Introduction
In 2025, more Indian business owners and MSMEs are applying for loans to fuel their growth. But one major question remains: Should you go for an NBFC business loan or a traditional bank business loan?
While banks are reliable with structured interest rates and long tenures, NBFCs (Non-Banking Financial Companies) offer faster approvals and more flexibility.
In this blog, we’ll explore the key differences, eligibility, pros, cons, and expert tips so you can choose the best fit for your business needs.
🏦 What Is a Bank Business Loan?
A bank business loan is a financial product offered by regulated institutions like State Bank of India (SBI), HDFC Bank, ICICI Bank, etc., primarily used to support business expansion, working capital, or asset acquisition.
✅ Features:
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Regulated by the Reserve Bank of India (RBI)
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Requires a high CIBIL score (700+)
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Interest rates starting at 9% per annum
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Processing time: 5–15 working days
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Extensive documentation required
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Collateral often mandatory
🔗 Learn more about bank loans on Wikipedia.
🏢 What Is an NBFC Business Loan?
An NBFC business loan is offered by non-bank financial institutions like Bajaj Finserv, Tata Capital, Lendingkart, and others. NBFCs are regulated by the RBI but operate more flexibly.
✅ Features:
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Quick approval: Within 24–72 hours
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Moderate CIBIL score accepted (600+)
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Interest rates from 11–18% per annum
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Minimum paperwork
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Suitable for MSMEs and startups
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Often do not require collateral
🔗 Know more about NBFCs on Wikipedia.
📊 Comparison Table — NBFC vs Bank Business Loan
| Feature | Bank Business Loan | NBFC Business Loan |
|---|---|---|
| Approval Time | 5–15 days | 1–3 days |
| Minimum CIBIL Score | 700+ | 600+ |
| Interest Rate | 9–14% | 11–18% |
| Documentation | High | Minimal |
| Collateral Requirement | Usually Required | Usually Optional |
| Flexibility | Low | High |
| Suitable For | Established businesses | Startups, MSMEs, urgent needs |
| Processing Fees | Low | Moderate to High |
| Customer Support | Institutional, slow follow-up | More proactive and digital |
💡 Which Should You Choose in 2025?
✔️ Choose Bank Business Loan If:
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Your CIBIL score is 700+
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You have complete financial records and ITRs
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You prefer lower interest rates
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You’re not in urgent need of funds
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You have collateral to offer
✔️ Choose NBFC Business Loan If:
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You need funds urgently
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Your CIBIL score is below 700
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You lack formal financials or audited balance sheets
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You want a fast and digital application process
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You’re an MSME/startup with limited resources
📍 Real-Life Use Case
A small retail business in Kolkata needed ₹5 lakhs working capital urgently. The business owner’s CIBIL score was 645. Traditional banks rejected the loan. However, an NBFC partner of CreditCares approved it within 36 hours with basic documentation.
🔗 Internal Links You Should Check
❓ FAQ Section
1. What is the main difference between a bank and NBFC loan?
Banks are stricter in eligibility and offer lower interest rates. NBFCs are quicker, more flexible, and ideal for MSMEs.
2. Can I get a loan from an NBFC with a low credit score?
Yes, many NBFCs offer loans even with CIBIL scores around 600.
3. Is an NBFC safe for business loans?
Yes. Major NBFCs are RBI-regulated and safe, but always verify credentials.
4. Do NBFCs charge higher interest?
NBFCs often charge slightly higher rates than banks, typically due to faster approval and risk tolerance.
📞 Call to Action
Need expert guidance to compare the best bank and NBFC business loan offers?
✅ At CreditCares, we help you choose from 50+ partner banks and NBFCs, ensuring:
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Lowest interest rates
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Fast loan approvals
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Credit score improvement support
📲 Call now: +91 9830038870
📧 Email: creditcaresindia@gmail.com
📍 Visit us at: 56L, Bidhannagar Rd, Ultadanga, Kolkata, West Bengal 700067
