Business Loans for MSMEs and Entrepreneurs: The Best Banks to Approach

Introduction

India is home to many MSMEs and these are constantly in need of business loans to attain targeted growth. A business loan can help in providing the necessary financial support while starting a new business project, expanding the current business, and also buying new equipment, purchasing office space, etc. 

There are several banks and lenders in India that provide specially designed business loans to cater to the MSME segment and entrepreneurs. These loans offer the flexibility of usage to the business. Here are the top 5 banks offering business loans for MSMEs and entrepreneurs in India.

  1. HDFC Bank Business Growth Loans

HDFC Bank offers business growth loans up to Rs. 40 Lakhs without the requirement of collateral, guarantor, or security. The business loan is designed for self-employed individuals, entrepreneurs, partnership firms and companies that are in the business of manufacturing, services, or trading.

The HDFC bank business loan has certain special benefits such as overdraft facility and flexible loan tenure of up to 48 months.

Eligibility Criteria:

  • Minimum turnover requirement of the business is Rs. 40 lakhs. 
  • Preceding two years must be the profit-building years for the business.
  • Rs. 1.5 lakhs is the minimum annual income requirement for the business as per ITR. 
  • The minimum experience of the promoter or entrepreneur of the business should be 5 years. Out of this, 3 years should be in the current business. 
  • The minimum interest rate is 11.90% and the maximum is 21.35% on business loans offered by HDFC Bank.
  1. SBI Simplified Small Business Loan

SBI business loans offer specially designed MSME loans to help small businesses build their current and fixed assets to attain further growth. The minimum loan amount offered by the MSME business loan of SBI bank is Rs 10 Lakhs and the maximum amount is Rs. 25 lakhs. The unique feature of SBI simplified small business loans is that it requires 40% of the collateral security from the business. The interest of the same is linked to the MCLR (Marginal Cost of Funds based Lending Rate).

Some of the eligibility criteria set by SBI simplified small business loan are:

  • 5 years of business presence in the market 
  • The current account must be maintained at any bank for the previous 2 years
  • The minimum average monthly balance requirement is Rs. 1 Lakh
  1. IDFC First Bank Business Loans

IDFC first bank helps entrepreneurs by offering business loans for equipment purchases, business growth or expansion and any other business requirements. However, the bank requires businesses to pay back the loan in equal instalments in fixed monthly intervals. Hence, the loan is also called Business Instalment Loan (BIL). IDFC first bank business loan is ideal for those who want to source unsecured loans.

  • The Business Instalment Loan is offered to businesses and also professionals as well as non-professionals. 
  • It is an unsecured loan with no requirement of collateral or security. 
  • The loan amount offered depends upon the category of business, repayment capability and business income.  
  • The interest rate is decided by the bank on the day of loan processing.
  • For availing of a BIL loan from IDFC bank, a business must be at least 3 years old.
  1. Citi Bank Business Loans

Citi Business offers a wide variety of business loans for small businesses to efficiently manage working capital needs. Businesses can avail various MSME Loan Products like working capital loans, overdrafts, short and long term loans, import and export finance, etc that can help in meeting various financing requirements of the business and fuel the business growth.

However, the loan amount, rate of interest and loan tenure are not disclosed on the bank’s website. To know these details, businesses will have to wait till the time of loan application processing.

The bank also requires businesses to pay a 2% processing fee on the loan amount granted. There are also loan pre-closure charges (2%) and renewal fees (2%) required to be paid for the business loan offered by Citi bank.

  1. Axis Bank Business Loan

Axis Bank is known for its seamless banking services and various other credit facilities offered to customers. Businesses can avail loans from Axis Bank of up to Rs. 50 lakhs with no requirement of collateral. 

Axis Bank also offers business loans to professionals including doctors, engineers, CAs, etc for purchase of equipment, buying office space and expansion of their practice.

To be eligible for an Axis Bank business loan, some of the criteria to be fulfilled are:

  • The business must be at least 3 years old and operational
  • Minimum annual turnover of Rs. 30 Lakhs 
  • Business loan applicants must be in the age group of 21 to 65 years
  • The interest rate is decided by the bank as per business profile, financial assessments, track record, and loan tenure required 
  • The interest rates for business loans offered by Axis Bank have generally ranged between 10.75% to 21%.  

Apply now for MSME business loans easily with simple steps.

Endnotes

Business loans are important especially for entrepreneurs and MSME promoters who often require funding for furthering business growth. With the above-mentioned options, business owners can easily fund their business growth and expansion by choosing a loan that exactly meets the business requirements.

Today, it’s easier than ever before for small businesses, startups to apply for and get business loans to expand and grow their business. Since business loans are sanctioned based on your business credit score, it’s always a good idea to regularly track and monitor your business credit score before applying for a business loan. Apply for the right loan and take your business to the next level. 

Karan Vasita

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