Looking for the best business loans in India to expand your venture or meet working capital needs? You’re not alone. Whether you’re a small startup, growing MSME, or a well-established company, access to affordable funding is crucial to keep your operations running smoothly and growing consistently.
The good news? In 2025, several financial institutions in India are offering low interest business loans with flexible terms, minimal paperwork, and quick disbursal—making it easier than ever to fund your ambitions.
In this guide, we’ll walk you through the top 5 best business loans in India that come with low interest rates, minimal collateral requirements, and borrower-friendly features. We’ll also share key insights to help you choose the best loan for small business based on your specific needs.
✅ Why Choosing the Right Business Loan Matters
Before diving into the top picks, let’s understand why choosing the right business loan is more than just comparing interest rates.
A business loan affects:
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Cash flow: High EMIs can hurt liquidity.
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Credit score: Late repayments or high borrowing can lower your score.
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Growth: A suitable loan allows you to invest in growth areas—marketing, inventory, hiring, etc.
That’s why you should look beyond just interest rates and consider repayment flexibility, processing fees, loan tenure, and eligibility criteria.
🏆 Top 5 Best Business Loans in India with Low Interest Rates (2025)
Here’s our handpicked list of business loans ideal for small enterprises, startups, and MSMEs in India, based on affordability, flexibility, and ease of access.
1. SBI Simplified Small Business Loan
Focus: Working capital & business expansion for MSMEs
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Loan Amount: Up to ₹25 lakh
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Interest Rate: Starting from 8.90% p.a. (floating)
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Tenure: Up to 5 years
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Collateral: Optional depending on the loan amount
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Processing Fee: Up to 1%
Why it’s great:
Backed by India’s largest public bank, this loan is ideal for small businesses looking for low interest business loans with flexible repayment.
Real-life example:
A textile shop owner in Surat used this loan to open a second branch with minimal upfront investment and easy EMIs.
2. HDFC Bank Business Growth Loan
Focus: For SMEs, traders, and service providers
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Loan Amount: ₹50,000 to ₹50 lakh
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Interest Rate: Starts from 10.50% p.a.
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Tenure: 12 to 48 months
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Collateral: Unsecured (no collateral required)
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Processing Fee: 2%
Why it’s great:
Fast approval, no collateral, and customized loan offerings make this a strong option for startups and growing businesses.
Ideal for:
Businesses that need quick funding without offering property or assets as security.
3. Bajaj Finserv MSME Loan
Focus: Equipment purchase, working capital, expansion
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Loan Amount: Up to ₹75 lakh
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Interest Rate: Starting from 9.75% p.a.
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Tenure: Up to 96 months
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Collateral: Not required
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Processing Fee: Up to 3.99%
Why it’s great:
Longer repayment tenure helps maintain affordable business loans with lower monthly outflow.
Feature highlight:
Pre-approved offers available for existing customers with minimum documentation.
4. Axis Bank Business Loan
Focus: All business types – small enterprises, professionals, traders
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Loan Amount: ₹50,000 to ₹50 lakh
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Interest Rate: Starts from 10.75% p.a.
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Tenure: Up to 5 years
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Collateral: Unsecured loan
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Processing Fee: 2% to 3%
Why it’s great:
Quick processing, digital documentation, and dedicated relationship managers.
Real-life use case:
A bakery chain in Delhi used this loan to open two new outlets and hire trained staff.
5. SIDBI Make in India Soft Loan Fund (SMILE)
Focus: MSME sector under ‘Make in India’ initiative
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Loan Amount: Varies based on project need
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Interest Rate: As low as 8.25% p.a.
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Tenure: Up to 10 years
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Collateral: Case-specific
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Processing Fee: 0.50% to 1%
Why it’s great:
Especially useful for manufacturing and service enterprises, this scheme offers low interest business loans under government schemes.
Ideal for:
Startups and small industries planning capex investments (machinery, units, equipment).
💡 Tips to Choose the Best Loan for Small Business
Here’s how to choose the best loan for small business depending on your situation:
✅ Know Your Loan Requirement
Ask yourself:
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Is it for expansion or daily operations?
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How much do I need vs. how much can I repay?
✅ Compare Interest Rates & Tenure
Look for the lowest business loan rates in India, but also check:
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EMI flexibility
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Prepayment charges
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Hidden fees
✅ Check Your Eligibility
Your:
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Credit score
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Business turnover
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Profitability
influence loan approval and rates.
✅ Go for Collateral-Free Options if Possible
Unless you’re looking for a high loan amount or government-backed subsidy, unsecured business loans are quicker and easier to get.
📝 Documents Required for Business Loans
Here’s what you typically need to apply for affordable business loans in India:
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PAN card and Aadhaar card of applicant
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Business registration proof
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Bank statements for last 6–12 months
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GST returns / ITR
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Income proof or balance sheet
Some banks may ask for additional documents depending on loan type and amount.
📈 Who Can Apply for Business Loans in India?
Most financial institutions allow the following to apply:
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Proprietors / self-employed individuals
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Partnership firms
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Private limited companies
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Startups and MSMEs
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Retailers, manufacturers, service providers
💬 FAQs: Business Loans in India (2025)
❓1. What is the best loan for small business in India?
The best loan for small business depends on your specific need. For quick funding without collateral, HDFC or Axis Bank loans are ideal. For manufacturing or government-supported projects, SIDBI SMILE is a top pick.
❓2. Which bank gives the lowest interest business loan?
SBI and SIDBI typically offer the lowest interest business loans in India, starting at 8.25% p.a., especially for MSMEs and under government-backed schemes.
❓3. Are business loans available without collateral?
Yes, many banks and NBFCs offer unsecured business loans, including HDFC, Axis, and Bajaj Finserv, where you don’t need to pledge any property or asset.
❓4. How can I get affordable business loans with poor credit?
If your credit score is low, improve it by:
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Clearing old debts
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Maintaining good business cash flow
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Applying with a co-applicant
Also, consider NBFCs or government schemes that are more lenient on credit scores.
❓5. What are the current business loan rates in India?
As of 2025, business loan rates in India range from 8.25% to 16.50% p.a. depending on lender, creditworthiness, and loan type.
❓6. Is there a government loan for small enterprises?
Yes! SIDBI, MUDRA Yojana, and Stand-Up India are top government-backed schemes offering loan for small enterprises at low interest with longer tenure.
🔚 Final Thoughts: Choose Smart, Borrow Smart
Whether you’re running a kirana store in Jaipur or launching a SaaS startup in Bengaluru, having access to the best business loans in India can fuel your next phase of growth. Always compare options, read the fine print, and borrow only what you can repay.
Remember, a loan should support your business, not stress it. Use the resources above to choose the right funding partner and take your enterprise to the next level.
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