Business Loans
Term Loan for Business: Meaning, Interest Rates & Eligibility in India
Sep 2, 2026
A term loan is the cheapest way to fund machinery, expansion or refinance — if you structure it right. Here's how term loans for business work in India, what they cost in 2026, and how to qualify.
What is a term loan for business?
A term loan is a lump-sum amount disbursed once and repaid in fixed EMIs over a defined tenure — typically 12 to 84 months. Unlike cash credit or overdraft (which revolve), a term loan amortises: every EMI reduces the principal, and the loan closes at the end of the tenure.
When should a business take a term loan?
- Machinery & capex: one-time equipment purchases with a long payback.
- Expansion: new branch, fit-outs, capacity addition.
- Refinance / debt consolidation: replacing expensive unsecured loans with a cheaper, longer-tenure facility.
- EMI reduction: extending tenure or lowering rate to free up monthly cash flow.
Using a term loan for daily working capital strands cash; using CC/OD for capex inflates your effective cost. Matching the product to the purpose is where most MSMEs save 2–4% a year.
Business term loan interest rates (2026)
Secured business term loans currently range from 9% to 13% p.a.; unsecured term loans from banks and NBFCs run 13% to 22% p.a. depending on vintage, turnover, CIBIL and banking. Processing fees are typically 1–2% of the sanctioned amount.
Eligibility & documents
- Business vintage of 2–3 years with filed ITRs
- Turnover and profitability sufficient to cover 1.5–2× the proposed EMI (FOIR/DSCR norms)
- CIBIL 700+ for the best rates
- KYC, GST returns, 12-month bank statements, financials, and proforma invoice for machinery loans
How to get the best term loan deal
Rates for the same profile can differ by 3–5% across lenders. Instead of applying bank-by-bank (each application dents your CIBIL), get one structured comparison. Moneymax checks 48+ banks and NBFCs with a single profile and negotiates the rate and structure on your behalf.