Business Loan Upto 10 Lakhs – Interest Rates and Charges

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Business Loan up to 10 Lakh – Full Guide for Entrepreneurs

Business Loan Upto 10 Lakh – Starting or expanding a business requires adequate funds, and one of the best solutions is opting for a business loan up to 10 lakh. Many entrepreneurs, small business owners, and startups in India prefer this option because it provides quick access to capital without having to dilute ownership. In this article, we will cover the eligibility, features, benefits, documents required, interest rates, and application process for availing a business loan up to ₹10,00,000.

What is a Business Loan up to 10 Lakh?

A business loan up to 10 lakh is a type of unsecured or secured loan provided by banks, NBFCs, and government-backed schemes to small and medium enterprises (SMEs), startups, and entrepreneurs. The loan amount can be used for multiple purposes, such as working capital, business expansion, purchasing machinery, marketing, or managing day-to-day expenses.

Key Features of Business Loan up to 10 Lakh

  • Loan Amount: Up to ₹10,00,000 for small and medium businesses.

  • Collateral-Free Option: Many lenders offer unsecured business loans without the need for property or security.

  • Flexible Tenure: Repayment period ranges from 1 to 5 years.

  • Quick Disbursement: Loans are approved within 2–7 working days if documents are in order.

  • Usage: Funds can be used for inventory purchase, machinery, marketing, or expansion.

Benefits of Taking a Business Loan up to 10 Lakh

  1. No Need to Dilute Ownership – Unlike investors, business loans allow you to retain 100% ownership of your business.

  2. Collateral-Free Access – Many banks offer unsecured loans for up to ₹10 lakh.

  3. Improves Business Credit Score – Timely repayment of the loan builds your company’s creditworthiness.

  4. Tax Benefits – Interest paid on business loans can be claimed as a business expense under the Income Tax Act.

  5. Flexible Usage – Funds can be used for any legitimate business purpose without restrictions.

Eligibility Criteria for Business Loan up to 10 Lakh

To apply for a business loan, you need to fulfill certain conditions. These may vary from bank to bank, but the general eligibility criteria include:

  • Age: Minimum 21 years and maximum 60 years.

  • Business Vintage: At least 2–3 years of running business operations.

  • Turnover: Minimum annual turnover of ₹10–15 lakh.

  • Credit Score: A good CIBIL score (above 700) improves chances of approval.

  • Applicant Type: Proprietors, partnership firms, private limited companies, self-employed professionals.

Documents Required for Business Loan

  1. KYC Documents – Aadhaar card, PAN card, voter ID.

  2. Business Proof – GST registration, trade license, business incorporation certificate.

  3. Financial Statements – Bank account statements for last 6–12 months.

  4. Income Proof – ITR for the last 2–3 years.

  5. Photographs – Passport-size photos of the applicant.

Interest Rates and Charges

  • Interest Rate Range: 10% to 22% per annum, depending on lender and applicant profile.

  • Processing Fees: 1% to 3% of the loan amount.

  • Prepayment Charges: Some banks charge up to 4% if you close the loan early.

  • Collateral Charges: Applicable only for secured loans.

Government Schemes Offering Business Loans up to 10 Lakh

The Indian government supports small businesses and startups by offering special credit schemes. Some of the popular ones are:

  • PMEGP (Prime Minister’s Employment Generation Programme): Provides loans up to ₹10 lakh for business and ₹25 lakh for manufacturing with subsidy support.

  • MUDRA Loan (Micro Units Development & Refinance Agency): Shishu, Kishor, and Tarun categories provide loans up to ₹10 lakh without collateral.

  • Stand-Up India Scheme: Helps women entrepreneurs and SC/ST category entrepreneurs to get loans for new ventures.

  • PM Vishwakarma Yojana: Supports artisans and craftsmen with low-interest loans up to ₹1 lakh (expandable).

How to Apply for a Business Loan up to 10 Lakh

Step 1: Choose the right bank, NBFC, or government-backed scheme.
Step 2: Check eligibility criteria and loan terms carefully.
Step 3: Collect and organize all required documents.
Step 4: Apply online through the lender’s website or offline by visiting a bank branch.
Step 5: Wait for verification and approval. Once approved, the loan is disbursed to your bank account.

Top Banks and NBFCs Offering Business Loans up to 10 Lakh

  1. State Bank of India (SBI) – Business loans under SME schemes with flexible tenure.

  2. HDFC Bank – Quick approval for small business loans up to ₹10 lakh.

  3. ICICI Bank – Offers collateral-free business loans with competitive interest rates.

  4. Axis Bank – Business loans for working capital and expansion.

  5. Bajaj Finserv – Unsecured business loans with minimal paperwork.

Tips to Increase Chances of Loan Approval

  • Maintain a good CIBIL score above 700.

  • File regular income tax returns to show financial stability.

  • Keep business financials (balance sheet, GST returns) updated.

  • Apply with a well-structured business plan.

  • Avoid multiple loan applications simultaneously as it affects your credit score.

Example of Loan Repayment

Suppose you take a ₹10,00,000 business loan at an interest rate of 12% per annum for 5 years.

  • EMI comes to approx ₹22,244 per month.

  • Total repayment after 5 years will be around ₹13,34,640.

  • If you repay early, you can save on interest but may have to pay prepayment charges.

Conclusion

A business loan up to 10 lakh is a powerful financial tool for small businesses and startups in India. With government schemes like MUDRA, PMEGP, and Stand-Up India, as well as private lenders offering quick approval, entrepreneurs can now easily access capital for growth. By maintaining good credit, preparing documents, and choosing the right lender, you can successfully get a loan and expand your business.

If you are planning to start or expand your business, a ₹10 lakh business loan can provide the perfect foundation to achieve your goals.

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