What is a business loan and who can apply?

A business loan is financing provided to entrepreneurs, MSMEs, startups, and companies for working capital, expansion, equipment purchase, or other business needs. Eligibility: Sole proprietors, partnerships, LLPs, private limited companies, and self-employed professionals with minimum 2-3 years business vintage and annual turnover of ₹10 lakhs or more can typically apply.

What is the current business loan interest rate in 2026?

Business loan interest rates in 2026 range from 9.75% to 20% depending on business type, vintage, and financials. Secured loans (against property) start from 9.75%. Unsecured working capital loans range from 12-18%. MSME loans under government schemes like MUDRA offer rates from 7-10%. Your credit score, ITR history, and bank relationship significantly impact the rate offered.

What is the maximum business loan amount I can get?

Maximum business loan amounts vary: MUDRA Shishu (new businesses) - Up to ₹50,000. MUDRA Kishore - ₹50,000 to ₹5 lakhs. MUDRA Tarun - ₹5 lakhs to ₹10 lakhs. Regular unsecured business loans - Up to ₹50 lakhs. Secured business loans (LAP) - Up to ₹10 crores. Loan amount depends on turnover (typically 20-25% of annual turnover), profitability, and assets available for security.

What documents are required for business loan?

Common documents required: Business registration/incorporation certificate, GST registration, Last 3 years' ITR with computation, Bank statements (12 months), Audited financial statements (P&L, Balance Sheet), KYC of proprietor/directors, Business plan for new ventures, Property documents (for secured loans), Proof of business vintage (shop license, utility bills, etc.).

What is the difference between working capital loan and term loan?

Working Capital Loan: Short-term (6-12 months), for day-to-day operations, raw materials, and inventory. Usually as overdraft or cash credit facility. Interest paid only on amount utilized. Term Loan: Long-term (1-10 years), for expansion, equipment, or specific one-time expenses. Fixed EMIs throughout tenure. Better for planned investments. Choose based on your funding need - operational vs capital expenditure.

Can I get a business loan without collateral?

Yes, unsecured business loans are available without collateral: Loans up to ₹50 lakhs from banks for established businesses. Fintech lenders offer ₹5-25 lakhs based on GST data and bank statements. MUDRA loans up to ₹10 lakhs don't require collateral. However, unsecured loans charge 2-5% higher interest rates. Personal guarantee of directors/proprietors is usually required. Strong ITR and credit score (750+) improve approval chances.

What is CGTMSE and how does it help get business loans?

CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) is a government scheme that provides guarantee cover to lenders for collateral-free loans to MSMEs. Benefits: Loans up to ₹5 crores without collateral/third-party guarantee. Banks are more willing to lend as risk is shared with CGTMSE. One-time guarantee fee (0.75-1.5% of loan) applies. Contact any scheduled commercial bank to apply under CGTMSE.

How is business loan EMI calculated?

Business loan EMI is calculated using the formula: EMI = P × r × (1+r)^n / ((1+r)^n - 1), where P = Principal, r = monthly interest rate (annual rate/12/100), n = tenure in months. Example: ₹10 lakh loan at 12% for 5 years = EMI of ₹22,244. Total repayment = ₹13.35 lakhs. Interest component = ₹3.35 lakhs. Use our calculator for instant, accurate EMI computation.

What is the processing fee for business loans?

Processing fees for business loans range from 0.5% to 3% of the loan amount: PSU banks (SBI, PNB) - 0.5-1%. Private banks (HDFC, ICICI) - 1-2%. NBFCs and fintechs - 2-3%. Some lenders offer zero processing fee promotions. Negotiate if borrowing a large amount. Processing fee is usually non-refundable and deducted from disbursement. Factor this cost when comparing loan offers.

Can startups get business loans?

Yes, but with conditions: Startups with 1-2 years vintage can apply for MUDRA loans (up to ₹10 lakhs). Recognized startups (DIPP registered) can access Startup India Seed Fund or venture debt. Revenue-generating startups can approach NBFCs and fintech lenders. Early-stage startups usually need founder investment or angel funding first. Strong business plan, projections, and founder credentials are crucial for approval.

What happens if I default on a business loan?

Defaulting on a business loan has serious consequences: 30 days delay - Late payment charges (1-2% per month), reminder calls. 90 days delay - Account becomes NPA, credit score drops significantly. 180+ days - Legal notice, recovery proceedings may begin. Asset seizure for secured loans. Personal guarantee invoked - directors' personal assets at risk. Willful default can lead to SARFAESI action. Always communicate with lender if facing difficulties - restructuring options exist.

