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Business loan interest rate in India: published ranges and what sets yours

A business loan interest rate in India is set by each lender for each borrower. On 02-Oct-2026, banks published business loan ranges starting from about 8% for small regulated micro loans, and NBFCs published rates from about 12% upwards. Your rate depends on your record, security, loan size and tenor.

Loan products, rates, and eligibility are determined by the lenders on our panel. Capnix is not a lender and does not lend its own capital. We run your loan journey end to end.

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Business loan interest rate ranges published by lenders

There is no single business loan interest rate in India. Each lender publishes a range or a formula, then prices each loan inside it. The table shows what lenders published on their own rate pages when we checked them on 02-Oct-2026. Every row is indicative and set by the lender. None of them is an offer, and none is a Capnix rate.

Lender (type) Product the rate applies to Published rate, a year Source
Bank of Baroda (public sector bank) Regulatory MSME loans up to ₹25,00,000 to micro enterprises 8.15% for loans up to ₹50,000; 10.50% for ₹10,00,000 to ₹25,00,000 (worked from the bank's formula) Bank of Baroda
Bank of Baroda (public sector bank) MSME loans above ₹25,00,000 to ₹7,50,00,000, priced by CIBIL MSME Rank (CMR) CMR 1: 8.20% to 9.65%; CMR 6: 10.35% to 15.60% (worked from the formula) Bank of Baroda
HDFC Bank (private bank) Business loan 10.75% to 22.50% (rack rate, page headed September 2026) HDFC Bank
Bandhan Bank (private bank) Business loan Secured 11.69% to 15.18%; unsecured 13.00% to 25.91% Bandhan Bank
IDFC FIRST Bank (private bank) Unsecured business loan From 12.99% (the page captions this table "August 2025") IDFC FIRST Bank
ICICI Bank (private bank) Business loan, non-priority-sector Up to repo rate + 6.0% secured; up to repo rate + 6.50% with CGTMSE cover ICICI Bank
Bajaj Finance (NBFC) Unsecured business loan 14% to 23% Bajaj Finance
FlexiLoans (NBFC) Unsecured business loan From 12% FlexiLoans
Lendingkart (NBFC) Unsecured business loan up to ₹50,00,000 From 17.25% Lendingkart
IIFL Finance (NBFC) Business loan Up to 28% IIFL

An NBFC is a non-banking financial company: a company registered with RBI whose main business is lending, but which cannot take demand deposits. Several large lenders were left out because their own pages did not publish a readable rate on the day we checked.

Government scheme loans have their own rate rules. The Mudra scheme, for example, leaves the rate to the lender within RBI guidelines (Mudra FAQ). Scheme rates sit on the schemes pages, not here.

What decides your business loan interest rate

Lenders usually build a rate from a benchmark plus a spread for risk.

  • The benchmark. Many bank loans to small businesses are linked to the RBI repo rate. Bank of Baroda's repo-linked rate was 7.90% from 06-Dec-2025, built from a 5.25% repo rate plus a 2.65% mark-up (Bank of Baroda). When the repo rate moves, a floating rate linked to it moves too.
  • Your record. Bank of Baroda prices loans above ₹25,00,000 by the business's CIBIL MSME Rank, a 1 to 10 risk grade from TransUnion CIBIL. A CMR 1 business pays a smaller spread than a CMR 6 business (Bank of Baroda). Bajaj Finance says the promoter's CIBIL score affects where a borrower lands in its range (Bajaj Finance).
  • Security. Secured loans sit lower. Bandhan Bank's secured range tops out at 15.18%, while its unsecured range runs to 25.91% (Bandhan Bank).
  • Loan size and product. Small regulated micro loans at Bank of Baroda carry the smallest spreads (Bank of Baroda).
  • Lender type. NBFCs that lend without security publish higher starting points than banks' secured products (Bajaj Finance, Lendingkart, FlexiLoans).

The worked examples below show why a few percentage points matter. On ₹10,00,000 over 36 months, the EMI is ₹32,620 at 10.75%, ₹34,178 at 14% and ₹36,152 at 18%. Total interest rises from ₹1,74,336 to ₹3,01,486 (HDFC Bank).

The rate is not the whole cost

A loan also carries a processing fee, documentation charges, stamp duty and other fees. RBI requires lenders to give a Key Facts Statement (KFS) for new retail and MSME term loans sanctioned on or after 01-Oct-2024 (RBI notification, 15-Apr-2024). The KFS shows the APR, the annual percentage rate. APR is the yearly cost of the loan including interest and all other charges (RBI notification). It includes every charge the lender levies (RBI notification).

