Women entrepreneurs and MSMEs under CGTMSE also enjoy subsidized interest rates.
