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Updated August 2026

Business Term Loan up to Rs 25 Crore - Fixed EMI, Structured Repayment

Lump-sum disbursal + fixed EMI over 1-15 years. Predictable cash-flow planning. Secured or unsecured, fixed or floating rate. India’s most-used business credit format for capex + expansion.

Rs 25 CrMax Amount
9%+Interest
180 MonthsMax Tenure
Fixed EMIStructure
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What is Term Loan

Business Term Loan Explained

A Business Term Loan is the most classic and widely-used form of business credit in India. The structure is simple: the lender disburses the full loan amount as a single lump sum at loan start, and you repay it over a fixed tenure (12 months to 180 months) via scheduled equal monthly instalments (EMIs). Each EMI has a principal component + an interest component, calculated according to a standard amortisation formula.

Term loans come in every possible variant: secured or unsecured, fixed or floating rate, with or without moratorium, standard EMI or step-up structure. They are the go-to credit format for capex (buying equipment, setting up facility, business expansion), debt consolidation, or any use-case where you need a fixed sum now and can plan out the repayment schedule.

In India, business term loans are available from every category of lender - PSU banks (SBI, PNB, Bank of Baroda for lowest rates), private banks (HDFC, ICICI, Axis for fast processing), NBFCs (Bajaj, Tata Capital, IIFL for higher speed + relaxed eligibility), and government schemes (SIDBI, CGTMSE-backed, PMEGP). MahadevX helps you identify the right term loan structure (amount, tenure, secured vs unsecured, fixed vs floating) and matches to the lender offering the best terms for your profile.

Key Features

Why Choose a Business Term Loan

Predictable EMI

Fixed EMI schedule for the full tenure. Zero surprises in cash-flow planning.

Lump-Sum Disbursal

Full amount credited to your account at loan start. Immediate deployment for capex.

Flexible Structure

Choose secured or unsecured, fixed or floating rate, standard or step-up EMI, moratorium option.

Long Tenure Option

Up to 180 months for property-backed term loans - lowest EMI burden of any business credit.

Competitive Rates

Secured term loans from 9%. Even unsecured term loans get better rates than credit cards or personal loans.

Full Amortisation

Loan fully repaid by end of tenure. No balloon payments or refinancing needed.

Prepayment Flexibility

Floating-rate term loans: nil prepayment (RBI mandated). Repay early anytime if business improves.

Section 37 Deductible

Interest fully deductible as business expense. Reduces effective post-tax cost.

Amortisation

How Term Loan EMI Amortisation Works

Understanding amortisation is critical - it tells you exactly how much of every EMI is interest vs principal, and how the mix shifts over time.

Take a Rs 10 lakh Term Loan at 12% p.a. for 60 months. Your EMI = Rs 22,244. Total repayment = Rs 13.35 lakh. Total interest paid = Rs 3.35 lakh. But here is the interesting part: your very first EMI has Rs 10,000 as interest (12% of Rs 10 lakh divided by 12 months) and only Rs 12,244 as principal. By month 60, that same Rs 22,244 EMI has almost Rs 22,000 as principal and just Rs 244 as interest.

This front-loaded interest structure is why prepaying early saves significantly more interest than prepaying later. It also explains why choosing a shorter tenure (higher EMI but lower total interest) vs longer tenure (lower EMI but much higher total interest) is a critical decision. On the same Rs 10 lakh at 12%: 36 months = Rs 33,214 EMI + Rs 1.95 lakh total interest. 60 months = Rs 22,244 EMI + Rs 3.35 lakh interest. 84 months = Rs 17,653 EMI + Rs 4.83 lakh interest.

Term Loan Types

Types of Business Term Loans

Unsecured Term Loan

No collateral. Up to Rs 75 lakh. 12-60 month tenure. Rates 10.75%-24%. Fastest approval.

Secured Term Loan

Property/machinery/asset collateral. Up to Rs 25 crore. 12-180 month tenure. Rates 9%-14%.

CGTMSE Term Loan

Government-guaranteed, collateral-free. Up to Rs 5 crore. Rates 8.15%-13.5%. Up to 84 months.

Machinery Term Loan

Machinery hypothecated. Up to Rs 10 crore. Rates 9%-14%. 36-84 months.

Working Capital Term Loan (WCTL)

Term-format working capital top-up. Up to Rs 5 crore. 24-60 months. Rates 9.5%-15%.

Project Term Loan

For plant setup / greenfield project. Up to Rs 100 crore+. 5-15 year tenure with moratorium.

