Running a small business in India requires not just passion but also consistent access to capital. Whether it’s for buying inventory, expanding operations, hiring staff, or upgrading technology, a small business loan can make a big difference.
But with so many banks, NBFCs, and government schemes, the main challenge is: Which is the best loan for small business in India in 2025?
In this blog, we’ll cover:
- Top banks and NBFCs offering business loans
- Government schemes like Mudra, CGTMSE, and Stand-Up India
- Eligibility criteria and required documents
- High CPC keywords for SEO and monetization
1. Best Loan for Small Business in India
The best small business loan depends on:
- Loan amount needed
- Purpose (working capital, expansion, machinery, etc.)
- Your business turnover and credit score
Banks like SBI, HDFC, ICICI, and Axis offer business loans, while government schemes provide support for startups and MSMEs.
2. MSME Loan for Small Business in India
MSME loans are designed for Micro, Small, and Medium Enterprises.
- Loan Amount: ₹50,000 – ₹5 Crores
- Interest Rate: 8% – 16% p.a.
- Tenure: Up to 15 years
- No collateral required in some cases
3. Mudra Loan for Small Business in India
The Pradhan Mantri Mudra Yojana (PMMY) supports micro and small enterprises.
- Shishu Loans: Up to ₹50,000
- Kishor Loans: ₹50,001 – ₹5 Lakhs
- Tarun Loans: ₹5 Lakhs – ₹10 Lakhs
- No collateral required
4. CGTMSE Loan Scheme for Small Business
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) provides loans up to ₹2 Crores without collateral.
- 75% to 85% credit guarantee by the government
- Available for both startups and existing businesses
5. Stand-Up India Loan Scheme for Small Business
This scheme is designed for women and SC/ST entrepreneurs.
- Loan Amount: ₹10 Lakhs – ₹1 Crore
- Purpose: Greenfield projects
- Bank branch support for mentoring and guidance
6. SIDBI Loan for Small Business in India
The Small Industries Development Bank of India (SIDBI) focuses on MSME financing.
- Loan Amount: ₹10 Lakhs – ₹5 Crores
- Interest Rate: 8% – 12% p.a.
- Tenure: Up to 10 years
7. HDFC Bank Small Business Loan Interest Rate
HDFC offers collateral-free business loans.
- Loan Amount: Up to ₹50 Lakhs
- Interest Rate: 10% – 21% p.a.
- Tenure: 12–48 months
8. ICICI Bank Small Business Loan Interest Rate
ICICI provides tailored small business loans.
- Loan Amount: Up to ₹40 Lakhs
- Interest Rate: 12% – 18% p.a.
- Processing: Fast digital approval
9. Axis Bank Small Business Loan Interest Rate
Axis Bank provides working capital and term loans.
- Loan Amount: ₹10 Lakhs – ₹50 Lakhs
- Interest Rate: 10.5% – 18% p.a.
- Tenure: Up to 5 years
10. SBI Small Business Loan Interest Rate
SBI is the most trusted bank for MSMEs.
- Loan Amount: ₹50,000 – ₹5 Crores
- Interest Rate: 8.25% – 16% p.a.
- Special schemes for traders and manufacturers
11. Unsecured Small Business Loan in India
Unsecured loans don’t require collateral.
- Loan Amount: ₹50,000 – ₹50 Lakhs
- Provided by NBFCs and private banks
- Higher interest rates due to risk
12. Secured Small Business Loan in India
These loans are backed by assets such as property, fixed deposits, or equipment.
- Loan Amount: Higher (up to ₹10 Crores)
- Lower interest rates compared to unsecured loans
13. Small Business Loan Eligibility in India
Eligibility factors include:
- Age: 21–65 years
- Business vintage: 1–3 years minimum
- Minimum turnover: ₹10 Lakhs – ₹40 Lakhs annually
- CIBIL Score: 650+ preferred
14. Small Business Loan EMI Calculator
Example:
- Loan: ₹10 Lakhs
- Tenure: 5 years
- Interest: 12% p.a.
- EMI: ~₹22,200
15. Compare Small Business Loan Offers Online
Platforms like BankBazaar, PaisaBazaar, and LendingKart allow entrepreneurs to compare interest rates, tenures, and processing charges.
16. Government Loan Schemes for Small Business in India
Apart from Mudra, CGTMSE, and Stand-Up India, other schemes include:
- MSME Business Loan in 59 Minutes – quick approval scheme
- PMEGP (Prime Minister’s Employment Generation Programme) – subsidy for entrepreneurs
17. Startup Loan for New Business in India
For startups, unsecured loans and government-backed subsidies are available. NBFCs also support entrepreneurs with limited credit history.
18. Best Bank for Small Business Loan in India
Based on features:
- SBI: Lowest interest rates
- HDFC: Quick disbursal without collateral
- ICICI & Axis: Flexible offers for SMEs
- SIDBI: Long-term project financing
Case Studies / Examples
Example 1:
Ravi, a shop owner in Delhi, took a ₹7 Lakh Mudra Loan under Kishor category to expand his retail shop. With no collateral required, it helped him grow his business.
Example 2:
Ananya, a woman entrepreneur, used the Stand-Up India Scheme to get a ₹20 Lakh loan for her food processing unit.
FAQs on Best Loan for Small Business
Q1. Which is the best loan for small business in India?
👉 For startups, Mudra and CGTMSE are best. For established businesses, SBI and HDFC are top choices.
Q2. Can I get a loan without collateral?
👉 Yes, unsecured loans and government schemes like Mudra provide collateral-free loans.
Q3. What is the maximum loan amount for small businesses?
👉 Up to ₹5–10 Crores, depending on collateral and turnover.
Q4. Do NBFCs provide small business loans?
👉 Yes, NBFCs like LendingKart, Bajaj Finserv, and Tata Capital offer quick loans.
Q5. What is the minimum CIBIL score required?
👉 Generally 650+, but government schemes are more flexible.
Conclusion
The best loan for small business in India 2025 depends on your requirement and eligibility:
- For collateral-free loans: Mudra, CGTMSE, HDFC, ICICI.
- For low-interest long-term loans: SBI, Bank of Baroda, SIDBI.
- For women entrepreneurs and SC/STs: Stand-Up India scheme.
