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IDBI Bank Business Loan Interest Rates

Many people will have the dream of starting their own business or if one already has a business to expand it and build it into something better. Be it SMEs or MNCs everyone will have need of funds at one point of time or another. Banks like IDBI Bank provides Business loans just for that purpose.

What is a Business Loan?

Any person wanting to start a business or any individual wanting to expand their business need funds to do so. This is where individuals and entrepreneurs take loans at a previously agreed rate of interest and time. Without this working capital businesses cannot run smoothly. There are 2 types of business loans

1. Secured loans – This is the case where individuals and entrepreneurs provide collateral like inventory, land, machinery etc. Here the interest rate will be less

2. Unsecured loans/Small business loans – This is the case where businesses take a loan without any collateral. The interest rates are highas the risk for the banks are high

IDBI Bank Business Loan Eligibility

IDBI MUDRA Loan

Available for individuals/MSMEs engaged in non-farm entrepreneurial activities (manufacturing, trading and service enterprises including professionals rendering services) across the country (including rural, semi-urban, urban and metro centers)

Loan Amount	Maximum of Rs.10,00,000/-
Tenure	Minimum of 12 months to Maximum of 60 months
IDBI Bank Business Loan Interest Rate	Linked to Bank’s Base Rate and Rating.
Loan Processing Charges	Nil up to Rs.50,000 and 0.5% of the loan amount for others

IDBI Bank Sulabh Vyapar Business Solutions

Made available to Wholesale and Retail Traders, Dealers and Distributors etc.

Loan Amount	Up to Rs. 5 crores
Interest rate	Interest Rate linked to Bank Base Rate and rating
Security	Primary: Hypothecation of stocks, receivables, assets financed by bank. Collateral: Immovable Residential or Commercial property Loan amount up to 90% of the property value
Margin	25% on Stock &Book Debts 25% for Term Loan (New Assets)
Processing Charge	Up to 1% of the loan amount

IDBI Bank Business Loan Interest Rate: 12% to 18%

Documents Required for IDBI Bank Business Loans

The following documents are required along with your Business Loan application:

PAN Card – For Company/Firm/Individual
A copy of any of the following documents as identity proof:

Aadhaar Card
Passport
Voter's ID Card
PAN Card
Driving License

A copy of any of the following documents as address proof:

Aadhaar Card
Passport
Voter's ID Card
Driving License

Bank statement of the previous 6 months
Latest ITR along with computation of income, Balance Sheet and Profit & Loss account for the previous 2 years, after being CA Certified/Audited
Proof of continuation (ITR/Trade license/Establishment/Sales Tax Certificate)
Other Mandatory Documents [Sole Prop. Declaration or Certified Copy of Partnership Deed, Certified true copy of Memorandum & Articles of Association (certified by Director) & Board resolution (Original)]

Repayment of IDBI Bank Business Loan can be repaid in following three ways.

Standing Instruction (SI): Standing instructions is a good way to pay your EMI if you are an existing account holder at the lender bank. Your EMI amount will be debited automatically at the end of the monthly cycle from the IDBI Bank account you specify. It is simple, and you do not need to remember each month about paying the loan manually.

Electronic Clearing Service (ECS): In case you do not have an account at the lender bank you can opt for Electronic Clearing Service (ECS), where you give the lender bank permission to directly withdraw money automatically, each month from your specified other bank account.

Post-Dated Cheques (PDCs): Postdated cheques can be submitted to the lender bank for the duration of the tenure, which the bank will deposit each month on the date specified by you. Most banks make this facility available only in areas where the ECS or SI facilities are not available. This method also has the drawback where the bank might lose the cheques as the duration or tenure is long.

Purpose of Business Loans

The most common reasons to take business loans are as follows

1. Expanding Operations

Buying land or leasing a property to expand business operations when you feel that your business has grown large enough and scaling up at this moment is an opportunity that you do not wish to forgo, a business based on its growth projections can go for expanding operations more than once.

2. Purchase Equipment

Technology has become a key driver in the information age of business, and since technology comes with a pre-set expiry date, there is always a demand to purchase or upgrade existing equipment and technology. Buying/leasing/replacing a new equipment that will help improve the production or operations of the organization, alternatively the equipment can also be leased, it is best to conduct a cost-profit analysis to determine whether to buy or lease. The advantage with buying equipment is that depreciation can be claimed each year apart from the first-year tax exemptions.

3. Purchase of inventory

Most often small business would require immediate capital for the purchase of inventory stock or raw material. There may arise the situation where the demand for your product may be very high in the market. Businesses may not have the funds to get the raw materials to meet the rise in demand. This problem can be solved when individuals and entrepreneurs take loans to buy the inventory needed for production.

