Unsecured Business Loan Interest Rate in India 2025

The functioning of a business in India usually requires some extra funds for running the daily activity, service expansion, or simply dealing with unexpected expenses. Some businesses go for secured loans, but numerous small and medium businesses prefer to have an unsecured loan for their businesses if they do not want their assets to be used as collateral. 

The very need for an unsecured loan for business has increased considerably in 2025, making it necessary to understand how interest rates are determined for unsecured business loans, their eligibility, and how to avail oneself of the best unsecured business loan.

The blog will take into account everything regarding the unsecured business loan interest rate, its factors, and ways to get the cheapest unsecured loan for business in 2025.

What is an Unsecured Business Loan?

Unlike a secured loan, an unsecured loan for business is a form of funding for which the borrower does not need to put up any collateral. It is granted based on the creditworthiness, repayment history, and credit standing.

In India, unsecured loans for business are provided by banks, NBFCs, and fintech lenders. These loans are a great option for startups, MSMEs, and small entrepreneurs.

Latest Business Loan Interest Rates by Banks and NBFCs – August 2025

Factors Affecting Unsecured Business Loan Interest Rate

The interest rates on unsecured business loans in India are influenced by several factors:

• Credit Score: A credit score of 750 or above is charged lower interest rates.
• Business Age and Stability: A new startup may be charged at a higher rate. While an old and stable business gets a loan at lower interest rates.
• Annual Turnover: A firm having a high and steady turnover is eligible for a better deal on an unsecured loan for business.
• Repayment History: Timely repayment of previous loans will increase your chances of acquiring the best unsecured business loans, with the lowest rates.
• Loan Duration: Since longer tenures tend to garner slightly higher rates, shorter ones have lower rates.
• Lender Type: From the perspective of interest rates on unsecured business loans, the banks impose the lowest rates compared to NBFCs or fintech lenders.

Why Choose an Unsecured Loan for Business?

The following may have brought about increased preference for unsecured loans for business over others by Indian entrepreneurs in 2025: 

• Security Not Required: Businesses do not risk their own or anyone else's personal or commercial assets.
• Quick Processing: Lenders in India process unsecured business loans faster than secured ones.
• Use of Funds: Flexible use of funds for working capital, expansion, or marketing. 
• Fewer Documents: Banks and NBFCs require less documentation for unsecured loans as compared to secured loans.

Eligibility for Receiving an Unsecured Business Loan in India

To qualify for an unsecured loan for business, applicants need to meet certain criteria:

• Self-employed persons, proprietors, private limited companies, and partnership firms engaged in manufacturing, trading, or services may apply. 
• Applicants should have been in their current line of endeavour for a minimum of 3 years with 5 years of total business experience.
• It should have been a profit-making venture for the past 2 years.
• The minimum age of the applicant must be 21 years at the time of application for a loan, and the maximum age must be 65 years at the time of maturity of the loan.

Documents Required for an Unsecured Loan for Business

Lenders generally ask for fewer documents for an unsecured business loan in India, such as:

• Applicants need to present an original identity proof, such as a PAN card, Aadhaar card, passport, or voter ID. 
• Address proof comprising original documents such as a utility bill, rental agreement, Aadhaar card, or passport must also be submitted.
• Submission of the business registration certificate for companies, LLPs, or firms (not needed for sole proprietors beyond GST/Udyam).
• Recent bank statements covering a period of 6 to 12 months, showing present financial transactions.
• Income Tax Return (ITR) for the last 2–3 years as income proof.
• GST Returns needed if the business is GST registered to verify turnover and compliance.

How to Get the Best Unsecured Business Loan Interest Rate?

Some tips to help you land the lowest unsecured business loan interest rates in India:

• Maintain a Good Credit Score: Pay dues promptly, so as to build a credit history for yourself.
• Shop Around: Don't settle for the first offer; compare banks, NBFCs, and fintech lenders alike.
• Look at the Loan Tenure: Shorter tenures mean a lower total amount for interest payments.
• Negotiate: Big companies can negotiate an interest rate payable for the unsecured business loan.
• Maintain Financial Records: Maintain current ITRs and GST returns accompanied by a set of auditor's reports to build lender trust.

Conclusion

In 2025, unsecured business loan interest rates are set anywhere between 10.5% and 35%, varying by lender and borrower profile. 

From a small startup or a growing MSME, the best unsecured business loans with the correct interest rate can take a company higher without worrying about money.

If planning on taking an unsecured business loan in India, do a comparison of lenders on My Mudra and cross-check eligibility, and thus negotiate terms and conditions for securing the best deal. You can connect with our team to make a wise decision.

Also Read:
- Best Bank for Business Loan with Low Interest Rate: 2025 Guide
- Best Fast Business Loan Options in India for 2025