Running a small business in India requires steady cash flow, whether it’s for expansion, inventory purchase, equipment upgrade, or working capital needs. In 2026, many banks and NBFCs are offering business loans for small businesses with competitive interest rates, minimal documentation, and fast approval.
This guide explains everything you need to know about small business loans in India, including eligibility, interest rates, documents required, and how to get quick approval.
What Is a Business Loan for Small Business?
A business loan for small business is an unsecured or secured loan offered to shop owners, traders, manufacturers, service providers, and MSMEs to meet business-related expenses. These loans usually come with flexible repayment options and can be used without usage restrictions.
Types of Business Loans Available in India (2026)
1. Term Loan for Small Business
- Fixed loan amount
- Tenure up to 5 years
- Suitable for expansion or asset purchase
2. Working Capital Loan
- Helps manage daily operational expenses
- Ideal for traders and retailers
3. MSME Business Loan
- Government-supported schemes
- Lower interest rates
- Designed for registered MSMEs
4. Mudra Loan
- Best for micro & small businesses
- Loan amount up to ₹10 lakhs
- Minimal documentation
Best Banks & NBFCs Offering Business Loans in India
| Lender Type | Interest Rate (Approx.) | Loan Amount | Approval Time |
|---|---|---|---|
| Public Sector Banks | 9.5% – 14% | Up to ₹50 Lakhs | 7–15 days |
| Private Banks | 11% – 18% | Up to ₹75 Lakhs | 3–7 days |
| NBFCs | 14% – 30% | Up to ₹1 Crore | 24–72 hours |
👉 Tip: NBFCs offer faster approval, while banks provide lower interest rates.
Eligibility Criteria for Small Business Loan
To apply for a business loan in India, you should meet the following criteria:
- Age: 21–65 years
- Business vintage: Minimum 1–3 years
- Stable monthly turnover
- Good credit score (650+ preferred)
- Indian resident
Documents Required for Business Loan
Most lenders ask for:
- Aadhaar Card & PAN Card
- Business address proof
- Bank statements (last 6–12 months)
- Income proof / ITR
- GST registration (if applicable)
How to Apply for a Business Loan (Step-by-Step)
- Check your eligibility online
- Compare interest rates from banks & NBFCs
- Submit application form
- Upload required documents
- Get verification call
- Loan approval & disbursal
Tips to Get Fast Business Loan Approval
- Maintain a good credit score
- Keep bank statements clean
- Apply for the right loan amount
- Avoid multiple loan applications at once
- Self-employed individuals may also consider personal loans for urgent business needs.
👉 Example sentence:
Self-employed individuals can also explore options like personal loans or credit cards designed for business expenses.
FAQs – Business Loan for Small Business
Q1. Can I get a business loan without collateral?
Yes, many NBFCs and banks offer unsecured business loans.
Q2. What is the minimum credit score required?
A score of 650 or above increases approval chances.
Q3. Can shop owners apply for business loans?
Yes, shop owners, traders, and retailers are eligible.
Q4. How fast can I get a business loan?
NBFCs can disburse loans within 24–72 hours.
Final Thoughts
A business loan for small business in India (2026) can help you scale operations, manage cash flow, and grow faster. Compare lenders carefully, choose the right loan type, and apply with proper documents for quick approval.