What Is a Business Term Loan? Types, Features, Interest & Eligibility Explained (2025 Guide)

Why Business Term Loans Matter in 2025

In today’s dynamic economy, access to capital is the lifeline of any growing or struggling business. Whether you’re running a small startup, an MSME, or a large enterprise, one financial product that continues to empower business growth is the business term loan.

But with so many options like short-term loans, long-term loans, working capital loans, and secured or unsecured business loans, it’s easy to get confused. What’s the difference? Which loan suits your business? What interest rates can you expect in 2025?

In this detailed guide, we’ll simplify it all , including:

• A comparison of short vs long-term business loans

• Current term loan interest rates in India

• Eligibility criteria

• Benefits for MSMEs & new businesses

• Online application steps
  …plus more insights trusted by business owners across India.

What is a Business Term Loan?

A business term loan is a type of financing where a business borrows a fixed amount for a set period at a predetermined interest rate. Repayment is done in monthly EMIs over the agreed tenure.

There are two major types:

• Short-term business loans (typically 12–36 months)

• Long-term business loans (3–10 years or more)

These are different from working capital loans, which are usually revolving credit used to meet daily operational expenses.

Business Loan vs Term Loan: What’s the Difference?

Let’s clear this common confusion.

Tip: If your goal is expansion, asset purchase, or business diversification, go for a term loan for business. If you need cash for short-term working needs, working capital loans are better.

Business Term Loan Interest Rate in India (2025)

Here are the expected term loan interest rates offered by top Indian banks and NBFCs in 2025:

The interest on term loans varies depending on business profile, credit score, loan type (secured/unsecured), and bank policies.

Types of Term Loans for Business

1. Short Term Business Loan (1–3 years)

Best suited for:

• Seasonal inventory purchase

• Urgent cash needs

• Marketing campaigns

You can now apply for a short-term business loan online via most banks and NBFC websites.

2. Long Term Business Loan (3–10+ years)

Ideal for:

• Business expansion

• Buying machinery or property

• Infrastructure projects

You can apply for a long-term loan online with documents like ITR, GST returns, and bank statements.

3. Secured Term Loan for Business

If you can offer collateral (property, equipment, FD), you can get:

• Lower term loan interest

• Higher approval chances

• Longer business loan tenure

This is often the best term loan for a small business with strong assets but lower credit scores.

Benefits of Business Term Loans in 2025

Whether you’re an MSME or a new startup, term loans come with several advantages:

• High loan amounts (up to ₹50 Cr for eligible businesses)

• Flexible repayment tenure — choose between short and long-term loans

• Competitive interest rates in 2025 due to the RBI repo rate stability

• Helps improve credit score over time with timely EMIs

• Useful for tax planning (EMI interest may be deductible)

Term loan benefits for MSMEs include relaxed norms, faster approval, and tailored schemes under CGTMSE or Mudra loans for startups.

Term Loan Eligibility in 2025

Most banks follow these criteria for business term loan eligibility:

Pro Tip: New businesses can look for a term loan for a new business with NBFCs and government schemes.

How to Apply for a Business Term Loan Online

It’s now easier than ever to get funding. Here’s how to apply for a business term loan online:

1. Visit the lender’s website or an aggregator like InstaRupee, BankBazaar, etc.

2. Choose a short-term or longshort-term term business loan.

3. Fill in basic details (name, phone, business type).

4. Upload documents (PAN, Aadhar, bank statement, ITR).

5. Get approval within 48–72 hours (some give instant loan offers).

Key Features & Characteristics of Term Loans

Here are the main term loan characteristics every borrower must know:

• Fixed interest rate or floating (depends on the lender)

• EMIs every month, typically auto-debited

• Repayment tenure pre-agreed; may have pre-closure charges

• Can be secured or unsecured

• Some loans offer a moratorium (repayment holiday)

These term loans features make them more structured and predictable for business planning.

Comparison Table: Short vs Long Term Business Loan

Top 5 FAQs on Business Term Loans in India

1. What is a business term loan, and how is it different from a working capital loan?

A business term loan is a fixed-amount loan for a fixed tenure, usually used for expansion or big purchases. Working capital loans are short-term loans for daily expenses.

2. What is the maximum business loan tenure I can get?

Business term loans can go up to 10 years, and even 15 years in secured cases. Most NBFCs offer up to 5 years.

3. What is the current term loan interest rate in India (2025)?

Interest rates range from 8.90% to 28%, depending on the lender, loan type, and business credit profile.

4. Can I get a term loan if I’m a new business?

Yes. Many banks and NBFCs offer term loans for new businesses, especially under startup schemes or with collateral.

5. How fast can I apply and get disbursal online?

With top NBFCs or digital lenders, you can apply online and get disbursal within 48 hours, especially for short-term business loans.

Final Words: Is a Business Term Loan Right for You?

If you’re serious about growing your business in 2025, a business term loan could be your smartest financing move. Whether it’s a short-term loan for managing cash flow or a long-term loan for opening a new branch, there’s a suitable option waiting for you.

Compare rates, understand your business loan tenure, check your term loan eligibility, and then apply online—fast, secure, and hassle-free.