Tata Capital vs. Bajaj Finserv: Which Business Loan is Right for You?

Business loans are a valuable resource for companies looking to expand their operations, buy new equipment, or manage working capital. Among the many lenders available, Tata Capital and Bajaj Finserv stand out as two popular choices for business loans in India. This article will help you understand the key differences between these two options, making it easier for you to decide which one suits your business needs.

Tata Capital vs Bajaj Finserv Business Loan

Overview of Tata Capital Business Loans

Tata Capital Limited is a well-known name in the Indian financial sector, offering a range of financial products and services. Here's a closer look at what they offer in terms of business loans:

1.  Processing Charges: Tata Capital charges a processing fee of 2.50% on the loan amount. This fee is lower compared to many other lenders, making it more cost-effective for businesses that need to keep initial expenses in check.

2.  Interest Rate: The interest rates for Tata Capital business loans range from 12% to 15% per annum. These rates are considered competitive and are based on factors like the applicant's credit score, business turnover, and repayment history.

3.  Loan Tenure: The loan tenure offered by Tata Capital is between 12 to 60 months (1 to 5 years). This range gives businesses the flexibility to choose a repayment schedule that aligns with their cash flow.

4.  Age Limit: To be eligible for a business loan from Tata Capital, the applicant's age must be between 21 to 65 years. This wide age bracket allows both young entrepreneurs and seasoned business owners to access financing options, making Tata Capital a versatile choice for a diverse range of applicants.

5.  Loan Amount: Tata Capital offers business loans ranging from ₹1 lakh to ₹90 lakh. This high maximum limit is ideal for businesses looking for substantial funding to support major expansions or capital investments.

6.  Approval Time: While the exact approval time can vary depending on the applicant's profile and the completeness of their documentation, Tata Capital generally strives to process loan applications quickly (Less than 24 Hours).

7.  Preclosure Charges: Tata Capital charges 4.5% on the outstanding balance if you decide to close your loan early. While this fee might seem high, preclosure can still save money on interest payments if managed well.

Overview of Tata Capital Business Loans


Documents Required: Tata Capital typically asks for the following documents:

  • Your Valid ID proof, including Aadhaar card, PAN card, or passport.
  • Proof of address (utility bill, rental agreement, passport, etc.)
  • Business proof (registration documents, IT returns, GST filings)
  • Financial statements (bank statements, balance sheet, profit & loss account)

Overview of Bajaj Finserv Business Loans

Bajaj Finserv is another major player in the lending market, known for its flexible loan options and quick approval process. Below are the details of their business loans:

1.  Processing Charges: Bajaj Finserv charges a processing fee of 3.54% on the loan amount. Although slightly higher than Tata Capital, this fee covers the costs of administrative work involved in processing your loan application, including document verification, credit assessment, and disbursal procedures. This charge is important to factor into your overall loan budget.

2.  Interest Rate: The interest rate on Bajaj Finserv business loans ranges from 9.75% to 30% per annum. If your business has a solid financial track record, you could potentially secure a rate that is lower than most other lenders in the market.

3.  Loan Tenure: Bajaj Finserv offers a loan tenure of 12 to 96 months (1 to 8 years), which is significantly longer than what Tata Capital provides. This extended loan tenure is particularly beneficial for businesses that prefer to spread their repayment over a longer period, reducing the monthly EMI burden

4.  Age Limit: The eligible age range for Bajaj Finserv business loans is from 24 to 80 years. This broad age range caters to a diverse group of entrepreneurs, from young startup owners to senior professionals managing well-established businesses.

5.  Loan Amount: Bajaj Finserv provides business loans ranging from ₹1 lakh to ₹80 lakh. Although the maximum loan amount is slightly lower than that of Tata Capital, it is still substantial enough for most medium-sized business needs.

6.  Approval Time: One of the standout features of Bajaj Finserv is its fast approval time, often within 24 hours for eligible applicants. This quick turnaround time is a huge advantage for businesses that require immediate funding to take advantage of growth opportunities or address unexpected expenses.

7.  Preclosure Charges: Bajaj Finserv’s preclosure charges stand at 4.72% on the outstanding amount. While these charges are slightly higher than Tata Capital's, they still allow businesses the flexibility to close their loan ahead of schedule if they come into extra funds.

Overview of Bajaj Finserv Business Loans

Documents Required: The documents needed for a Bajaj Finserv business loan include:

  • Your Valid ID proof, including Aadhaar card, PAN card, or passport.
  • Proof of address (utility bills, lease agreement, passport)
  • Business proof (business registration, GST certificate)
  • Financial documents (income tax returns, bank account statements)

Detailed Comparison: Tata Capital vs. Bajaj Finserv Business Loans

To help you make an informed decision, let’s break down each feature of Tata Capital and Bajaj Finserv business loans in detail.

