Low Interest Rates & Charges for Business Loans in 2024

For example, if one plans to borrow Rs 1 lakh at a 15% interest rate over a 1-year tenure, the monthly equated installment (EMI) would amount to Rs 9,026. The total payment, including Rs 8,310 as interest, would be Rs 1,08,310. While manual calculations may be complex, tools like those offered by Lendingkart simplify this process, assisting borrowers in making well-informed financial decisions.

Tips for Securing a Low Interest Rate Business Loan

• Improve Your Credit Score: Aim for a credit score of 700 or above to qualify for lower interest rates.
  
• Stay Consistent with EMI Payments: Avoid defaulting on loan payments to build trust with lenders and qualify for lower rates.
  
• Craft a Solid Business Plan: Impress lenders with a well-defined business plan outlining your company’s goals and strategies.
  
• Strengthen Financial Statements: Showcase your business’s financial stability and growth potential to lenders.
  
• Consider Refinancing Options: Explore the possibility of transferring your loan to lenders offering better rates or terms.
  
• Offer Collateral: Pledge assets to mitigate lending risk and potentially secure lower interest rates.
  
• Build Positive Relationships with Lenders: Maintain a good repayment history and transparent communication with your bank to negotiate better loan terms.
  
  

Factors Influencing Interest Rate on Business Loan

Business loan interest rates play a crucial role in determining the overall cost of borrowing. Securing a low-interest rate can lead to significant savings over the loan term. However, several factors influence the interest rates offered to businesses. Here’s a breakdown of these influential factors:

• Healthy Cash Flow: Lenders favor businesses with strong cash flow, as it indicates financial stability and lower risk, resulting in lower interest rates.
  
• Business Type and Industry: Businesses operating in stable or growing industries are perceived as less risky by lenders, leading to lower interest rates. Conversely, businesses in declining industries or seasonal sectors may face higher rates.
  
• Creditworthiness: A high credit score demonstrates your ability to manage debt responsibly, leading to lower interest rates and better loan terms. Conversely, a lower credit score may result in higher interest rates and less favorable conditions.
  
• Collateral: Offering collateral can lower lending risk for lenders, potentially resulting in lower interest rates. However, not all businesses have significant assets to pledge as collateral.
  
• Existing Loans: Lenders may be hesitant to extend loans to businesses with multiple outstanding debts, as it raises concerns about repayment capacity. This may lead to higher interest rates or loan rejection.

Eligibility Criteria for Business Loan

• Basic Prerequisites: Streamlined to speed up loan processing, avoiding extensive documents and paperwork.
• Operational Duration: Must have been operational for over 6 months.
• Revenue Threshold: Minimum turnover of ₹90,000 in the last 3 months.
• Exclusion Parameters: Cannot be on the blacklisted/excluded list for SBA finance or located in a negatively listed location.
• Entity Limitations: Trusts, NGOs, and charitable institutions are ineligible.
• Validation Process: Contact for eligibility confirmation if unsure about restricted categories or locations.

For more detailed information check business loan eligibility criteria.

Business Loan Interest Rate Calculator

Calculate your business loan repayment details with our easy-to-use business loan EMI calculator. Simply enter the loan amount, tenure, and interest rate, then click “Calculate” to get instant results. You’ll receive information on the principal amount, interest amount, monthly EMI, and the total amount payable. Plan your business finances efficiently with accurate loan repayment projections on small business loan interest rates.