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In 2025, starting or expanding a small business in India has become easier thanks to accessible bank loans tailored for entrepreneurs. Whether you run a startup, a shop, or an MSME, choosing the right bank can make a huge difference in loan approval, interest rates, and repayment flexibility. This guide breaks down the 8 best banks for small business loans in India, explaining features, eligibility, documents, and benefits in a simple and clear way.
1. State Bank of India (SBI)
Why SBI? It’s India’s largest and most trusted public sector bank, offering tailored MSME loan schemes.
Loan Features:
- Loan Amount: ₹50,000 to ₹500 crore (depends on business size)
- Interest Rate: Starts at 8.25% p.a.
- Tenure: Up to 15 years
- Collateral: Varies (many options under CGTMSE are collateral-free)
Popular Schemes:
- SBI SME Smart Score
- SBI Simplified Small Business Loan
- PM Mudra Loan (via SBI)
Eligibility:
- Age: 21–65 years
- Must be a registered MSME/business entity
- Good credit history (CIBIL score above 650 preferred)
Documents Needed:
- PAN, Aadhaar, GST certificate, ITRs, Bank Statements
- Business Registration Proof
✅ Highlight: SBI offers one of the lowest interest rates with flexible tenure options. Perfect for MSMEs and small traders.
2. HDFC Bank
Why HDFC? Known for fast processing and customised business loan offerings.
Loan Features:
- Loan Amount: ₹50,000 to ₹50 lakh
- Interest Rate: 11.90% – 21.35% p.a.
- Tenure: Up to 5 years
- Collateral: Not required for unsecured loans
Eligibility:
- Businesses should be at least 3 years old
- Annual turnover: Minimum ₹40 lakh
- CIBIL Score: 700+
Documents:
- KYC, business proof, 6-month bank statements, ITRs (2 years)
Special Benefits:
- Quick disbursal within 48 hours
- Minimal paperwork
✅ Highlight: Great for urban entrepreneurs and fast-growing startups.
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3. ICICI Bank
Why ICICI? Offers digital-first business loans with instant eligibility checks.
Loan Features:
- Loan Amount: Up to ₹2 crore
- Interest Rate: 11% – 19% p.a.
- Tenure: 12–60 months
- Collateral: Optional (depending on loan size)
Eligibility:
- Business operational for at least 5 years
- Turnover: ₹15 lakh and above
- Valid GST number and business registration
Documents:
- PAN, Aadhaar, financials, GST returns, property documents (if secured)
Special Offerings:
- InstaBiz app for loan tracking
- Working Capital and Term Loans
✅ Highlight: Perfect for tech-savvy businesses looking for a fully online loan process.
4. Axis Bank
Why Axis? Known for personalised loan structuring and fast customer service.
Loan Features:
- Loan Amount: ₹50,000 to ₹1 crore
- Interest Rate: 10.75% – 18.50% p.a.
- Tenure: Up to 5 years
- Collateral: Not required for loans under ₹20 lakh
Eligibility:
- Business must be profit-making for 2 years
- Minimum turnover: ₹30 lakh
- CIBIL Score: 700+
Documents:
- PAN, Aadhaar, ITR, financials, business proof
✅ Highlight: Flexible repayment schedules tailored for SMEs and manufacturers.
ALSO READ | Axis Bank Business Loan: How to Apply, Eligibility, Benefits & More
5. Bank of Baroda (BOB)
Why BoB? Offers government-supported MSME loans with low interest and high approval chances.
Loan Features:
- Loan Amount: ₹10,000 to ₹5 crore
- Interest Rate: 8.5% onwards
- Tenure: Up to 7 years
- Collateral: Optional under CGTMSE
Popular Schemes:
- Baroda SME Loan Pack
- Baroda Startup Banking
Eligibility:
- Registered business or sole proprietorship
- Good repayment history
✅ Highlight: BoB is a great option for rural and semi-urban businesses.
6. Punjab National Bank (PNB)
Why PNB? Strong network across India, supports agriculture-based and rural SMEs.
Loan Features:
- Loan Amount: ₹50,000 to ₹5 crore
- Interest Rate: 8.75% – 14.5%
- Tenure: 1–7 years
- Collateral: Optional (based on schemes)
Popular Schemes:
- PNB Mudra Loan
- PNB MSME Credit
Eligibility:
- Indian resident
- Valid business PAN and GST
- Business age: Minimum 2 years
✅ Highlight: Offers government-backed subsidies and interest rebates.
7. IDFC FIRST Bank
Why IDFC First? Offers startup-friendly business loans with a digital application.
Loan Features:
- Loan Amount: ₹1 lakh – ₹50 lakh
- Interest Rate: 11% – 23% p.a.
- Tenure: 12–48 months
- Collateral: Not required
Eligibility:
- Age: 22–65 years
- Minimum annual income: ₹1.5 lakh
- Business in operation for 1+ year
Documents:
- KYC, ITRs, income proof, business proof
✅ Highlight: Best for new business owners seeking quick, paperless approval.
8. Kotak Mahindra Bank
Why Kotak? Provides flexible repayment options and relationship-based lending.
Loan Features:
- Loan Amount: ₹3 lakh – ₹75 lakh
- Interest Rate: 10.99% – 22% p.a.
- Tenure: Up to 60 months
- Collateral: Optional for smaller loans
Eligibility:
- Age: 25–65
- Business operating for 3+ years
- ITR > ₹2 lakh p.a.
✅ Highlight: Kotak is ideal for self-employed professionals and growing SMEs.
ALSO READ | How to Get Startup Loan for New Business in India (2025)
Comparison Table of Top Business Loans
| Bank | Max Loan Amt | Interest Rate (p.a.) | Collateral | Disbursal Time |
|---|---|---|---|---|
| SBI | ₹500 Cr | From 8.25% | Optional | 5–7 days |
| HDFC | ₹50 Lakh | 11.90%–21.35% | No | 2–3 days |
| ICICI | ₹2 Cr | 11%–19% | Optional | 3–5 days |
| Axis Bank | ₹1 Cr | 10.75%–18.50% | No | 2–5 days |
| Bank of Baroda | ₹5 Cr | From 8.5% | Optional | 7–10 days |
| PNB | ₹5 Cr | 8.75%–14.5% | Optional | 5–7 days |
| IDFC FIRST Bank | ₹50 Lakh | 11%–23% | No | 2–3 days |
| Kotak Mahindra Bank | ₹75 Lakh | 10.99%–22% | Optional | 3–5 days |
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Conclusion
Choosing the best banks for small business loans in India depends on your business type, size, and funding needs. Public sector banks like SBI and BoB offer stability and government schemes, while private players like HDFC and ICICI focus on speed and digital access. Assess your eligibility, compare interest rates, and go for the option that gives you the best flexibility and support for 2025.
Frequently Asked Questions (FAQs)
SBI and HDFC are top choices due to low interest rates and fast processing.
Many banks offer collateral-free loans under CGTMSE or for loans below ₹20 lakh.
Usually 650–700+. A higher score improves approval chances.
Yes, banks offer loans under the PM Mudra, CGTMSE, and Stand Up India schemes.
Yes, banks like ICICI, HDFC, and IDFC First offer fully digital loan applications.
PAN, Aadhaar, business registration, bank statements, GST, and ITRs.
2 to 7 business days, depending on the bank and documentation.
IDFC FIRST Bank and Kotak Mahindra Bank have good options for startups.
It’s difficult. Most banks require proof of income or turnover to assess repayment capacity.
It ranges from ₹50,000 to ₹5 crore, depending on your business type and financials.
