Business Loan Interest Rates – Factors and Features to Getting an Optimal Rate

How Business Loan Interest Rates Work

Ever wonder why business loan interest rates vary from lender to lender? There are several factors based on which every financial lender such as a bank or an NBFC determines the interest rate for any loan. The same holds true for a business loan as well. The more you satisfy these factors the lower your interest rate and accordingly, a higher interest rate is the result of such criteria not being satisfactorily met.

Here are the factors which are considered by banks and NBFCs for determining the interest rate for your business loan application.

Credit Score


The most talked about of all factors which determine your eligibility for a business loan and hence your interest rate, is credit score of your organisation. Some financial institutions also account for the credit score of the business owners to gauge their temperament for repaying loans. While having a healthy credit score helps in making the loan process smoother, you can get a business loan with an average credit score if you get the other variables right. The norm is to have a credit score more than 700 to be considered eligible and more than 750 to be favourable.

Age of Your Business


If your business is relatively young/new, lenders will consider your business loan as a high-risk entity, and charge you a higher rate of interest. Then again, having a long-running business does not guarantee a lower interest rates, as is covered in the following point.

Profitability of Your Business


Everyone likes a profitable business. That is especially true when it comes to lenders. If you are running an efficient organisation with large profit margins, lending institutions will most likely discount your business loan interest rates for it.

Volatility of Your Industry


Another important factor considered by lenders while calculating the interest rate for a business loan is the prevailing market conditions in a certain industry. If the market is excessively volatile, the interest rates go up, and if there is a projection of short or long-term stability, the interest rates are likewise relaxed.

Assets and Infrastructure


While unsecured business loans do not require a collateral, having a sound infrastructure and assets help if you are applying for loans in the range of six-digit figures.

Small Business Loan Interest Rates – Fixed vs. Variable


Based on the above factors, a lender will offer you an interest rate on the loan amount. The rate can be fixed or may fluctuate based on a market model that dictates variable interest rates. Although most people prefer a fixed interest over a variable interest rate, both have their advantages. If the market prospects are looking good, a borrower can save on interest payments by opting for a variable interest rate.

Lendingkart Business Loan Interest Rates


At Lendingkart, we understand the needs of our customers and therefore have devised a smart system based on analytics and machine learning. The system allows us to offer customized interest rates to our customer, thus ensuring that every loan application is sanctioned with the lowest possible interest rate. Thus, relieving MSME loan applicants from the dilemma of choosing between fixed and variable interest rates and giving them the best of both worlds.

If you are looking for an online business loan, visit our website to get a quick quote and apply for a business loan in a few simple steps.

Lendingkart offers Attractive Interest Rates for SME Loans

Small and medium enterprises in India are growing at an exponential rate. The Indian Government has launched several schemes for their benefit. Furthermore, the introduction of GST and online portals has increased the ease of doing business in India. You can now quickly gain approvals for new projects or much needed expansions. However, to get things started you will need ready capital for investment, and at Lendingkart Finance, we do just that for you. Lendingkart offers attractive interest rates in the range of 18-27% for short term SME loans.

With Lendingkart’s unsecured business loans, you can get small-ticket short term investment on-the-go. We have made the process completely online so that you can monitor the progress of your application in real-time. Lendingkart loans are approved for businesses having profitability in 2 previous financial years with a minimum annual turnover of Rs. 6,00,000. Other factors such as applicant’s age, income tax returns, and business stability are also used in determining the loan eligibility.

Easily Calculate Your EMIs

We offer a business loan EMI calculator which you can use to get an idea of EMI amounts you will be paying. The EMI is calculated based on the Lendingkart interest rate offered to you, the loan amount and tenure. For example, the EMI payable for a one lakh rupee loan, taken for 12-months at 18% interest per annum, will be Rs. 9,168. In similar scenario, if the interest rate is 27% p.a., then the EMI will be Rs. 9,602.

Attractive interest rates for SME loans. Find yours through the EMI Calculator

 

Needless to say, the higher the amount of your loan, the higher the amount of your EMI. The EMI calculator also helps you in budgeting and adjusting your finances to meet your EMI payment schedules.

The benefits of taking a business loan from Lendingkart

There are several benefits offered by Lendingkart in comparison to banks providing similar loans.

Lendingkart Interest Rates:

Applying for an SME Loan

Terms

Attractive Interest Rate 18% to 27%*
One time Processing Charge 2% of the Loan amount
Loan Duration Minimum: 1 month, Maximum: 1 year
Loan Amount (min to max.) Rs. 50,000 to 1 Crore
Part Prepayment Charges NA
Pre-closure Charges Nil**

*based on your business’s health and credit score

**Pre-closures are only allowed after the first EMI has been paid in full

We have a proprietary method of calculating interest rates which evaluates your loan application using advanced analytics. By enabling technical inputs and outputs we have made the process of calculating interest rates faster and more accurate. The attractive interest rates are calculated by factoring in several things listed below and are different for every partner SME.

  1. Loan Amount: The amount that you apply for, pending approval, counts towards deciding the interest rate. Generally, the higher the amount of loan, higher the possibility of a lesser interest rate from Lendingkart.
  2. CIBIL Ranking: If your CIBIL score and history are good, the interest rate we charge will be lower and vice versa.
  3. Balance Sheet: If you are earning good margins, we will take that in consideration while deciding interest rates on your loan.
  4. Age of Business: For long running enterprises, we offer special discounted SME loan rates.

Business Friendly Loan Approval and Pre-closure Charges

We do not believe in charging extraneous charges and fees from our customers. That’s why we have one of the friendliest pre-closure policies – there are no pre-closure charges. After paying the first EMI, you can prepay the full loan amount, anytime. Added with the benefit of attractive interest rates, it is a great way to finance any short term business requirement.

Also, we only charge 2% of the loan amount plus service tax as processing fee. It’s a one-time fee which you don’t have to pay if you choose to reapply for the same loan amount upon closing.

Minimum documentation and turnaround time

When applying for a business loan with Lendingkart, you have to submit only a handful of documents. And we process every loan application within 3 days of document verification.

Documents required by us are:

  1. Address proof (Aadhar Card, Voter ID, Bank Statement, Proof of registration, etc.)
  2. Identity Proof (Passport, Aadhar Card, Driving Licence, PAN, etc.)
  3. Proof of Business (PAN, GST Registration, Trade License, Registration Certificate issued by RBI or SEBI).
  4. Copy of PAN card and Income Tax Returns for last 24 months.
  5. Bank Statement of last 12 months.

To know more about applying for a business loan with Lendingkart, head over to our website and sign-up for a free account.