4. To increase working capital

Many times, small businesses and entrepreneurs may not have enough working capitals to run their day to day activities. They will take short term loans till their own assets earn enough revenues to meet their operational needs.

5. Improve credit history

If a business is looking to get a larger loan it is necessary for the company to have a good credit history. To make sure of this the individual or proprietors get short term loans and pay them on time to improve their credit history. Consistent repayment of borrowings will lead to a positive credit history.

How to get the best Interest rate on IDBI Bank Business Loan?

For any business loan the tenure and interest rate are very important for the borrower. It is based on this that they will decide whether to go for the loan or not. As the amount required in business loans are usually high the rules and criteria for approval of business loans are also stricter.

Factors that affect the interest rate business loan

The business loan can be offered to any person who is running a legitimate business and has good turnover. Different banks have different criteria and terms to validate and authenticate a person’s business. After all the evaluation the loan amount, tenure and rate of interest or even whether to provide loan falls under the purview and authority of the bank. Some of the parameters taken under consideration are

Credit score of the company or in the case of a new business the owner/s
Type of business: Proprietorship, Partnership, Private Limited or Public Limited
Turnover of the business
Profit made by the business
Cash flow of the business
Track record of business

Comparing the loans

When taking a business loan, it should not just be the fact that you are taking a business loan because there is a shortage of funds, a proper analysis must be done to make the loan taken justifiable and only then can the funds be utilized effectively. The following are the factors to be considered when taking a business loan.

The requirement of the business – Why do you need the business loan for, what is the money going to be used for, do you not have any other options other than a loan, Strategic or Tactical business needs and decisions – All these questions need to be answered before applying a loan
The loan amounts – What is the loan amount you need – know the spread i.e. where exactly the money is going to be spent
The interest rates – There are 2 types of interest rates when it comes to business loans

a) Diminishing Rate of interest –

b) Flat Rate of interest –

Processing fee – Make sure the processing fee charged is less
Prepayment charges – Prepayment is where a company pays the loan dues well before the tenure ends. Make sure there are nil or very less prepayment charges

Business Loans for Women Entrepreneurs

To encourage women, increase the number of women entrepreneurs and bring out the best from organisations such as the women Self Help Groups, the government has come up with various schemes that are aimed at helping women better their business. The schemes have had a positive effect and has resulted in an increase of number of women owned businesses.

How to Apply for Business Loan

There are 2 ways by which one can apply for a business loan.

Online: Many banks like IDBI Bank have provisions on their website to apply for the Business loan. A customer just needs to visit the website and click on Apply. Fill up the form with details asked and their application process has started.

Visit the branch: A person can directly visit a branch to apply for a business loan. In this method you have the opportunity to bargain for good terms on the loan. Here again an application form will be available which needs to be filled and the necessary documents submitted.

IDBI Bank Business Loans FAQs:

1. How to calculate Interest/EMI on Business Loan?

Once your loan specifics are finalized, there are loan EMI calculators available online which can be used to know your Interest and Principle breakdown each month and also keep track of the amount paid and the amount pending which can be useful when planning to prepay the loan.

2. What is the IDBI Bank business loan interest rate for existing customer?

For existing customers, if you have a good standing with IDBI Bank and with good credit score and cashflows then you can negotiate better terms.

3. How to check IDBI Bank business loan status?

You can check the IDBI Bank business loan status by contacting the customer care number or if you already have an account can login to your account and check the status there. You can also check with your account manager if you have been allotted one.

4. What is the IDBI Bank business loan interest rate in 2018?

The IDBI Bank Business loan currently ranges between 12% to 18%

5. What is the usual interest rates for business loans in India?

In India business loans usually range between 10% to 21%. It will vary from bank to bank based on the eligibility criteria defined by the bank.

6. How can I get a small/startup business loan?

You can get a small/startup business loan by applying for the loan at IDBI Bank through one of the sources made available to the customer. Which are online, customer care or directly visiting the branch. You need to match the eligibility criteria decided by the bank and provide the requisite documents before the loan can be approved.

7. How can I repay the IDBI Bank Business loan?

You pay the loan in equal monthly instalments (EMIs). The loan will be paid through post-dated cheques. You can also pay through Electronic Clearing System (ECS) or a standing instruction to debit your IDBI Bank account with the EMI amount.

About IDBI Bank

IDBI Bank is an Indian government-owned financial service company, formerly known as Industrial Development Bank of India, headquartered in Mumbai, India. It was established in 1964 by an Act of Parliament to provide credit and other financial facilities for the development of the fledgling Indian industry. IDBI is currently the 10th largest development bank in the world in terms of reach, with 3700 ATMs, 1995 branches, including one overseas branch at Dubai, and 1382 centers.