The interest rate for a business loan varies depending on factors such as the lender’s policies, the borrower’s credit profile, the type of loan, and market conditions. Since most business loans are unsecured, their interest rates are generally higher than those of secured loans. Borrowers are advised to review and negotiate the rate with the lender before finalizing the loan agreement.
The applicable interest rate and the method of interest calculation (such as fixed or reducing balance rate) are clearly communicated to the borrower at the time of loan sanction. These details are reflected in the sanction letter and the Key Fact Statement (KFS), which specify the annualized interest rate, processing fees, and other charges in a transparent manner.