Factors that Affect Business Loan Interest Rate

Business loan interest rates are important accepts for every borrower before taking a loan. Everybody wants a high amount of business loan at a low-interest rate but due to some reasons, you are not able to get a low-interest rate business loan. As you can see different lenders offer different rates. There are many factors that affect the business loan interest rate. So borrowers can understand the external and internal effects of business loans. It is very important for the borrower to know the factors so that you can plan accordingly for the loan.

Below are some factors that affect your Business Loan Interest Rate

Nature of Business

The first and main factor affecting your business loan is the nature of your business. Your business nature only tells what kind of business activity you are doing. Your business should be positive and the place of doing business should not be on the blacklist. When deciding the interest rate of a business loan, lenders examine the previous nature of your business to see how it works, whether it is profit-making or loss-making.


The CIBIL score is a three-digit numeric number that reflects your repaying ability to repay the loan. The Cibil range starts from 300 to 900. A score of 750 and above is considered a good and healthy score. Lenders always look at your cibil score before making any decision. Always remember that a high CIBIL score represents a good influence on lenders. If you have a good CIBIL score then the lender offers the loan at a lower interest rate. If you have a low cibil score then the lender will charge a higher interest rate or may reject your loan application.

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Business Experience

Yes, your business experience matters a lot because a well-established business is likely to be secured. If you run a business for a long period of time, lenders may charge a lower interest rate to expand your business. Keep in mind that lenders have charged higher interest rates for set-up business loans due to defaults or non-payment opportunities. The one who is doing business for a long time, so you have several options to choose various business loan products as per your choice.

Annual Turnover

As each lender sets a business loan interest rate on your annual business turnover. If the business turnover is high, the rate of interest will be lower and the EMI amount will be lower, while your turnover is poor or not to the satisfaction of the lender, so you will charge a higher interest rate, which will lead to a higher EMI amount.

Revenue and Profit

The lender always checks the monthly, quarterly and annual revenue of your business before deciding the interest rate. According to the lender business, the loan interest rate will be calculated on the revenue. If the lender does not get any good revenue then it may approve your loan application but they will charge a higher interest rate.

Repayment History

Another main factor affecting business loans interest rates is your past repayment history. If your repayment track is good then you are more likely to get a lower interest rate. Even your credit score is good but your repayment track record is not good so that lender charges high or low-interest rate as per their choice. It can be higher or lower.

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Good Relationship

If you are an existing and good customer of any financial institution then they can charge a lower interest rate. Because every financial institution wants a good customer. So always try to make your relationship perfect so that you can enjoy the facility of the low interest rate.

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Personal Loan Interest Rates September 2023
Fullerton India12.00% - 24.00%
HDFC Bank10.75% - 14.50%
ICICI Bank10.75% - 19.00%
IndusInd Bank10.25% - 26.00%
Kotak Bank10.99%
RBL14.00% - 23.00%
Standard Chartered Bank11.49%
Tata Capital10.50% - 24.00%
Home Loan Interest Rates September 2023
Axis Bank8.75% - 9.15%
Bank of Baroda8.50% - 10.60%
Citibank8.75% - 9.15%
HDFC8.50% - 9.40%
ICICI Bank9.00% - 9.85%
Indiabulls Housing Finance Limited8.65%
Kotak Bank8.85% - 9.40%
LIC Housing8.50% - 10.50%
Piramal Capital & Housing Finance10.50%
PNB Housing Finance8.50% - 10.95%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI9.10% - 9.65%
Tata Capital8.95% - 12.00%