Two rules help you hold a lender to that number:

  • A fee that is not in the KFS cannot be charged without your explicit consent (RBI notification).
  • A penalty for breaking a loan term must be a "penal charge", not extra interest, and it must be disclosed in the agreement, the KFS and on the lender's website (RBI notification, 18-Aug-2023, RBI notification).

For floating-rate business loans to individuals and micro and small enterprises, sanctioned or renewed on or after 01-Jan-2026, commercial banks and large NBFCs cannot charge for paying early (RBI notification, 02-Jul-2025, RBI notification). See business loan charges and fees for the full list.

How to compare two offers

  1. Ask each lender for the KFS before you sign.
  2. Compare the APR, not the headline rate. Our APR, flat and reducing rate guide shows how a 2% fee lifts the true cost.
  3. Check whether the rate is fixed or floating, and what the pre-payment terms are.
  4. Run the EMI in the business loan EMI calculator.
  5. Before you apply, see how lenders are likely to read your file with the free loan readiness check. It gives you a Capnix score from 0 to 100.

Guides in this section

In this section

APR, flat vs reducing rate In the flat vs reducing rate comparison, a flat rate charges interest on the full loan for the whole term, while a reducing rate charges only on what you still owe, so a flat rate costs much more at the same number. APR goes further and adds every fee, giving the yearly cost RBI makes lenders show. Business loan charges and fees The processing fee in loan offers is a one-time charge for assessing and setting up the loan, usually a percentage of the amount. Indian lenders published business loan processing fees of up to 2% to 5% on 02-Oct-2026. Other charges include documentation, stamp duty, pre-payment, penal and bounce fees, all of which belong in the Key Facts Statement. Business loan EMI by loan amount Business loan EMI tables for nine loan amounts, from ₹1,00,000 to ₹1,00,00,000. At an illustrative 14% a year on a reducing balance, the EMI on ₹10,00,000 is about ₹34,178 over 36 months and ₹23,268 over 60 months. Each amount page adds the fee, the rules and schemes that apply at that size, and the documents. Business loan low interest rate A business loan low interest rate is earned, not chosen. Lenders give smaller spreads to businesses with a strong repayment record, a good CIBIL MSME Rank, security, and clean documents. The starting rates lenders publish apply only to their strongest borrowers, so compare the APR on a real offer. MSME loan interest rate The MSME loan interest rate is set by each lender. On 02-Oct-2026, Bank of Baroda's published formula gave 8.15% to 10.85% a year on regulated MSME loans up to ₹25,00,000, private banks published business loan ranges from about 10.75%, and NBFC unsecured loans started from about 12%.

Frequently asked questions

It depends on the lender and on you. On 02-Oct-2026, HDFC Bank published a rack rate of 10.75% to 22.50% and Bajaj Finance published 14% to 23% (HDFC Bank, Bajaj Finance). Bank of Baroda's formula gives about 8.15% to 10.50% on small regulated micro loans (Bank of Baroda). These are ranges, not offers.

Because each loan is priced for its risk. Bank of Baroda, for example, adds a larger spread for a weaker CIBIL MSME Rank and less security (Bank of Baroda).

Both exist. A floating rate is linked to a benchmark such as the repo rate and moves with it. A fixed rate stays the same for the term. The KFS states which one you are getting.

Most term loans charge interest on the reducing balance, so you pay interest only on what you still owe. IDFC FIRST Bank, for example, says its rates are on a monthly reducing balance (IDFC FIRST Bank). Some quotes use a flat rate, which costs more. See flat vs reducing rate.

If your loan is floating and linked to the repo rate, yes. Bank of Baroda's MSME benchmark is the repo rate plus a mark-up (Bank of Baroda). A fixed-rate loan does not change.

Not without your consent if the charge was missing from the KFS (RBI notification). Penal charges must be disclosed in advance too (RBI notification).

The published starting points are higher for unsecured NBFC loans, from 12% at FlexiLoans and 17.25% at Lendingkart (Lendingkart, FlexiLoans). A bank's secured product usually starts lower. Compare the APR on each offer.

No. Capnix is not a lender. The lender on our lender panel that takes up your loan requirement sets the rate, the amount and the terms.

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