Which is better: bank loan or NBFC loan for business?

Comparison: Banks - Lower interest (9-14%), slower approval (7-15 days), strict documentation, relationship dependent. NBFCs/Fintechs - Higher interest (14-24%), faster approval (24-72 hours), flexible on documents, algorithm-based. Choose banks if: You have complete documentation, good credit, and can wait. Choose NBFCs if: You need urgent funds, have limited documents, or irregular income patterns. Many businesses use both - banks for long-term needs, NBFCs for urgent requirements.

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Business Loan EMI Calculator

Calculate your business loan EMI for working capital, expansion, or equipment purchase. Explore MUDRA loans, CGTMSE schemes, and compare rates from top banks for MSMEs.

✓ MSME Loans•✓ MUDRA Scheme•✓ Working Capital

Loan Details

Loan Amount

Minimum loan amount is ₹10,000

₹

₹10,000₹1,00,00,00,000

Interest Rate

Supports 0% for interest-free loans.

%0%40

Loan Tenure

Minimum tenure is 1 Year

Yr1Yr30

💡

Reducing tenure saves significantly more interest than lower rates.

Monthly EMI

₹21,370

Total Interest

₹2,82,216

Total Payment

₹12,82,216

Loan Liquidation over time

Total Breakup

Principal

Interest

Popular Business Loan Scenarios

MUDRA TARUN

₹5 Lakhs

3 years @ 12%

Click to calculate →

WORKING CAPITAL

₹25 Lakhs

5 years @ 10.25%

Click to calculate →

BUSINESS EXPANSION

₹1 Crore

7 years @ 10.25%

Click to calculate →

How to Use the Business Loan Calculator

Our business loan EMI calculator helps entrepreneurs and MSMEs plan their financing needs. Whether you need working capital, equipment financing, or expansion funding, use this calculator to understand your repayment obligations.

Step-by-Step Guide:

1
Enter Loan Amount: Input the business loan amount you need - from ₹1 lakh for working capital to ₹5 crores for expansion. Consider both your requirement and realistic borrowing capacity based on turnover.
2
Set Interest Rate: Adjust the interest rate based on loan type and your profile. Secured loans start at 9.75%, unsecured at 12%+. Check current rates from multiple lenders for comparison.
3
Choose Tenure: Select repayment period from 1-10 years. Working capital loans are usually 1-3 years; term loans for equipment/expansion can be 5-7 years. Longer tenure = lower EMI but higher total interest.
4
Evaluate Affordability: Ensure EMI doesn't exceed 50% of your monthly business profit. Account for seasonal variations in revenue. Build a buffer for unexpected dips in business.
5
Compare Options: Use compare mode to evaluate different loan scenarios - varying amounts, rates, or tenures. Consider total cost of borrowing, not just monthly EMI.

Types of Business Loans in India

Working Capital Loan

Short-term financing for day-to-day operations, raw materials, and inventory.

Tenure: 6-12 months | Rate: 10-15%

Term Loan

Long-term financing for expansion, equipment purchase, or capital expenditure.

Tenure: 3-10 years | Rate: 9-14%

MUDRA Loans

Government scheme for micro-enterprises: Shishu (up to ₹50K), Kishore (₹50K-5L), Tarun (₹5L-10L).

Tenure: 3-5 years | Rate: 7-10%

CGTMSE: Collateral-Free Loans for MSMEs

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) helps MSMEs get loans without collateral by providing guarantee cover to banks.

Key Benefits:

Loans up to ₹5 Crores without collateral
No third-party guarantee required
Available at all scheduled commercial banks
One-time guarantee fee: 0.75-1.5% of loan amount

💡 CGTMSE makes it easier for first-generation entrepreneurs and small businesses to access formal credit without pledging assets.

Business Loan Rates 2026

BoB10.10%

PNB10.15%

SBI10.25%

Canara10.65%

Kotak10.75%

*Rates as of December 2025. Secured loans may get lower rates.

MUDRA Loan Limits

ShishuUp to ₹50,000

Kishore₹50K - ₹5 Lakhs

Tarun₹5L - ₹10 Lakhs

No collateral required for MUDRA loans

Financial Tools

Affordability Check

How much loan can your business afford?

Prepayment Calculator

Save on interest with prepayments

Frequently Asked Questions About Business Loans

Get answers to common questions about business loan EMI, MSME financing, MUDRA, and CGTMSE schemes.

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