Finding the right bank for a business loan in India can significantly shape the trajectory of your enterprise—be it a startup, MSME, or large venture. Here’s a curated list of top banking institutions offering competitive business loans, tailored services, and sector-specific advantages as of 2025.
1. State Bank of India (SBI)
As the largest lender in India—with around 23% market share by assets—SBI is a trusted choice for businesses of all sizes Wikipedia. Their SME loan schemes feature attractive interest rates starting near 8.25%, especially for working capital and term loans Lemonn. SBI’s MCLR has also been reduced recently, now ranging between 7.90% and 8.85%, thanks to an August 2025 reduction The Economic Times. Plus, the narrowing spread between SBI’s MCLR and corporate bond yields makes bank loans even more appealing The Economic Times.
2. HDFC Bank
A go-to private lender, HDFC offers business loans ranging from ₹50,000 up to ₹50 lakh, though interest rates are higher (typically 10.75% to 22.5%) Lemon Forbes. After a June 2025 RBI rate cut, HDFC lowered their benchmark lending rates by 10 basis points, enhancing affordability for borrowers The Times of India. Known for digital-first processing, it’s ideal for businesses seeking swift, paper-light approvals.
3. ICICI Bank
Flexible and comprehensive, ICICI Business Loan products include working capital and term loans with interest rates starting from around 9–10%, extending up to 15% or more ForbesAP Startup Hub. With fast processing and collateral-free options up to ₹1 crore, ICICI is attractive for established SMEs and startups with decent credit profiles.
4. Axis Bank
Axis offers business loans up to ₹10 crore, with interest starting near 11% and tenures stretching up to 15 years LemonnAP Startup Hub. Their streamlined collateral-free EMI-based loans and solid digital infrastructure make them business-owner-friendly.
5. Kotak Mahindra Bank
Targeted at SMEs and specialized industries (healthcare, education, green energy), Kotak provides loans from ₹3 lakh to ₹1 crore, with interest rates typically between 12.99% and 14.5% Lemonn. Their tailored solutions are a boon for niche-sector entrepreneurs seeking customized lending.
Also Know About the best bank for business loan 2025.
Bonus Mentions & Supporting Institutions
- Punjab National Bank (PNB): Known for competitive rates (~10.3% p.a.) and broad loans reach up to ₹5 crore My Mudra.
- Federal Bank & IDFC First Bank: Offer mid-range interest rates (~11–15%), and are suited for businesses seeking flexible options with digital support My MudraPaisabazaar.
- Government Schemes like Mudra Loan (via MUDRA Bank): Ideal for micro-enterprises, providing small, collateral-free financing under categories like Shishu, Kishor, and Tarun LemonnWikipedia.
Quick Comparison Table
| Bank / Scheme | Loan Range | Interest Rate (Approx.) | Best For |
| SBI | Up to ₹50 lakhs+ | ~8.25% p.a. | SME/startups with need for low-cost financing |
| HDFC Bank | ₹50,000 – ₹50 lakh | ~10.75–22.5% p.a. | Fast, digital-first SMEs |
| ICICI Bank | Up to ₹1 crore (collateral-free) | ~9–15% p.a. | Flexible, established SMEs |
| Axis Bank | Up to ₹10 crore | ~11%+ p.a. | Long-term growth, large credit needs |
| Kotak Mahindra | ₹3 lakh – ₹1 crore | ~12.99–14.5% p.a. | Niche sectors and tailored financing |
| PNB | Up to ₹5 crore | ~10.3% p.a. | Small businesses seeking competitive pricing |
| Mudra Loan (Govt) | Up to ₹10 lakh | Varies | Micro and small enterprise owners |
Final Takeaway
Choosing the right bank for your business loan in India depends on your loan size, urgency, interest sensitivity, and sector. SBI offers some of the lowest rates and wide reach—great for MSMEs. HDFC, with its fast digital setup and recent rate cuts, is optimal for tech-savvy entrepreneurs. ICICI and Axis offer flexible terms and higher limits, while Kotak delivers sector-specific lending solutions. Don’t overlook PNB for cost-effective options or Mudra/Government schemes for micro-enterprises without collateral.
