Business loans
Business Loan Interest Rates in India: Lender-wise Comparison (October 2026)
Quick answer
Business loan rates in India in October 2026 fall into three tiers. Public sector banks price MSME loans off repo-linked benchmarks of 8.15% to 8.35%, plus a spread. Private banks' unsecured business loans start around 13% (ICICI Bank charged 13% to 17.5% in July–September 2026). NBFCs and fintechs charge roughly 14% to 24%, with processing fees of up to about 4.7%.
On this page
- Business loan rates at a glance
- Public sector bank business loan rates
- Private banks, NBFCs and fintechs
- Advertised rates vs what borrowers actually pay
- Compare the true cost, not the headline rate
- What decides your business loan rate
- Cheaper routes: schemes and secured loans
- How to get a lower business loan rate
- Frequently asked questions
Business loan rates at a glance
- Public sector banks: benchmark only, your spread is added on top8.15–8.35%
- Private banks (unsecured)13–17.5%
- NBFCs and fintechs14–23.5%
The private bank row uses ICICI Bank's contracted range for July–September 2026; the NBFC row uses Bajaj Finance's published range. Sources are in the tables below.
Public sector bank business loan rates
Public banks rarely publish a single business loan rate. They price MSME loans as their repo-linked benchmark plus a spread that depends on your credit profile, security and loan size. After RBI raised the repo rate to 5.50% on 7 October 2026, the benchmarks are:
| Bank | Now | Before |
|---|---|---|
| Bank of Baroda Repo-based lending rate, from 8 Oct | 8.15% | 7.90% |
| State Bank of India EBLR, from 15 Oct | 8.15% | 7.90% |
| Indian Bank RBLR, October 2026 | 8.20% | 7.95% |
| UCO Bank Repo-linked rate, from 8 Oct | 8.30% | 8.05% |
| Punjab National Bank RLLR, from 8 Oct | 8.35% | 8.10% |
| Bank of India RBLR, from 7 Oct | 8.35% | 8.10% |
| Indian Overseas Bank RBLR, from 8 Oct | 8.35% | 8.10% |
As of 23 October 2026, from bank announcements reported by Business Standard, India TV and ETV Bharat. Every bank listed raised its benchmark by 0.25 percentage points.
Public banks are usually cheapest, especially for secured loans and government-scheme loans, but they're slower and lend mostly within each branch's area. For Mudra loans specifically, see Mudra loan interest rates by bank.
Private banks, NBFCs and fintechs
These lenders mostly offer unsecured, fixed-rate business loans with faster, digital processing. Figures below are from each lender's own website.
| Lender | Interest rate | Processing fee | Foreclosure |
|---|---|---|---|
| ICICI Bank Business Instalment Loan, fixed | 13.00%–17.50% Charged Jul–Sep 2026 | Up to 2% + tax | See the bank's charges page |
| IDFC FIRST Bank Business loan | From 12.99% | Up to 3.5% | See schedule of charges |
| Kotak Mahindra Bank Business loan, fixed | Not published | Up to 2% + tax; nil for MSEs up to ₹5 lakh* | 4% + tax |
| Bajaj Finance NBFC, term loan | 14.00%–23.50% | Up to 4.72% incl. tax | Up to 4.72% incl. tax |
| Lendingkart Fintech NBFC, up to ₹50 lakh | From 17.25% | None before disbursal | Case by case |
*Kotak waives the processing fee for micro and small enterprises with total facilities up to ₹5 lakh that submit the required document before disbursal. IDFC FIRST's page labels its rates August 2025. Checked 23 October 2026.
Advertised rates vs what borrowers actually pay
"Starting from" is the best rate a lender offers its strongest borrowers. Many banks and NBFCs also publish the range of rates they actually charged in the previous quarter, which is far more useful:
- ICICI Bank business instalment loans: 13.00% to 17.50% for loans taken in July–September 2026.
- IDFC FIRST Bank business loans, in a recent quarter's disclosure: 10.5% to 33.48%, with a weighted average of 16.57%, against an advertised start of 12.99%.
Look for "interest rate range of contracted loans" or "rates charged in the past quarter" in the lender's regulatory disclosures. The average tells you where a typical borrower lands.
Compare the true cost, not the headline rate
Processing fees are deducted upfront, so they raise your real annual cost (APR). On a ₹10 lakh, 3-year loan:
14% + 2% fee (+GST)
≈ 15.7% a year
The true annual cost once the fee is counted.
15% with no fee
15.0% a year
Cheaper overall, despite the higher rate.
