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Interest Rate and Processing Fees

Business Loan Rate of Interest

Interest Rate is a percentage of the Principal Business Loan amount payable to the lender as charges for borrowing. This Rate of Interest typically applies on the principal amount on an annual basis, which may be known as the Annual Percentage Rate or APR.

Bank Name Interest Rate Processing Fee
HDFC Bank Ltd 15% 1.00%
IDFC First Bank 15% 1.50%
ICICI Bank 15% 1.50%
Axis Bank Ltd 15% 1.50%
Bajaj Finance Ltd 17% 2.00%
Fedfina 17% 2.00%
Fullerton 17% 2.00%
Poonawala 18% 2.00%
Tata 18% 2.00%
SMC Finance 19% 2.00%
Indifi 20% 3.00%
Lendingkart 19% 2.50%
Dhanvarsha Finvest Limited 21% 2.00%
Loantap 21% 2.00%
Neogrowth 24% 3.00%
Aditya Birla Finance Ltd 18% 2.00%
Hero Fincorp 18% 3.00%
Loan Frame 18% 2.00%
Growthsource 24% 2.00%
IndusInd Bank 18% 2.00%
Kotak Mahindra Bank Ltd 15% 2.00%
Standard Chartered Bank 16% 2.00%
UGRO 18% 2.00%
Yes Bank 16% 2.00%
Edelweiss 18% 2.00%
Axis Finance 18% 2.00%

Types

Business Loan Interest Rate Types

Banks and NBFCs offer two types of interest rates, namely fixed and floating. The EMI amount changes according to the type of interest rate a borrower chooses.

  • Fixed-Rate of Interest

    When you opt for a Fixed Rate of Interest, the interest rate on your Business Loan remains constant throughout your loan period, and this allows you the freedom to plan your finances.

  • Floating Rate of Interest

    Floating Rate of Interest changes according to the RBI lending benchmark, namely Repo Rate. This means, that although your EMI remain constant, your loan tenure may extend due to rate adjustments.

ROI Calculation

How to Calculate Interest on Business Loans

You may calculate Annual Interest on your Business Loans by using the following formula for calculating Simple Interest


SI = P x R x T / 100


Where:


  • P = Principal Amount, or Loan Amount
  • R = Rate of Interest or ROI
  • T = Time Period of the Loan
  • SI = Simple Interest

To calculate Monthly Interest on your Business Loan when the loan period indicates months, use the following formula


SI = P x R x T / 100


To calculate the Amount Payable with Interest Rate at the end of tenure the end of the maturity period, use the formula mentioned below


Total Amount Value = P x [1 + (R x T)]


Factors

What are the Factors Affecting Business Loan Interest Rates

  • Nature of Business

    Your lender will requires you to state the nature of your business to comprehend the profitability of your enterprise and decide the interest rate chargeable to you.

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  • Business Vintage

    Well-Established businesses operating for a long time are like to receive better terms and conditions in by way of lower rates of interest.

  • Turnover

    High turnover reflects the state and health of your business, which in turn secures you a better and affordable Business Loan with better rates of interest.

  • Credit Score

    Your Credit Score reflects your financial health, and the future of your finances. Therefore, a high credit score naturally deserves better rates of interest.

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