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Chennai is the capital of the southern state of Tamil Nadu. It is one of the most prominent business centres in India, with financial services playing a dominant role. There are numerous private and public sector banks operating out of Chennai, with Indian Bank and Indian Overseas Bank (public sector banks) headquartered in Chennai. It’s therefore natural to find many financial institutions offering a business loan in Chennai for start-ups, MSMEs, and large enterprises. Today, let us take a look at how to get a bank loan for business in Chennai, government business loans in Chennai, bank loan interest rates for business, and why business loans are the right type of business finance for your business.

Also read: Business loans in Mumbai and business loans in Hyderabad

How to get business loan in Chennai?

To get a business loan in Chennai or any other city in India, there are channels available:

  • Business loans from NBFCs and banks (private and public)
  • Funding via government schemes and cooperatives
  • Connect with a bank business loan DSA in Chennai – I.e., identify a direct selling agent and get help to fill in the application form, screening documents, uploading documents etc.

These funds can be availed by applying online on the bank/NBFCs page or visiting a branch. When availing an online or offline business loan, keep in mind that offline loans take slightly more time to process, while online loans can be disbursed within 72 hours after approval.

Similarly, loans can be for a short term (up to 3 years) or long term (5-7 years or more). Depending on the loan amount and tenure and other documents, these can be unsecured business loans or business loans with collateral (though it is always beneficial to offer collateral for small scale business loan in Chennai or any other place).

In general, banks and NBFCs have similar eligibility and documentation requirements, tenure and amount offered. The business loan interest rate in Chennai is also comparable across lenders in the city. Let us then take a look at these details in general.

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Eligibility & Documents for applying for bank loans for business in Chennai

As mentioned previously, the eligibility requirements for most lenders for business loans are similar. It depends on the loan amount borrowed and whether it’s a secured or unsecured business loan.

General eligibility criteria for unsecured business loans in Chennai, Tamil Nadu

  • Must be a citizen of India
  • Age – 21 to 65 years old (at the time of loan maturity)
  • 650+ credit score (recommended)
  • Business vintage – 2+ years
  • Type of business – Proprietors, One Person Company, Partnership or Limited Liability Partnership (Check details on OPC business loans)
  • Turnover – ₹1+ lakh in the last 3 months of operations
  • 2+ years ITR submission and financial records
  • Industry type – All industry types except restricted industries

Documents required for small business loan in Chennai

Whether you are seeking a startup business loan or loan for expanding your existing business, lenders will always check for documentation. This is done to reduce risks and ensure that the borrower is capable of loan repayment and does not default.

In general, the documents required for a business loan application are:

Business Loan
  • Duly filled in application form and 2 passport sized photo
  • Any Identity proof document – Aadhaar, Voter’s ID, DL, Passport
  • PAN card (individual and Business PAN)
  • Address proof (individual and business)
  • Business ownership proof and Business existence proof
  • All financial documents – 6+ months bank statements, ITRs for 2 years, audited P/L and balance sheets
  • Any existing loan declaration and business plan if available

Business loan interest rate in Chennai by leading banks/NBFCs

As mentioned previously you can get a business loan for new business in Chennai from leading banks and NBFCs. As the RBI regulates loan interest rates, there is minor difference in the interest rates offered by different lenders. Here’s a snapshot of the business loan features and interest rates offered by top lenders in Chennai:

Bank name Features Interest rates
HDFC Bank business loan Loan amount – Up to ₹50 lakhs (₹75 lakhs in select locations)

Tenure: 12 – 48 months

Collateral – Not required

10% – 22.5% p.a. (Rack interest rate range)
Axis Bank business loan Loan amount – ₹50 lakhs to ₹75 lakhs

Tenure: 1 – 5 years

Collateral – Not required

11% – 25% p.a.
IDFC FIRST Bank business loan Loan amount – Up to ₹1 crore

Tenure: Up to 48 months

Collateral – Not required

10.5% – 24% p.a.
IndusInd Bank business loan Loan amount – Up to ₹50 lakhs

Tenure: Up to 48 months

Collateral – Not required

13% – 22% p.a.
Canara Bank business loans Different loan schemes for commercial vehicles, transport operators, women entrepreneurs, working capital etc. 10% p.a. onwards depending on the scheme
SBI business loans – Simplified Small Business Loans Loan amount – ₹10 – ₹25 lakhs

Tenure: 12 to 60 months (for dropline OD)

Collateral – Required (40%)

10% margin
IIFL Finance business loans Loan amount – Up to ₹30 lakhs

Tenure: 12 to 60 months

Collateral – Not required

12.75% – 33.75% p.a.

Note: This is for information only. Bank loan interest rates, loan amount, repayment tenure and other details are subject to change at the bank’s discretion. Please check the bank website for more details.

Tamil Nadu government business loan in Chennai

We’ll now take a look at some of the business loan schemes offered by the government. In general, most of the funds provided by the government are for specific purposes. That is, while a business loan can be used for diverse business needs (e.g., paying rent, buying raw material, meeting daily cash challenges etc.), a government loan is usually for a specific purpose.

We’ll take a look at some of the top loan schemes in Chennai for businesses:

Tamil Nadu Industrial Investment Corporation Scheme Limited (TIIC) – Small Business Loans

  • Loan type – General Term Loan
  • Loan amount – Up to ₹50 crores
  • Repayment period – Up to 9 years
  • Collateral – For loans up to ₹3 crore (up to 50%); for above ₹3 crore (to be decided by Sanctioning Authority)
  • Debt Equity ratio – 3:1 (for loans up to ₹10 lakhs); 21:1 (for loans above ₹10 lakhs)

New Entrepreneur cum Enterprise Development Scheme (NEEDS)

  • Loan type – Assistance with entrepreneurial training, tie ups with banks etc.
  • Project cost – ₹10 lakhs – ₹5 crores
  • Repayment period – 5 to 7 years (with 6 months moratorium)
  • Collateral – 50% of loan amount

Other notable mention of business loans for MSMEs in Chennai

Tamil Nadu Grama Bank – MSME Term Loan

  • Loan type – Term loan
  • Quantum – Project based
  • Schemes covered – MUDRA, NEEDS, UYEGP, PMSVANidhi, Stand-Up India etc.
  • Tenure – Up to 10 years
  • Collateral – Required
  • Interest rates – 11.5% to 13.50% p.a.

Next steps

So now that you understand how to apply for a SME loan or connect with business loan agents in Chennai, what do you do next? Here you must understand the role and importance of business finance.

  • Before taking a loan for business startup in Chennai (or for an existing business), you need to understand your loan requirements. That is, why you need the loan, how much and for how long, and how you will spend the loan amount, and be able to repayment the loan EMIs in time.
  • Approach at least 3-5 lenders to understand the process, documents required, loan disbursement timelines, charges and fees, and other details.
  • Negotiate the loan offer thoroughly so that it fits your business needs and timelines

Sohini Banerjee

Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.