Eligibility

Business Term Loan Eligibility

Business Vintage

PSU banks: 2-3 years. Private banks: 2 years. NBFCs: 1-2 years. Startups via SIDBI/CGSS schemes.

Annual Turnover

Rs 40 lakh minimum for Rs 10 lakh loan (4x rule). Rs 5 crore+ for Rs 1 crore+ term loans.

CIBIL Score

Personal CIBIL 700+. Business CMR rank 1-6. Secured term loans workable with weaker CIBIL.

FOIR Under 50%

Total EMIs (existing + proposed) as percentage of net income should stay under 40%-50%.

DSCR 1.5x+

Debt Service Coverage Ratio - business cash flow available to service the EMI. Higher DSCR = lower rate.

Clear Purpose

End-use of loan clearly defined - capex, working capital, consolidation. Vague purposes hurt approval.

Documents

Documents Required

Business + KYC Documents
PAN + Aadhaar of proprietor/partners/directors. Business PAN. GST + Udyam registration. Constitution documents. 12 months bank statements. 2 years ITR + audited financials.
Term-Loan-Specific
Business plan / project note (for capex term loans). Utilisation plan of loan proceeds. Quotations if for machinery/equipment. Existing loan details + schedules.
For Secured Term Loans
Collateral title documents. For property-backed: sale deed, EC, property tax receipts, approved plan. For machinery: invoice, valuation, insurance. For FD: original FD + lien authorisation.
Project-Specific (for large capex)
Detailed Project Report (DPR). Cost breakdown + funding pattern (equity + loan). Cash flow projections 5 years. Break-even analysis. Environmental clearance if applicable.
Top Lenders

Best Lenders for Business Term Loans

State Bank of India
Largest term loan lender. Best rates for secured + CGTMSE-backed. Longest tenure (up to 180 months for property-backed).
Rate9.00% - 13.50%
MaxRs 25 Cr
HDFC Bank
Fastest private-bank term loan approval. Best for growing MSMEs with clean GST + banking. HDFC Business Growth Loan up to Rs 75 lakh unsecured.
Rate10.75% - 15.50%
MaxRs 10 Cr
Axis Bank
Competitive term loan rates + top-up flexibility. Digital-forward processing. Strong for Tier-2 city MSMEs.
Rate10.25% - 15.00%
MaxRs 5 Cr
Bajaj Finance
Fastest NBFC term loan. 24-72 hour digital approval for pre-approved customers. Pre-approved top-ups.
Rate12.00% - 22.00%
MaxRs 50 Lakh
Tata Capital
Strong term loan for growing enterprises. Sector-specific pricing + moratorium options for capex.
Rate11.00% - 18.00%
MaxRs 5 Cr
IDFC First Bank
Best CGTMSE-backed unsecured term loan up to Rs 1 crore. Digital verification. Excellent for GST-registered MSMEs.
Rate10.75% - 15.00%
MaxRs 1 Cr
Interest Rates

Term Loan Rates by Category (August 2026)

CategoryInterest Rate (p.a.)Max AmountMax Tenure
PSU Bank Secured (LAP-backed)9.00% - 12.50%Rs 10 Cr180 months
PSU Bank CGTMSE-backed8.15% - 13.50%Rs 5 Cr84 months
Private Bank Secured9.50% - 14.00%Rs 25 Cr180 months
Private Bank Unsecured10.75% - 16.00%Rs 75 Lakh60 months
NBFC Unsecured12.00% - 20.00%Rs 50 Lakh60 months
NBFC Secured (LAP)10.00% - 16.00%Rs 5 Cr180 months
Machinery Term Loan9.50% - 14.00%Rs 10 Cr84 months
Project Term Loan (Large)9.00% - 12.50%Rs 100 Cr+10-15 years
Application Process

How to Apply for a Business Term Loan

1

Purpose Discussion

Define end-use, amount, tenure, secured vs unsecured preference.

2

Lender Match

MahadevX matches your profile to best-fit lender across 100+.

3

Document Submission

Business + KYC + financial + term-loan-specific docs.

4

Underwriting

Credit assessment + FOIR + DSCR + CIBIL checks.

5

Sanction

Sanction letter with amount + rate + EMI + tenure locked.

6

Disbursal

Full loan amount credited to account. EMI cycle begins from next month.

Pros & Cons

Is a Term Loan Right for You?

