Credit is the lifeline of businesses. Clearly, access to funding is the key to building a business, whether you are a budding entrepreneur or a firm looking to expand. Often, securing the right business loan can give you a head start.
Business loans range from government-backed schemes to private lenders offering competitive interest rates. In such a competitive market, finding the best business loan in India in 2025 requires careful consideration. To help you navigate the selection process seamlessly, we have listed the best business loans in 2025. Read on to learn more about them.
Understanding business loans
A business loan is a financing option provided by banks, financial institutions, or NBFCs (non-banking financial companies) to help businesses meet their capital needs. The purpose of the loan could vary, from expansion to working capital needs, purchase of equipment, or other operational needs. Borrowers receive a fixed amount, which is repaid with interest over a pre-determined period. Choosing the right loan depends on business requirements, financial health, and growth plans.
There are different types of loans businesses can avail of, such as:
- Term loan: Fixed loan amount with a set repayment period.
- Working capital loan: It covers short-term operational expenses.
- Equipment/machinery loan: Financing for purchasing business assets.
- Invoice financing: Loan against unpaid invoices for cash flow.
- Business line of credit: Flexible credit limit for ongoing expenses.
- MSME loan: Special loans for Micro, Small, and Medium Enterprises.
- Government business loans: Schemes like Pradhan Mantri Mudra Yojana (MUDRA), Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), and Stand-Up India.
- Overdraft facility: Withdraw funds beyond the account balance with interest.
List of the best business loans in India in 2025
Indian businesses can access various loan options tailored to meet diverse financial needs. Let’s discuss some of the best business loans in 2025.
Pradhan Mantri Mudra Yojana (PMMY)
PMMY is a business loan launched by the government of India. The scheme benefits women entrepreneurs and businesses in the service and trading sectors. PMMY provides loans up to ₹10 lakh to non-corporate, non-farm, small, or micro-enterprises. The benefits of this business loan include its collateral-free credit and flexible repayment tenures. The scheme categorizes loans into three segments:
- Shishu: Loans up to ₹50,000
- Kishor: Loans between ₹50,001 and ₹5 lakh
- Tarun: Loans between ₹5,00,001 and ₹10 lakh
State Bank of India (SBI) business loans
SBI, the leading Indian public sector bank, offers various SME (Small and Medium Enterprises) loan schemes with interest rates starting from 8.25% per annum. These loans cater to varying business needs, including working capital and term loans. The bank provides flexible tenure options, but requires collateral based on the loan amount and the applicant’s profile.
HDFC Bank business loans
HDFC Bank, one of the leading private banks in India, offers business loans ranging from ₹50,000 to ₹50 lakh. The loan interest rates range from 11.50% p.a. to 20% p.a., and payback tenures run from 1 to 7 years. The bank also provides a business loan balance transfer facility and flexible repayment options, making it a popular lender in the business loan segment.
ICICI Bank business loan
Private sector lender ICICI Bank provides a range of business loans, including working capital finance and term loans. Interest rates start from 9%, with payback tenures of 1 to 10 years, based on the loan type and business needs. The bank offers several financing options designed to fuel business growth and tailored to the specific needs of businesses.
Kotak Mahindra Bank business loan
Kotak Mahindra Bank offers loans to small and medium enterprises (SMEs) and large businesses to meet their financial needs. The key features of Kotak Mahindra Bank business loans are loan amounts ranging from ₹3 lakh up to ₹1 crore, with interest rates ranging from 12.99% p.a to 14.50% p.a. The bank also offers a flexible repayment tenure of 12 to 60 months.
Axis Bank business loan
Axis Bank offers business loans up to ₹10 crore, with interest rates starting at 11.25% p.a. and repayment terms of up to 15 years. Businesses can access collateral-free EMI-based loans for growth.
Factors to consider before taking a business loan in India
Before applying for a business loan, it is essential to consider several factors to ensure you choose the right financing option. Here are some key aspects to consider:
Loan purpose
You should clearly understand why you need the loan: to expand operations, purchase equipment, manage working capital, or launch a new product. A specific purpose will help determine the right loan type and repayment structure.
Collateral
Some business loans, especially secured loans, require collateral such as property, inventory, or machinery. Consider whether you have assets to pledge and the risks involved in case of non-repayment. If you prefer not to pledge collateral, consider unsecured business loans, though they might come with higher interest rates.
Interest rates and costs
Regarding loans of any type, interest rates make a lot of difference. So, always compare interest rates from different lenders before choosing a loan. Besides interest rates, you should also consider additional costs such as processing fees, prepayment charges, late payment penalties, and other hidden costs that may impact overall loan affordability.
Repayment schedule
Analyze the loan repayment structure, including tenure, EMI amount, and repayment flexibility. Choose a business loan that aligns with your business’s cash flow to ensure prompt repayment. Check with your lender for repayment options, such as step-up EMIs or seasonal payment schedules, and choose the one most beneficial for your business.
Company cash flow
The financial health of your business plays a vital role in loan approval. Ensure that your cash flow is stable enough to manage EMIs and operational expenses without difficulties. Lenders assess revenue patterns, profit margins, and financial statements to determine loan eligibility.
Reputation of the lender
There are many lenders to choose from. Make sure you pick a reputable lender, consider its loan processing process, terms, and quality of customer service. Also, study the lender’s credibility, customer reviews, and efficiency in loan processing.
Conclusion
Choosing the right business loan can be a game-changer for entrepreneurs and businesses. We have listed the best business loans available in India in 2025, which include Pradhan Mantri Mudra Yojana (PMMY), State Bank of India (SBI) business loans, HDFC Bank business loans, and Kotak Mahindra Bank business loans, among others. With multiple options available, selecting the best business loans requires thorough research. Carefully evaluating these factors can help you choose a business loan that aligns with your financial situation and growth strategy. When weighing these loan options, consider your business’s specific financing needs, repayment capacity, and the terms each lender offers to choose the best-suited financing solution.
