Business Loan Interest Rates in India 2025: Bank-Wise Comparison

As a business owner or aspiring entrepreneur, one of the most crucial factors to consider when applying for a business loan is the interest rate. In India, interest rates on business loans can vary significantly across different banks, impacting the overall cost of borrowing and your business’s financial health. In 2025, with a competitive financial landscape, it’s essential to be well-informed and strategic when choosing the right lender.

In this article, we’ll provide a comprehensive comparison of business loan interest rates in India for 2025, offering insights on how different banks stack up against each other, along with real-world examples and actionable tips to help you make the best financial decision for your business.

Understanding Business Loan Interest Rates

Before diving into the comparison, it’s important to grasp what business loan interest rates are and how they work. Interest rates represent the cost of borrowing money and are expressed as a percentage of the principal loan amount. These rates can be either fixed or floating:

• Fixed Interest Rates: The interest rate remains constant throughout the loan tenure.

• Floating Interest Rates: The rate fluctuates based on changes in the benchmark rate, such as the MCLR (Marginal Cost of Funds-based Lending Rate) or the repo rate.

The rate you are offered will depend on several factors, including your creditworthiness, the type of loan, and the tenure of the loan.

How Business Loan Interest Rates Are Set in India

Banks and financial institutions in India set their business loan interest rates based on several key factors:

1. RBI’s Repo Rate: The Reserve Bank of India’s monetary policy and its repo rate have a direct influence on the lending rates of commercial banks.

2. Bank’s Internal Benchmarks: Banks use internal benchmarks like the MCLR to determine their rates.

3. Credit Risk Profile: Lenders assess the risk of lending to a borrower, considering factors like the business’s credit history, financial stability, and industry risk.

Current Business Loan Interest Rates in India for 2025

In 2025, business loan interest rates in India typically range from 8% to 24%. However, the rate you receive will vary depending on the type of loan, the lender, and your profile as a borrower.

Below, we compare the bank-wise business loan interest rates offered by some of the top banks in India:

Bank-Wise Business Loan Interest Rates in India 2025

1. State Bank of India (SBI)

• Interest Rate: 8.50% – 13.50%

• Loan Tenure: Up to 15 years

• Key Highlights:

  • Low-interest rates for MSMEs.

  • Offers both secured and unsecured loans.

  • Attractive loan schemes with minimal processing fees.

2. HDFC Bank

• Interest Rate: 9.00% – 15.50%

• Loan Tenure: Up to 5 years

• Key Highlights:

  • Offers customized loan schemes.

  • Quick disbursal for existing customers.

  • Competitive rates for high-rated businesses.

3. ICICI Bank

• Interest Rate: 9.25% – 17.25%

• Loan Tenure: Up to 7 years

• Key Highlights:

  • Tailored products for small and medium enterprises (SMEs).

  • Flexibility in repayment schedules.

  • Charges low processing fees.

4. Axis Bank

• Interest Rate: 9.00% – 18.00%

• Loan Tenure: Up to 12 years

• Key Highlights:

  • Loans with both fixed and floating rate options.

  • Minimal documentation requirements.

  • Offers working capital loans with flexible repayment.

5. Kotak Mahindra Bank

• Interest Rate: 9.75% – 15.00%

• Loan Tenure: Up to 8 years

• Key Highlights:

  • Easy eligibility criteria.

  • Special loan programs for startups.

  • Competitive rates with attractive terms.

6. Bank of Baroda

• Interest Rate: 8.60% – 13.40%

• Loan Tenure: Up to 10 years

• Key Highlights:

  • Special loans for women entrepreneurs and MSMEs.

  • Flexible repayment terms.

  • Lower processing fees for established businesses.

7. Punjab National Bank (PNB)

• Interest Rate: 9.25% – 15.00%

• Loan Tenure: Up to 7 years

• Key Highlights:

  • Attractive interest rates for businesses with a strong credit profile.

  • Competitive loan schemes with lower interest for large-ticket loans.

  • Fast loan approval for eligible businesses.

Comparative Loan Rates: How to Choose the Best Option?

When comparing business loan rates across banks, there are a few key factors to keep in mind:

1. Loan Amount: Some banks offer better rates for higher loan amounts.

2. Repayment Terms: A longer repayment tenure might offer lower monthly installments but could come with higher interest rates.

3. Security/Collateral: Secured loans generally come with lower interest rates than unsecured loans.

4. Processing Fees: While interest rates are essential, don’t forget to check for additional charges such as processing fees, prepayment penalties, and late payment fees.

5. Customer Service: A bank that offers efficient service, quick approval, and easy communication can save you a lot of time and hassle.

Real-Life Example: Comparing Loan Options for a Business Owner

Let’s say you’re a business owner looking to expand your operations and need a loan of ₹5 lakh. Here’s how different banks compare:

• SBI: Offers an interest rate of 8.50% with a tenure of 7 years. You would pay a lower interest over time, but the processing fees may be higher.

• HDFC Bank: Offers an interest rate of 9.00%, with minimal paperwork and faster processing. However, the loan tenure is only 5 years, which means higher monthly payments.

• Axis Bank: Offers a slightly higher rate of 9.50%, but you have the option of both fixed and floating interest rates, which gives you flexibility based on market conditions.

In this case, SBI might be the best choice if you’re looking for a long-term, low-cost option, while HDFC could be ideal if you want fast approval.

Frequently Asked Questions (FAQs)

1. What is the current business loan interest rate in India?

The interest rate ranges from 8% to 24%, depending on the bank, loan amount, and borrower profile. Top banks like SBI offer rates starting at around 8.5%.

2. How can I compare business loan rates across banks?

To compare business loan interest rates, focus on factors such as interest rate, loan tenure, processing fees, and customer service. You can use online comparison tools for quick insights.

3. Can I get a business loan without collateral in India?

Yes, several banks, including ICICI and Axis, offer unsecured business loans with competitive interest rates, especially if you have a good credit history.

4. How does my credit score affect the loan interest rate?

Your credit score is one of the key factors in determining your interest rate. A higher credit score (750 and above) usually results in a lower rate, as the risk to the lender is lower.

5. What is the maximum loan tenure for a business loan?

Loan tenures can range from 5 to 15 years, depending on the bank and loan type. Longer tenures typically come with higher interest costs but lower EMIs.

6. Are there any special schemes for women entrepreneurs?

Yes, banks like PNB and SBI offer business loan schemes with lower interest rates and better terms for women entrepreneurs.

7. What documents are required for a business loan application?

Documents typically include proof of business existence (GST registration, balance sheets), identity proof, income tax returns, and business bank statements.

Conclusion

Choosing the right business loan with the best interest rate is a key decision that can impact your business’s future growth. By comparing the bank-wise business loan interest rates for 2025 and understanding the terms, you can find an option that best fits your needs. Always take time to consider your business’s financial position, the loan terms, and any additional charges to make an informed decision.

Use this guide to navigate the complex landscape of business loans, and choose the one that will help your business thrive.