<aside> <img src="/icons/forward_red.svg" alt="/icons/forward_red.svg" width="40px" /> For small and medium businesses, SBI’s Business Loans are the most attractive. For larger businesses, HDFC bank’s loans are better owing to an add-on insurance cover and proper interest rates
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State Bank of India: Best customized business loans to small, mid and large-sized businesses.
Axis Bank: Best short-term collateral-free business loan with overdraft, cash credit, and term loan facilities.
Punjab National Bank: Best customized business loans to MSMEs, especially enterprises led by women entrepreneurs.
ICICI Bank: Best business loan in the overdraft facility.
Kotak Mahindra Bank: Best business loan up to INR 75 lakh.
IndusInd Bank: Best business loan in a fixed rate of interest category.
HDFC Bank: Best business loan with facility to add on insurance cover.
HDFC Bank provides both secured and unsecured business loans up to INR 75 lakh to manufacturers, traders, and self-employed individuals whose businesses have been making a profit for over two years and a minimum turnover of INR 40 lakh. The business should possess a minimum income tax return (ITR) of INR 1.5 lakh per annum to be eligible for the business loan.
Until the quarter ending Dec. 31, 2022, the rate of interest on HDFC’s business loans was in the range of 10% to 22.50% – with an average lending rate of 16.43% (currently, 16.75%) – on loans with one to four years of repayment tenure. The interest is low on business loans where securities are pledged as collateral, or someone as a guarantor to support the borrower’s loan repayment from getting default.
Foreclosure or prepayment of the business loan is allowed after six paid instalments with an additional 2% to 4% charges levied on the EMI amount, depending on tenure and outstanding amount. This fee is waived for MSMEs who have opted for a fixed rate of interest for the repayment of the loan. Part-payment can also be done to clear the loan after 12 EMIs upon extra payment of up to 25% of the outstanding amount.
Borrowers also have the option to opt for HDFC term life insurance, which is a credit insurance plan to protect families from debt in case of unforeseen circumstances, with a premium paid on the EMI amount. There are also charges for obtaining business loans, as follows:
| Other Charges | Amount |
|---|---|
| Overdue EMI interest | 2% per month |
| Repayment mode change charges | INR 500 |
| Amortization schedule charges | INR 50 |
| EMI/payment return charges | INR 450 |
| Stamp duty | Applicable as per state rates |