How to get the business loans with the lowest interest rates in India

Business loans are the backbone of an economy as small businesses depend on these business loans to pay salaries, invest in new machinery and buy raw materials for production. In this article we are going to help you to find the appropriate business loan with the lowest interest rates which is going to help you to grow your business and scale it to new heights.

Various types of business loans –

There are various types of business loans which are offered by the financial institutions. It is important for the business owner to select the appropriate business loan which suits his requirements as per the prevailing market conditions.

 1.  Term loans

These types of loans are usually acquired by a business for purchase of asset. The business owners are required to provide proper financial information and are required to have a good credit score for quick approval.

2. Working capital loan

Working capital loan is a type of loan which helps the business in running its day to day operation. Working capital loans generally have a high interest rate as it is an indication that the business does not have high liquidity and in some cases may also require collateral.

3. Line of credit

A line of credit can be seen as a credit card for the business which the business can use as and when it requires money. There is no need to pay any additional interests if all the payments are all made on time. This type of business loan is easily available if the business has a good cash flow and credit history.

Factors that affect business loans interest rates and tips to get the lowest business loan interest rate in India.

To get the lowest business loan interest rate in India the business owner should keep the following points in his mind while obtaining the loan. Interest rates can range from 16% to 60 % depending upon various conditions.

1. Business existence

If the business has a long and good financial record it increases the chances of business to obtain a loan at lower interest rate.

2. Type of lender

If we compare interest rates of banks and NBFC’S we can say that banks offer lower interest rates as compared to NBFC’s.  If the business has any long lasting relations with the bank / bank manager it could also benefit it to obtain loans at a lower interest rate.

For example businesses we can now apply for a business loan online 

Now the process for applying for business loans has become much easier due to the digital age. Businesses applying for loan online can get loans at a cheaper rate with 24/7 customer service and the loans available online are very flexible. 
The loans which are applied online usually are cheaper because the cost of an agent or branch is not added in the loan and the credit score is also checked online. But while getting a loan physically the credit score is pulled a lot of times for lender mapping, which increases the cost of borrowing. 

3. Type of business

If the business falls under the priority sector the business has a chance of getting a loan at a lower interest rate.

4. Long term loan

Long term loans generally have a lower interest rate as compared to short term loans. Long term loans also help businesses to pay back loans without applying pressure on the cash flows. Hence if possible a business should prefer a long term loan over short term loan for better interest rates.

5. Collateral

If the business is able to provide collateral then financial institution is able to offer lower interest rates as it increases the security for the loan amount.


Hence we can say that to get the best business loans with the lowest interest rates the business owner should apply for a loan keeping in mind the present and future needs of the business, cash flow and market conditions. To get the best interest rates he must keep proper documentation and have good credit score. All of these points will help him achieve his dreams of becoming a successful businessman.