Apply for OD Loan or Business Loan in 2025 – Check Limit, Eligibility, Interest Rate & Instant Online Approval

Confused Between OD and Business Loan? Let’s Break It Down

Cash flow tight? Need instant money to run your business or handle a short-term crunch?

Whether you’re a salaried person, a startup founder, or a small business owner, this guide will help you understand which is better for you — a business overdraft loan or a business loan.

We’re not here to confuse you with jargon. You’re here for answers.
Let’s give you that — with real info, real benefits, and zero fluff.

What is an Overdraft Loan Facility?

An Overdraft Loan (OD) is a credit facility provided by banks where you can withdraw more money than your current account balance, up to a fixed OD limit. It’s like an emergency fund always available for use.

1. You pay interest only on the amount you use (not the total limit).

2. It’s ideal for short-term needs, working capital gaps, and seasonal expenses.

Example: You have ₹50,000 in your account and your OD limit is ₹2,00,000. You can withdraw up to ₹2,50,000 if needed!

What is a Business Loan?

A Business Loan is a fixed-term loan where you borrow a lump sum (say ₹5–₹50 lakhs) and repay it in monthly EMIs with interest. It’s ideal for:

• Business expansion

• Buying machinery

• Hiring staff

• Launching a new service/product

Quick Comparison: Overdraft Facility vs Business Loan

Who Can Apply for an Overdraft Loan?

You’re eligible if:

• You’re a business owner, self-employed professional, or salaried individual

• You have a stable income and an active bank account

• You’ve filed ITR for the past 1–2 years

• You meet the OD loan eligibility criteria set by banks

Documents Required for Overdraft Facility

Here’s what you typically need to apply for OD limit:

• PAN Card & Aadhaar

• Bank statement (6–12 months)

• Business registration proof

• ITR for 1–2 years

• OD account opening form

Some banks may also ask for GST returns and audited financials.

Top Banks Offering OD & Business Loans in India (2025)

How to Apply for an Overdraft Facility or a Business Loan?

Applying online is super easy in 2025. Here’s how:

Apply for OD Limit Online

1. Visit your preferred bank’s site

2. Choose Overdraft Facility for Business/Salaried

3. Fill out the online form

4. Upload documents

5. Get the OD limit sanctioned within 24–72 hours

Apply for a Business Loan

1. Go to the lender’s site or aggregator platform

2. Select the loan amount and tenure

3. Fill application

4. Upload documents

5. Get approval & money in the account within 3–5 days

Pro Tip: When to Choose What?

• Choose Overdraft Loan if: You need flexible credit, pay only when you use, and expect income soon.

• Choose Business Loan if: You need large funds upfront with a clear repayment plan.

5 Most Asked FAQs

1. Is an overdraft loan better than a business loan?

If you need frequent, small funds and flexibility , yes. For big-ticket one-time needs, go for a business loan.

2. Can salaried people apply for an overdraft facility?

Yes! Overdraft loan for salaried employees is offered by many banks based on salary and job stability.

3. What is the average overdraft loan interest rate in 2025?

Rates start from 8.5% — 16%, depending on your profile and bank.

4. What is the OD limit I can get as a small business?

Typically, ₹50,000 to ₹1 crore. Higher limits are offered to stable businesses with good financials.

5. Can I apply for both OD and a business loan together?

Yes, if your eligibility and documents support it. Many businesses use both to manage long-term and short-term needs.

Final Words: Get the Right Funding, the Right Way!

Whether you’re starting or scaling up, choosing between a business overdraft facility and a business loan depends on your goal.

For quick working capital, go with an OD loan for business.
For large, long-term growth, go for a business loan.

Apply online for a loan, compare offers, and choose the best fit.