Top Banks Offering Business Loans in India with Low Interest

29 August 2025•7 minute read

If you’re an entrepreneur or a small business owner in India, securing the right business loan can be a game-changer for your company’s growth. Whether you’re looking to expand, cover working capital costs, or make strategic investments, finding a business loan with a low-interest rate can save you thousands over time. But with so many options available, how do you choose the right one?

In this guide, we’ll explore the top banks offering business loans in India, with a focus on those that provide low-interest business loans. We’ll also highlight what you need to know about bank loan interest comparisons and help you navigate the options that best fit your business needs.

Table of Contents

Why Low-Interest Business Loans Matter
Top Banks Offering Business Loans in India
- 1. State Bank of India (SBI)
- 2. HDFC Bank
- 3. ICICI Bank
- 4. Axis Bank
- 5. Bank of Baroda
Bank Loan Interest Comparison: How to Choose the Right Bank
How to Get the Lowest Interest Business Loan
Frequently Asked Questions (FAQs)

Why Low-Interest Business Loans Matter

Securing a business loan with low interest is crucial for any business looking to maximize its financial resources. The lower the interest, the less you pay over the life of the loan, leaving you with more capital to invest in growth, technology, or even hiring employees.

A low-interest business loan not only reduces your financial burden but also gives you the flexibility to reinvest your savings back into the business. Whether you’re looking at a long-term loan or a short-term working capital loan, understanding how interest rates affect your repayments is key to choosing the right loan for your business.

Top Banks Offering Business Loans in India

1. State Bank of India (SBI)

SBI is one of the largest and most trusted public sector banks in India. It offers a range of business loan products tailored to meet different business needs.

Interest Rates: SBI’s business loan interest rates typically range between 9.20% to 15.10% depending on the type of loan, amount, and tenure.
Key Features:
- Loan amounts starting from ₹10,000 up to ₹5 crores.
- Repayment tenure can go up to 10 years.
- Quick disbursal and minimal documentation required.

2. HDFC Bank

HDFC Bank is known for its competitive interest rates and flexibility in terms of loan amounts and repayment tenures.

Interest Rates: HDFC Bank offers business loans at rates starting from 11.00%, with additional fees depending on the specific loan structure.
Key Features:
- Loan amounts range from ₹50,000 to ₹50 lakhs.
- Repayment tenure up to 4 years.
- Low processing fees and fast approval.

3. ICICI Bank

ICICI Bank offers customized loans for businesses looking for quick financial support with minimal hassle.

Interest Rates: The interest rates for business loans at ICICI Bank start at 10.75% per annum.
Key Features:
- Loans available from ₹1 lakh to ₹50 lakh.
- Flexible repayment options.
- No prepayment penalty, which allows businesses to pay off loans early.

4. Axis Bank

Axis Bank is another key player in the Indian market, offering business loans with competitive interest rates.

Interest Rates: Axis Bank offers business loans with interest rates starting from 12.50%.
Key Features:
- Loan amounts range from ₹50,000 to ₹50 lakhs.
- Fast loan processing with flexible repayment terms.
- Easy online application and low processing charges.

5. Bank of Baroda

A well-established public sector bank, Bank of Baroda offers business loans at competitive rates.

Interest Rates: Bank of Baroda offers interest rates starting from 10.75% on business loans.
Key Features:
- Loan amounts up to ₹1 crore for business needs.
- Flexible repayment period and minimal documentation.
- Quick processing and disbursal.

Bank Loan Interest Comparison: How to Choose the Right Bank

When comparing business loans, it’s important to not just look at the interest rates, but also at additional factors like processing fees, loan tenure, and repayment flexibility. Here’s how you can make the right choice:

1. Interest Rates

While interest rates play a major role in determining your total repayment amount, they can also vary based on factors like the nature of your business and your credit score. Make sure to compare rates across different banks to find the most competitive one.

2. Loan Tenure and Amount

Consider how much you need and how long you want to repay the loan. Some banks offer longer repayment periods which can ease your monthly financial burden, while others may be more suitable for short-term, urgent financial needs.

3. Processing Fees and Other Charges

Many banks charge processing fees, late fees, and even prepayment penalties. These additional costs can significantly impact the overall cost of the loan. Make sure you understand these fees before committing.

4. Customer Service and Speed

How quickly can the bank process and disburse the loan? If you need funds urgently, choose a bank that offers fast disbursal and responsive customer service.

How to Get the Lowest Interest Business Loan

To secure the lowest interest business loan, follow these steps:

Maintain a Strong Credit Score: A high credit score often results in better interest rates. Ensure your business and personal credit scores are strong before applying.
Choose the Right Loan Type: Research different types of loans and select the one that suits your business needs the best. Some loans come with lower interest rates than others.
Negotiate with Lenders: Don’t be afraid to negotiate the terms, especially if you’re applying for a larger loan or have a proven track record with your bank.
Opt for Collateralized Loans: Offering collateral can help reduce the interest rate, as it minimizes the lender’s risk.
Compare Offers: Use online comparison tools to compare business loans across different banks. This will give you a clear idea of which bank is offering the most competitive rate for your specific needs.

Frequently Asked Questions (FAQs)

1. What is the best bank for a business loan in India with low interest rates?

The best bank depends on your business needs, but State Bank of India (SBI), HDFC Bank, and ICICI Bank are among the top banks offering low-interest business loans.

2. What is the lowest interest rate for a business loan in India?

Interest rates typically start at 9.20% for well-established public sector banks like SBI, and may vary depending on your business type, loan amount, and tenure.

3. Can I get a business loan with a low interest rate if I have bad credit?

While it may be more difficult, many banks offer secured business loans where collateral can help reduce the interest rate, even if you have a less-than-ideal credit history.

4. How do I compare business loan interest rates?

Look at factors such as the interest rate, processing fees, loan tenure, and repayment flexibility to determine the best loan for your business.

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

Loan tenures generally range from 1 year to 5 years depending on the lender and type of loan. Some banks, such as SBI, offer business loans with a repayment period of up to 10 years.

6. Do I need collateral to get a business loan with low interest?

Some banks may offer unsecured loans, but providing collateral can help secure a lower interest rate, especially if your business is new or has no strong credit history.

7. How long does it take to get approval for a business loan?

Approval time can vary, but many banks offer instant or quick approval for loans. On average, it can take anywhere from a few days to a week to receive approval and disbursal.