The right bank for business loans depends on a range of factors, including interest rates, repayment terms, and approval processes. So finding the best fit requires careful evaluation.

Not all banks offer the same loan terms, and picking the wrong one could mean higher costs or unnecessary hurdles. Some lenders favor startups, while others work best for established companies with strong credit. Speed, flexibility, and transparency matter just as much as interest rates of the business loans.

Through this blog, we’ll evaluate the leading banks (& NBFCs) for getting business loans. By the end, you will be able to decide which bank is best for business loans. So let’s simplify your search.

How to Evaluate a Bank for Business Loans?

Securing the right business loan can fuel growth, but picking the wrong lender may lead to high costs or rigid terms. The best bank for your loan depends on a range of key factors. Like interest rates, repayment flexibility, approval speed, and customer service—not just brand reputation.

So start by assessing your business needs, like loan type, amount & repayment timeline, and credit score.

Then, compare lenders on:

  • Interest rates & fees (APR, origination charges)
  • Approval odds & processing time
  • Collateral requirements
  • Customer reviews & support

Some banks excel with fast funding, while others offer lower rates for strong credit. First and foremost, let’s look at the banks with the best interest rates.

Banks With Best Interest Rates on Business Loans

The interest rates may vary across lenders, so it’s important to compare the offers and options and choose accordingly.

Loan Lender (Bank or NBFC)Interest Rates
HDFC Bank10.50% to 15% p.a.
Axis Bank11.50% to 19% p.a.
ICICI Bank16% p.a.
Kotak Mahindra Bank11.75% to 13% p.a.
IDFC First Bank11.18% to 15% p.a.
Tata Capital13.50% to 26% p.a.
L&T Finance15% to 19% p.a.
Aditya Birla Finance24% to 30% p.a.
Muthoot Fincorp28% p.a.
Shriram Finance21% to 22% p.a.

The interest rates for business loans are charged at the sole discretion of the bank (or NBFC). But of course, interest rates aren’t the only thing you should consider—there are several highlights you need to consider. Like, repayment terms, loan tenure, loan amounts, and more.

Which Bank is Best for Business Loans?

Finding the right bank for a business loan in India depends on your company’s stage, credit profile, and funding needs. Here’s a comparison of top banks for getting business loans.

HDFC Bank

HDFC Bank offers quick approvals, flexible repayment tenures (up to 4 years), and minimal documentation for pre-qualified businesses. Ideal for SMEs needing urgent funds.

Key Highlights

  • Loan Amount: Up to ₹75 lakhs, can be higher with collaterals
  • Interest Rate: 10.50% to 15% p.a.
  • Processing Time: As fast as 48 hours
  • Special Feature: Pre-approved loans for existing customers

Axis Bank

Axis Bank provides some of the lowest interest rates in the market, along with a hassle-free digital application process. It’s great for cost-conscious borrowers.

Key Highlights

  • Loan Amount: Up to ₹10 Crore (unsecured)
  • Interest Rate: 11.50% to 19% p.a.
  • Repayment Tenure: Up to 15 years
  • Special Feature: No prepayment penalty

ICICI Bank

ICICI’s seamless online application, instant approvals, and flexible EMI options make it a top pick for tech-savvy business owners.

Key Highlights

  • Loan Amount: Up to ₹10 Crores (unsecured)
  • Interest Rate: 16% p.a.
  • Processing Fee: Up to 2% of loan amount
  • Special Feature: EMI moratorium available

Kotak Mahindra Bank

Kotak offers tailored loan products for startups and newer businesses with moderate revenue, along with dedicated relationship managers.

Key Highlights

  • Loan Amount: Up to ₹1 Crore
  • Interest Rate: 11.75% to 13% p.a.
  • Repayment Tenure: Up to 7 years
  • Special Feature: Customized loan solutions

IDFC First Bank

With transparent pricing and minimal fees, IDFC First is ideal for businesses looking for affordable, no-surprise financing.

Key Highlights

  • Loan Amount: Up to ₹15 crore
  • Interest Rate: 11.18% to 15% p.a.
  • Processing Fee: As low as 5% of the loan amount
  • Special Feature: No hidden charges

IndusInd Bank

IndusInd offers easy unsecured loans with quick disbursal and the option to transfer existing loans at better rates.

Key Highlights

  • Loan Amount: Up to ₹50 lakhs (without collateral)
  • Interest Rate: Starting from 13% p.a.
  • Repayment Tenure: Up to 48 months
  • Special Feature: Doorstep delivery available

Need a larger loan? NBFCs like Bajaj Finserv or Tata Capital may offer higher amounts but at slightly higher rates. Nihal Fintech also offers business loans with best terms for your enterprise. So explore the services. 

FAQs on Best Banks for Business Loans

  1. Can startups get business loans easily?

    Yes, Kotak Mahindra Bank offers customized loan solutions for startups, even with limited business history.

  2. Do we need collateral for a business loan?

    Not always. IndusInd Bank provides unsecured loans up to ₹50 lakhs without collateral.

  3. Can I prepay my business loan without penalties?

    Several banks and NBFCs allow prepayment without extra charges. But of course, some lenders may impose fees.

  4. How does my credit score affect loan approval?

    A CIBIL score of 700+ improves approval chances. Banks like ICICI & HDFC favor strong credit profiles.

  5. Can I get a business loan with a low CIBIL score?

    A score below 650 reduces approval chances, but some banks may consider other factors like cash flow.

  6. Do banks offer overdraft facilities instead of term loans?

    Yes! Some of the top banks provide business overdrafts (interest-only on utilized amount), ideal for working capital needs.

Final Thoughts

India has a range of top banks offering the best business loans with outstanding terms. We compare them analyzing factors like eligibility criteria, loan amounts, and more, so you can make an informed decision.

Each bank has unique advantages—choose based on your business needs, credit profile, and urgency.

  • Need fast funding? → HDFC Bank
  • Want the lowest interest? → Axis Bank
  • Prefer digital convenience? → ICICI Bank
  • A startup with limited history? → Kotak Mahindra
  • Looking for low fees? → IDFC First Bank
  • Need collateral-free loans? → IndusInd Bank

So, want the best funding for your business enterprise? Then explore our financing options today!