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How to Get a Business Loan: Small Business Guide for India 2026
A complete step-by-step guide to getting a small business loan: eligibility, documents, the best banks and tips for the fastest approval for Delhi NCR businesses.
How to Get a Business Loan Small Business Guide for India 2026
From Mudra loans to private banks, here are all the options and the process for getting a business loan in India
Want to grow your business but short of capital? For small business owners in India, taking out a business loan has become easier in 2026 than ever before. There are plenty of options, from government schemes to private banks, and this guide covers them all.
Types of Business Loans
1. Term Loan: You receive a fixed amount once and repay it through monthly EMIs. Best for equipment, renovation and expansion.
2. Working Capital Loan: For day-to-day operations such as buying stock, paying salaries and paying bills. It is short term.
3. Mudra Loan (Government): Up to Rs. 10 lakh. The easiest option, with low interest. Best for small businesses.
4. MSME Loan: Up to Rs. 1 crore. For MSME-registered businesses, at a subsidized interest rate.
5. Business Credit Card: For small, regular expenses. No collateral and instant approval.
Pradhan Mantri Mudra Yojana (PMMY)
The Mudra Loan is a government scheme that offers collateral-free loans to small businesses. There are three categories:
- Shishu: Up to Rs. 50,000. For new businesses.
- Kishore: Rs. 50,000 to Rs. 5 lakh. For growing businesses.
- Tarun: Rs. 5 lakh to Rs. 10 lakh. For established businesses.
Good news: No collateral is needed for a Mudra Loan, and most banks do not charge a processing fee either.
Business Loan Eligibility
- Age: 21 to 65 years
- The business should be at least 1 to 2 years old (most lenders)
- CIBIL score 700 plus recommended (650 minimum)
- You need ITR filings (for the last 2 to 3 years)
- Bank statements 6 to 12 months
- Business registration proof
Business Loan Interest Rates 2026
| Lender | Interest Rate | Loan Amount | Tenure |
|---|---|---|---|
| SBI | 10.5% to 12.5% | Up to Rs. 1 Cr | Up to 5 years |
| HDFC Bank | 11% to 15% | Up to Rs. 50 Lakh | Up to 4 years |
| Bajaj Finserv | 14% to 18% | Up to Rs. 50 Lakh | Up to 5 years |
| Lendingkart | 18% to 24% | Up to Rs. 2 Crore | Up to 3 years |
| Mudra Loan | 8% to 12% | Up to Rs. 10 Lakh | Up to 5 years |
Business Loan Application Process
Step 1: Check your CIBIL score for free (at cibil.com).
Step 2: Decide how much loan you need and what it is for. Be realistic.
Step 3: Compare several lenders on interest rate and terms.
Step 4: Prepare your documents: ITR, bank statements, business registration and address proof.
Step 5: Apply online or visit a branch.
Step 6: Approval usually comes in 3 to 7 days. Digital lenders can approve within 24 hours.
How to Improve Your CIBIL Score
If your CIBIL score is below 700, improve it first. Pay credit card bills on time, repay existing loans on schedule and avoid applying for several loans at once. Your score can improve in 6 to 12 months.
Online Lenders in 2026
Lendingkart, NeoGrowth, FlexiLoans and Indifi are online platforms that lend quickly, but their interest rates are higher. They are useful in an emergency, while banks are better for the long term.
Website and Business Loan Connection
Interesting fact: a professional website improves your chances of loan approval. Banks and lenders look at your online presence to check that your business is legitimate, and a professional website helps prove your credibility. Get a professional website built before you apply.
Related articles: GST Registration Guide | Start an Online Store | Why Your Business Needs a Website
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Frequently Asked Questions
What is the minimum CIBIL score for a business loan?
Most banks and NBFCs want a CIBIL score above 700. Large banks such as SBI, HDFC and ICICI prefer 750 or higher. Getting a loan with a score below 650 is difficult. The Mudra Yojana is less strict about the CIBIL score.
How long does a Mudra loan take?
Under the Pradhan Mantri Mudra Yojana, a Shishu loan (up to Rs. 50,000) can be approved in 7 to 10 working days. Kishor and Tarun loans (Rs. 50,000 to Rs. 10 lakh) can take 15 to 30 days, provided your documents are in order.
Which documents are needed for a business loan?
You will usually need an Aadhaar card, PAN card, 6 months of bank statements, a business registration certificate, GST registration, 2 years of ITR, and property documents if you are offering collateral. Having an MSME registration speeds up processing.
Can I get a business loan without collateral?
Yes. The Mudra Yojana and the CGTMSE scheme offer collateral-free loans, and Mudra loans up to Rs. 10 lakh need no collateral. Many NBFCs and fintech companies, such as Lendingkart and NeoGrowth, also offer unsecured business loans, but at slightly higher interest rates.
What is the interest rate on a business loan in India?
Government banks such as SBI charge 10 to 12% per annum on business loans. Private banks charge 12 to 18%, and NBFCs and fintech lenders can charge 18 to 36%. Mudra Yojana loans are around 10 to 12%. Your rate depends on your CIBIL score, how long your business has been running and your turnover.
