A business
loan provides financial assistance to entrepreneurs and enterprises to support
operations, working capital, or expansion. It is often used for purchasing
machinery, paying salaries, or investing in growth. Borrowers usually benefit
from repayment flexibility, structured EMIs, and quick processing when opting
for such loans. With the Reserve Bank of India (RBI) cutting repo rates in
2025, borrowing has become affordable across the market. Tata Capital responded
to these changes in business loan interest rates to reflect the impact. This
article discusses the impact of policy changes on Tata Capital’s interest rates
amid the RBI’s changing policies.
What are Business Loan
Interest Rates?
A business loan
interest rate is a yearly charge expressed as a percentage on the outstanding
loan amount. This means the loan interest rate is the cost charged by a lender
for the amount borrowed.
Tata
Capital aligned its business loan interest rates to reflect the affordable cost
of borrowing. Tata Capital offers competitive interest rates starting from 12%
per annum for self-employed professionals such as doctors, lawyers, chartered
accountants and others.
If you are
a self-employed non-professional, your rate would typically start from 14% per
year. The rate they provide can differ depending on various factors like your
income, credit score, business stability, financial record, nature of
profession, etc.
RBI’s Policy Shift and
Its Impact
In
February 2025, the RBI announced a reduction in the repo rate of 0.25%. This
move is aimed at making borrowing affordable, which may encourage businesses to
borrow more for expansion. When such cuts take place, lenders are expected to
pass on the benefit by lowering their own loan rates. Tata Capital, in line
with the new policy, has reviewed its business loan rates to align with market
conditions, making borrowing more affordable.
Tata
Capital’s floating-rate business loans are tied to the RBI’s repo rate. A rate
cut may lower EMIs, easing repayment. For borrowers, this shift creates an
opportunity to secure funding at more competitive costs. Fixed-rate options
remain available for those preferring stability, but floating rates may prove
useful for businesses expecting benefits from lower repo rates.
Types of Rates Offered at
Tata Capital
Tata
Capital provides both fixed and floating interest rate loans. Fixed rates
ensure predictable EMIs throughout the loan tenure, while floating rates are
directly linked to RBI’s repo rate and may fluctuate with market shifts. For
professionals, rates start from around 12% per annum, while non-professionals
may see rates beginning near 14%.
Interest
rates depend on borrower profiles. Credit history, turnover, and repayment
record influence approvals. Tata Capital evaluates each profile individually to
arrive at fair terms.
Business Loan Interest
Rates in India
In India,
business loan interest rates for self-employed individuals can vary
significantly across lenders, depending on business type and borrower profile.
Professionals
usually enjoy affordable rates due to the stability of their practice, while
non professionals may face slightly higher rates depending on their business
risk profile.
Along with
the rate of interest, customers should also consider the processing fee, which
at Tata Capital is up to 3% of the loan amount + taxes. All charges are
disclosed upfront, ensuring complete transparency with no hidden costs.
Business Loan Documents
Required
To ensure
a smooth approval process, applicants must submit the necessary business loan documents when applying. These documents help lenders verify identity,
financial standing, and business stability.
At Tata Capital, the typical
documents required for business loans include:
- Identity Proof: Aadhaar Card, PAN Card, Passport,
Voter ID, or Driving Licence - Address Proof: Utility bills, rental agreement,
passport, or Aadhaar - Income Proof: Latest Income Tax Returns, audited
balance sheet, and profit & loss statements - Business Proof: GST registration, business licence,
or partnership deed - Bank Statements: Last 6 months’ bank statements
How to Avail Business
Loans at Lower Interest Rates?
Although
market rates and lender policies play a big role, borrowers can still influence
the rate they receive. Here are some ways to increase your chances of
securing competitive interest rates with Tata Capital:
- Maintain a Strong Credit Score: A high credit score shows repayment
discipline and reduces perceived risk. Timely EMI payments and low
credit utilisation can help improve your score. - Present a Strong Business Plan: Tata Capital carefully evaluates
business sustainability before finalising rates. A solid business plan
that highlights growth strategies can positively impact the interest
rate offered. - Improve Financial Health: Higher turnover, healthy cash flow,
and positive balance sheets signal stability. This may help you
qualify for more favourable rates.
Conclusion
The RBI’s decision to cut
the repo rate has created favorable borrowing conditions, and Tata Capital has
responded by lowering its business loan rates. For borrowers, this
development may ease access to credit for operations or expansion at a
lower cost. Tata Capital’s range of options, including fixed, floating,
and hybrid term loans, offers practical solutions for diverse borrowers.
Careful evaluation ensures that a loan remains manageable and aligned
with long-term business goals.
