business loan

A complete guide to all dimensions of Business financing

In order to run business operations smoothly, capital is a must and core component that any entity would require. The requirement is non-ending, ever-lasting, and constant. Similarly, getting such heavy capital each time is parallelly difficult. But, worry not! To get your back, business loans are here with the tempting ratio of business loan interest rate.

In India, almost every bank, NBFC, brokers and financing companies offer negotiable business loans to support small ventures, and start-ups inaugurate their business. There are merely any constraints, contracts or other business requirements – your business simply needs to match the eligibility standard – you are good to go!

So, in this article, we will feed you a crystal clear picture of the business loan. Besides, you will know why your business needs this scheme and how you can get the lower interest rate ratio available in the Indian financing market.

What is a business loan?

A business loan is a useful tool provided by banks and financing institutions to entrepreneurs. It assures financial assistance. The core intention of this scheme is to support the capital and operational requirements of new and existing businesses and help them flourish more. However, most NBFCs and financing companies offer Flexi loans and term loans to enterprises to cater to their business needs.

Business financing or business loans are also called commercial loans. No matter what business type you own, commercial, proprietorship, partnership, sole owner, sell-employed, privately held company or retail, everyone is eligible and can avail of this loan.

What makes business loans lucrative to start-ups?

There’s no such alternative compared to business loans that can go a prolonged way in fulfilling the fundamental requirements of a company. From vendor financing and dealer contracts to venture expansion – all you can do by getting business loans. Surprisingly, all these offers are attainable without any security or collateral, making this scheme a handy way to apply for extensive capital for businesses.

Needless to say that a company can be liquidated to settle off the dues even if the finance gets default. It is certainly an attractive feature of this loan. However, compared to any pitch to investors and venture capitalists, business owners find this loan term extensively helpful and approaching way. Also, depending on your unusual requirements, the bank will structure your loan period.

How can you get a lower business loan interest rate:

No matter what business size and type you have, every company can get affected by the interest rate of a business loan. It is a substantial component of a loan scheme. It can vastly influence your business revenues and financial planning, too. So, here are a few tips on how you can avail of more subordinate interest rates while applying for a business loan. Read the following:

  • Maintain a splendid CREDIT score (must be minimum 750-900).
  • Elevate the financial health of your organisation.
  • Port an acceptable source of revenue.
  • Do not close any credit card or a business account in any bank.
  • Pay your bills (credit card debt and EMI bills) timely to improve your credibility.
  • Open a standard bank account and maintain a sturdy relationship with the bank manager.

Types of business loans:

Before you apply for a business loan, let us inform you of two primary types of commercial loans – Flexi loan and Fixed/Term loan.

  1. Term loans – If you plan to obtain a long-term asset, for instance, land, machine, commercial building, etc., you can go for a term loan. This type of loan comes with a fixed loan repayment option, and the interest rate is either floating or fixed. Under term loans, the maximum tenure of 3 years to 15 years is variable, depending on the applicant’s profile. With the help of a term loan, an entrepreneur can effortlessly invest in equipment, building construction, renovation, land, vehicles or building purchase, capital infusion, etc.
  2. Flexi loans – It is a new-age convenient business financing It comes with a credit limit, which the borrower can use while they need the fund. With the credit of Flexi loans, an entrepreneur can wrap up all genres of business obligations during financial crunches. Besides, you can think of business expansion, machine purchase, and more.

Business loan opportunity for female entrepreneurs:

In the male-dominating society, female venture owners are also taking a step ahead. In that journey, a number of banks and capital companies offer special schemes for women to raise their efforts in the industrial ground. For instance, Annapurna scheme, Udyogini Scheme, Dena Shakti Scheme, Mahila Udyam Nidhi Scheme, Stree Shakthi Scheme, and Cent Kalyani Scheme. All these schemes aim to support the woman-business-hood that comes with lucrative interest rates and flexible loan pay off options, too.


Apart from the application, which is easy as pie, the business loan interest rate is a vital portion of a commercial loan. So, before you apply, do thorough research and learn more about commercial business interest ratios to save yourself from additional financial burdens.