Advantages

  • Predictable fixed EMI - easy cash-flow planning
  • Lump-sum disbursal for immediate deployment
  • Long tenure options (up to 180 months)
  • Fully amortising - no refinancing needed
  • Wide lender availability (100+)
  • Moratorium available for capex
  • Step-up EMI for growing businesses
  • Section 37 tax deduction on interest

Trade-offs

  • Interest on full amount from Day 1 (even if not used)
  • Fixed schedule - less flexible than OD/CC
  • Missing EMIs hurts CIBIL fast
  • Front-loaded interest structure
  • Prepayment charges on fixed-rate loans
  • Processing + legal + valuation fees
Comparison

Term Loan vs Working Capital vs Overdraft

FeatureTerm LoanWorking Capital (CC)Overdraft (OD)
StructureLump-sum + fixed EMIRevolving limitRevolving limit
Interest Charged OnFull outstandingAmount drawn onlyAmount drawn only
RepaymentFixed monthly EMIFlexible (annual review)Flexible (annual review)
Tenure12-180 months12 months renewable12 months renewable
Best ForCapex, one-time fundingOngoing operationsShort-term cash-flow
Amount CapRs 25 CrRs 25 CrRs 25 Cr
Rate9% - 20%9.15% - 14%9.15% - 14%
20 Questions