Criteria

Tata Capital

Bajaj Finserv

Processing Charges

2.50%

3.54%

Interest Rate

12% to 15%

9.75% to 30%

Loan Tenure

12 to 60 months

12 to 96 months

Age Limit

21 to 65 years

24 to 80 years

Loan Amount

₹1 lakh to ₹90 lakh

₹1 lakh to ₹80 lakh

Approval Time

Varies, typically fast

Within 24 hours

Preclosure Charges

4.5% on outstanding balance

4.72% on outstanding amount


Which is Better: Tata Capital or Bajaj Finserv for Business Loans?

Choosing between Tata Capital and Bajaj Finserv for a business loan depends on various factors like interest rates, loan tenure, and your financial needs. Here's an analysis to assist you in making the right decision:

1. Interest Rates:

o   Tata Capital: Offers interest rates ranging from 12% to 15%, which is relatively moderate and predictable.

o   Bajaj Finserv: The interest rates vary from 9.75% to 30%, which means they can offer lower rates than Tata Capital but can also go significantly higher based on your credit profile.

2. Loan Tenure:

o   Tata Capital: Provides a loan tenure of up to 60 months (5 years), which might be ideal for businesses looking for a shorter repayment period.

o   Bajaj Finserv: Offers a longer tenure of up to 96 months (8 years), suitable for those who need more time to repay the loan.

3. Processing Fees:

o   Tata Capital charges a lower processing fee of 2.50%, which can make a significant difference in the overall cost of the loan.

o   Bajaj Finserv has higher processing charges at 3.54%.

4. Approval Time:

o   Tata Capital: Approval time can vary, but they generally have a quick process for eligible borrowers.

o   Bajaj Finserv: Offers one of the fastest approvals in the industry, often within 24 hours.

5. Preclosure Charges:

o   Tata Capital charges 4.5% on the outstanding balance if you choose to prepay your loan.

o   Bajaj Finserv has a slightly higher preclosure charge of 4.72%.

6. Loan Amount:

o   Tata Capital: Provides a maximum loan amount of up to ₹90 lakh, which is higher than many competitors.

o   Bajaj Finserv: Offers a maximum loan amount of ₹80 lakh.

Analysis: Tata Capital and Bajaj Finserv Business Loans

To sum up the detailed comparison, each lender has its strengths:

  • Tata Capital is better for businesses looking for lower processing fees, stable interest rates, and higher loan amounts. If you prefer more predictable loan terms and costs, Tata Capital could be your go-to option.
  • Bajaj Finserv is ideal for those who prioritize faster approval times, longer loan tenures, and potentially lower interest rates for applicants with a high credit score. If your business requires immediate funding with a flexible repayment plan, Bajaj Finserv might be the better choice.

Advice to Blog Readers

When choosing between Tata Capital and Bajaj Finserv business loans, it's important to consider the specific needs of your business. Here are some recommendations to support your decision-making:

  1. Evaluate Your Business Needs: If your business needs a quick loan approval, Bajaj Finserv's 24-hour processing might be crucial. However, if you are looking for a larger loan amount, Tata Capital could be more suitable.
  2. Check Your Credit Score: A strong credit score can help you secure lower interest rates with Bajaj Finserv. If your credit score isn't great, Tata Capital’s stable interest rates might be more affordable in the long run.
  3. Consider the Total Cost: Don’t just look at the interest rates; also consider processing fees, preclosure charges, and the overall cost of the loan. Tata Capital has lower processing charges, which can reduce your upfront expenses.
  4. Loan Tenure Flexibility: If you need a longer time to repay the loan, Bajaj Finserv's 8-year tenure provides more flexibility compared to Tata Capital's 5-year maximum tenure.

Final Thoughts

Both Tata Capital and Bajaj Finserv offer solid business loan options, but they cater to slightly different needs. Tata Capital stands out for its lower processing fees, stable interest rates, and higher loan amounts. On the other hand, Bajaj Finserv impresses with its quick approval process, longer loan tenures, and potential for lower interest rates for those with a good credit score.

Ultimately, the choice depends on your business's specific financial requirements, repayment capacity, and how quickly you need the funds. Evaluate both options carefully to ensure that you choose the loan that best supports your business's growth and stability.

Use our free  Business Loan Calculator to Calculate your Business Loan. 

Post a Comment

Previous Post Next Post

Published by

Author Image
Sachin Chopade
I am a Finance and Tax Analyst, Content Creator, sharing valuable articles and calculators related to Finance, Accounting and Banking industry.