14% + 4.72% fee
≈ 17.4% a year
The true annual cost once the fee is counted.
The lender has to give you a Key Fact Statement with the APR before you sign. Compare those, and work out your EMI on our business loan EMI calculator. If a lender quotes a flat rate, convert it first with the flat vs reducing interest calculator.
Prepayment matters too. For floating-rate business loans to individuals and micro and small enterprises sanctioned from 1 January 2026, most banks can't charge foreclosure fees. Most unsecured business loans are fixed-rate, though, and charges of around 4% (Kotak) or up to 4.72% (Bajaj Finance) can apply.
What decides your business loan rate
- Secured or unsecured: loans backed by property or a CGTMSE guarantee are priced well below unsecured loans.
- Credit record: your CIBIL score and the business's CIBIL Rank, plus any past defaults.
- Business vintage and turnover: 3+ years of filed ITRs and steady GST returns get better pricing than a new business.
- Banking behaviour: average balance, cheque bounces and how much business runs through your account.
- Loan size and tenure: lenders price risk per rupee lent and per year.
- Lender type and the repo rate: banks' costs track RBI's policy rate; NBFCs' costs are higher.
Cheaper routes: schemes and secured loans
- Mudra loans: up to ₹20 lakh, collateral-free, mostly from public banks at benchmark-linked rates.
- CGTMSE-backed loans: up to ₹10 crore without collateral, for a guarantee fee of 0.37% to 1.20% a year.
- PMEGP: for new units, a 15% to 35% subsidy that cuts the amount you pay interest on.
- Loan against property: if you have property, usually far cheaper than an unsecured loan.
How to get a lower business loan rate
- Fix your credit report first. Clear small overdues and get errors corrected. See what lenders look at in your credit profile.
- Start with your own bank. It sees your cash flow, which supports a lower spread.
- Offer security, or ask for CGTMSE. Either can cut several percentage points off an unsecured rate.
- File ITR and GST on time. Lenders price on documented income; gaps push you to costlier lenders.
- Get two or three quotes and compare the APR. Include fees and foreclosure charges, not just the rate.
- Negotiate the processing fee. It's often more flexible than the rate.
Find the lenders that fit your business
Tell us about your business and a Kredway loan advisor calls you back to talk through which lender tier you're likely to fit and the rate to expect. We advise; we don't lend.
Frequently asked questions
What is the current business loan interest rate in India?
In October 2026, public sector banks price MSME loans off benchmarks of 8.15% to 8.35% plus a spread. Private banks' unsecured loans start around 13%, and NBFCs and fintechs charge roughly 14% to 24%.
Which bank gives the lowest business loan interest rate?
Among public banks, Bank of Baroda and SBI have the lowest benchmark (8.15%). Your actual rate depends on your spread, so compare real quotes and the APR on each Key Fact Statement.
Are business loan rates fixed or floating?
Public bank MSME loans are usually floating and linked to a repo benchmark. Most unsecured loans from private banks and NBFCs are fixed.
Why is an NBFC rate higher than a bank's?
NBFCs pay more for their funds and often lend to borrowers banks turn down, such as newer businesses or those with thin documentation. In return they're usually faster and more flexible.
Will the October 2026 repo hike raise my business loan rate?
If your loan is floating-rate and linked to repo, yes: by about 0.25 points from your next reset date. Fixed-rate loans don't change.
Can I get a business loan without collateral at a low rate?
Yes. Mudra loans (up to ₹20 lakh) and CGTMSE-backed loans (up to ₹10 crore) are collateral-free and usually cheaper than unsecured NBFC loans.
Business loan ka interest rate kitna hai?
October 2026 mein sarkari bank MSME loan ko 8.15% se 8.35% benchmark plus spread par dete hain. Private banks ka unsecured loan lagbhag 13% se shuru hota hai, aur NBFC/fintech lagbhag 14% se 24% tak lete hain. Processing fee bhi zaroor compare karein.
Sources
- ICICI Bank: Business Instalment Loan interest rates
- IDFC FIRST Bank: Business loan interest rates and contracted rate range disclosure
- Kotak Mahindra Bank: Business loan fees and charges
- Bajaj Finance: Business loan interest rate and charges
- Lendingkart: Business loan interest rates
- Business Standard: Major banks hike loan rates after RBI move
- ETV Bharat: SBI raises EBLR from 15 October
- SCC Online: RBI hikes repo rate to 5.50%
- SCC Online: RBI Pre-payment Charges Directions, 2025