Business Term Loan - Frequently Asked Questions

What is a Business Term Loan?
A Business Term Loan is a fixed-tenure loan disbursed as a lump sum at the start, repaid in scheduled fixed EMIs (Equated Monthly Instalments) over a defined period. The term is typically 1-10 years. Each EMI has principal + interest components - the principal share grows over the tenure while the interest share shrinks (amortisation).
How does term loan amortisation work?
Amortisation is the mathematical schedule of splitting each EMI into principal + interest. In early EMIs, most of the payment is interest (because outstanding is high). In later EMIs, most is principal (as outstanding shrinks). The formula: EMI = P x R x (1+R)^N / ((1+R)^N - 1), where P = principal, R = monthly rate, N = tenure in months. The amortisation schedule shows every EMI’s breakup for the entire tenure.
What is the maximum Term Loan amount?
Unsecured Term Loans: up to Rs 75 lakh (bank), Rs 50 lakh (NBFC). Secured Term Loans backed by property: up to Rs 25 crore. Machinery-backed Term Loans: up to Rs 10 crore. CGTMSE-covered Term Loans: up to Rs 5 crore collateral-free. Very large enterprise term loans go up to Rs 100 crore+.
What is the tenure for a Business Term Loan?
Short-term: 12-24 months (working capital use). Medium-term: 2-5 years (typical capex). Long-term: 5-10 years (heavy capex, plant setup). Machinery term loans go up to 84 months. Property-backed term loans (LAP) up to 180 months. Longer tenure = lower EMI but higher total interest paid.
What is the interest rate on a Term Loan?
PSU bank secured term loans: 9%-13%. Private bank secured: 9.5%-14%. Unsecured term loans: 10.75%-24%. NBFC term loans: 11%-20%. Rate depends on secured vs unsecured, borrower profile, and tenure. Longer tenure fixed-rate loans typically price 0.25%-0.5% higher than short-term.
Fixed vs Floating rate - which is better for a Term Loan?
Fixed rate: EMI stays constant for the full tenure. Predictable but higher rate. Best when rates are low and expected to rise. Floating rate: linked to lender’s benchmark (Repo Rate, MCLR, EBLR); EMI changes when benchmark changes. Lower initial rate. Best when rates are high and expected to fall, or if you want to prepay flexibly (RBI mandates nil prepayment on floating).
What is a moratorium period in a Term Loan?
Moratorium is a period at loan-start during which you pay only interest (no principal) OR pay nothing at all. Useful for capex loans where the project takes time to generate revenue. Machinery term loans: 6-12 months moratorium. Real estate project term loans: 12-36 months. During moratorium, interest continues accruing (added to principal).
What is a step-up EMI structure?
Step-up EMI starts small and increases over the tenure (e.g. Rs 30k for first 2 years, Rs 40k for years 3-5, Rs 50k thereafter). Useful for growing businesses expecting revenue to scale. Total interest paid is higher than standard EMI, but affordability at the start is better. Some lenders also offer step-down EMI for declining-revenue scenarios.
Can I get a Term Loan for working capital?
Yes - a Working Capital Term Loan (WCTL) is a specialised product. Unlike a rolling working capital limit (CC/OD), WCTL is a term loan disbursed once + repaid via EMI over 3-5 years. Useful for one-time working capital top-up, seasonal inventory build, or bridging a cash flow crunch. See our Working Capital Loan page for details.
What documents are required for a Term Loan?
Standard business + KYC docs: PAN, Aadhaar, business PAN, GST + Udyam registration, 12 months bank statements, 2 years ITR + audited financials. Term-loan-specific: business plan / project note (for capex loans), utilisation plan of loan proceeds, quotations if for machinery, existing loan schedules, and for secured loans - collateral documents.
How is Term Loan eligibility calculated?
Lenders use FOIR (Fixed Obligation to Income Ratio) - total EMIs (existing + proposed) as a percentage of net income. FOIR should typically stay under 40%-50%. Also DSCR (Debt Service Coverage Ratio) - business cash flow available to service the EMI. DSCR of 1.5x+ preferred. Combined with CIBIL + collateral (if secured) determines the sanctioned amount and rate.
Can I foreclose a Term Loan early?
Yes. RBI has mandated nil prepayment / foreclosure charges for all floating-rate loans (effective 2025). For fixed-rate term loans: 2%-5% of principal foreclosed, often reducing after 12-24 months. Some lenders waive charges for full closure after 60% tenure completion. Always check your loan agreement.
What is the processing fee for a Term Loan?
PSU banks: 0.50%-1.50% + GST. Private banks: 1%-2%. NBFCs: 2%-3%. Fintech NBFCs: 2%-4%. Secured term loans additionally have legal + valuation charges (Rs 15,000-40,000). Processing fees are often negotiable - during festive seasons or year-end lender campaigns, waivers are common.
How long does Term Loan approval take?
Unsecured Term Loans: 3-7 days (NBFC), 10-15 days (private bank), 15-30 days (PSU bank). Secured Term Loans: 20-30 days (private bank + NBFC), 30-60 days (PSU bank due to legal + valuation). CGTMSE-covered: additional 5-10 days for guarantee application.
What happens if I miss a Term Loan EMI?
(1) Immediate SMS/email/call reminder. (2) After 30 days overdue - late-EMI penalty of Rs 500-750 per instance + penal interest of 2%-3% p.a. (3) After 60 days - collection escalation + CIBIL negative reporting. (4) After 90 days - loan classified NPA + full outstanding recall notice. (5) After 120 days - legal action + SARFAESI (for secured). Always talk to your MahadevX RM if EMI trouble is coming.
Can I get a Term Loan tax benefit?
Yes - interest paid on a business term loan is fully deductible as a business expense under Section 37(1). Principal repayment is NOT deductible. Processing fees are deductible in the year paid. Total post-tax cost of the loan is your interest x (1 - marginal tax rate). At 30% tax bracket, a 12% pre-tax rate becomes 8.4% effective post-tax rate.
Which banks are best for Business Term Loans?
For lowest rates + long tenure: SBI, HDFC Bank, Axis Bank (secured term loans 9%-13.5%). For fast NBFC unsecured term loans: Bajaj Finance, Tata Capital, IDFC First. For CGTMSE-covered term loans: any PSU bank + IDFC First + Federal Bank. For very large enterprise term loans: SBI Corporate + private bank SME divisions. MahadevX matches per profile.
Can I use a Term Loan to consolidate multiple existing loans?
Yes - one of the most common use-cases. A single larger Term Loan pays off multiple smaller high-cost loans (personal loans, credit cards, expensive NBFC loans), leaving you with ONE lower-rate EMI. Consolidation typically works when the new loan rate is 3%+ lower than your weighted-average existing rate. Talk to your MahadevX RM for a consolidation calculator.
Can startups get a Business Term Loan?
Established startups (2+ years with strong GST): yes - via private bank + NBFC unsecured term loans. New startups (under 12 months): challenging. Better routes: Mudra Tarun up to Rs 20 lakh, DPIIT-recognised startup schemes via SIDBI (loans up to Rs 10 crore under SIDBI Credit Guarantee for Startups), CGTMSE-backed startup term loans up to Rs 5 crore.
How can MahadevX help me get a Business Term Loan?
MahadevX identifies the right term loan structure (secured vs unsecured, fixed vs floating, tenure, moratorium), matches you to the best-fit lender across 100+ empanelments, negotiates rate + fee waivers, and coordinates end-to-end till disbursal. We also build a full EMI amortisation projection so you understand the loan cost before signing. Service is free - lenders pay us on disbursal.
Related

Related Loan Types

Working Capital Loan Overdraft Facility Unsecured Business Loan Secured Business Loan Machinery Loan CGTMSE Loan
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