Business Loan Interest Rate - Starting at 1.5% Per Month (18% p.a.)

Business Loan Interest Rates, Fees & Charges

Every charge you will pay on an Indifi-facilitated loan is listed below. There are no hidden fees.

Indifi does not add charges on top of what your lending partner discloses. There are no surprise deductions at disbursal and no administrative fees buried in the fine print. Your sanction letter will state every applicable charge clearly before you accept the offer.

*Rates are indicative and subject to change based on borrower profile and lender policies.

Interest Rate by Loan Type

The rate your lending partner offers depends partly on the product you choose. Below is a guide to how different products are typically priced. All rates start from 1.5% per month (18% p.a.).

Term loans are typically used for longer-planned investments and tend to carry more predictable EMI schedules. Working capital and line-of-credit products offer flexibility for day-to-day cash-flow needs. Your lending partner assesses which product and rate apply to your profile. Final rates are disclosed at the time of sanction.

Rates are indicative and subject to assessment by Indifi's lending partners.

6 Factors that Determine Your Business Loan Interest Rate

Your lending partner prices the loan based on risk. These six factors have the most influence on the rate you receive.

Annual turnover and revenue consistency

Lenders look at both the size and the stability of your revenue. A business turning over ₹30 lakhs per year with consistent monthly inflows is viewed more favourably than one with the same annual figure but irregular patterns (Indifi gives a business loan at the annual turnover of INR 12 Lakhs+). Consistent revenue signals lower default risk, which typically leads to a better rate. Filing ITRs on time and maintaining clean books makes it easier for lenders to quickly verify your turnover.

Credit / CIBIL score

Your personal and business CIBIL scores are among the first data points a lender checks. A score of 700 or above typically qualifies for the best available rates on Indifi's platform. Scores between 650 and 699 can still be eligible, though the rate offered may be higher. Scores below 650 will face tighter eligibility conditions. Check your score before applying and resolve any errors on your credit report.

Business vintage

How long your business has been operating signals stability to lenders. Businesses with 1+ years of operational history typically receive preferential rates. Newer businesses (1 to 3 years old) can still qualify, but the rate may reflect the higher perceived risk. A longer track record, supported by GST filings and bank statements, significantly strengthens your case.

Loan amount and tenure

Larger loan amounts carry higher absolute risk for the lender, which can push rates up slightly. Shorter tenures mean lower total interest paid and often signal stronger repayment confidence. Borrowing exactly what you need, rather than the maximum available, can improve your rate. If your cash flow supports a 12-month repayment instead of 24 months, that choice can reduce your total borrowing cost.

Industry risk profile

Lenders apply different risk weights to different industries. Sectors with historically stable repayment patterns, such as manufacturing and established retail, may receive more competitive rates. Industries with higher cyclicality or seasonal cash flow variation may be priced at a premium. Indifi's platform covers 12+ industry verticals and matches your profile to lending partners familiar with your sector.

Banking and GST transaction health

Your bank account and GST returns are the most direct evidence of your business's financial health. Lenders check for consistent credit inflows, absence of bounced EMIs or cheque dishonours, and regular GST filing for 12 months or more. A bank account with stable inflows and no defaults tells the same story as a good CIBIL score. Both together give you the strongest negotiating position on rate.

Flat Rate vs Reducing Balance Interest Rate

These two methods calculate interest very differently. The difference matters more than most borrowers realise.

Under a flat rate, interest is calculated on the full original loan amount for every month of the tenure, regardless of how much you have repaid. If you borrow ₹10 lakhs at a flat rate, you pay interest on ₹10 lakhs every month, even in month 23 of 24. Under the reducing-balance method, interest is calculated only on the outstanding principal after each EMI payment. As you repay, the interest component shrinks. This is the standard method used by Indifi's lending partners, and the rate is fixed for the full tenure.

EMI formula (reducing balance)

EMI = P × r × (1+r)ⁿ / [(1+r)ⁿ – 1]

Where P = principal, r = monthly interest rate, n = number of monthly instalments.

Worked example: ₹10 Lakh loan at 1.5% per month for 24 months

• EMI = ₹49,924 per month (approximately)
• Total repaid = ₹11.98 Lakhs
• Total interest paid = approximately ₹1.98 Lakhs

Because the rate is fixed and calculated on a reducing-balance basis, your EMI stays the same throughout. There are no rate revisions mid-tenure.

Use the EMI calculator on this page to run your own numbers.

How to Get a Lower Business Loan Interest Rate

Your rate is not fixed in advance. These six actions, taken before you apply, directly improve the offer you receive.

1. Improve your credit score to 700+

Pay all existing EMIs and credit card dues on time for at least 6 months before applying. Dispute any errors on your CIBIL report immediately. A score above 700 is the single most reliable way to qualify for lower rates across Indifi's lending partner network. Even moving from 670 to 705 can make a measurable difference to your offered rate.

2. File GST returns on time for 12+ months

Consistent GST filing for at least 12 consecutive months is one of the most visible signals of a healthy business. Lenders use your GSTR-3B data to verify declared turnover. Missing or late returns raise questions about revenue reliability. A clean 12-month GST filing record reduces lender risk and can improve your rate offer.

3. Keep your bank account healthy

Ensure your primary business account shows regular and consistent credit inflows. Avoid EMI bounces, cheque returns, and large unexplained withdrawals in the 6 months before you apply. Lenders pull 6 to 12 months of bank statements. A clean account with predictable inflows signals low default risk and supports a better rate.

4. Borrow only what you need

Apply for the amount your business genuinely requires. An overleveraged borrower who asks for the maximum available loan without a clear use case appears riskier to lenders. Stating a specific purpose, such as an inventory purchase or an equipment upgrade, with a clear repayment plan can lead to a more favourable rate assessment.

5. Choose a shorter tenure if cash flow permits

A 12-month tenure reduces the lender's exposure period compared to a 24-month tenure. If your business cash flow can support a higher monthly EMI, a shorter tenure may result in a lower total interest cost. Run the numbers using the EMI calculator before deciding.

6. Clear high-cost existing debt first

If you carry outstanding loans or credit card balances, repay the most expensive ones before applying. A high existing debt obligation raises your debt-to-income ratio and reduces lender confidence. Clearing or reducing existing liabilities before you apply strengthens your profile and improves your eligibility for a rate.