Business Loan EMI Calculator

Business Loan EMI Calculator

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Entrepreneurs look at several options to raise capital to set up or expand their business. Availing business loan is the best solution and it is quick and reliable to go for a business loan from reputed financial institutions. There are many players coming up in the market today and hence awareness about the right organization is a must before you make a decision.

That being one side of the coin, the other side is to know how much EMI is required to be paid. The primary decision making element is EMI. There is indeed business loan EMI calculator available, but the challenge is to understand how it works.

This article will give you a brief overview of EMI, the factors that affect business loan EMI, EMI schedule and all other details pertaining to business loan EMI will be discussed. Also, we have embedded our business loan EMI calculator  which will let you calculate the business loan interest rate for your loan amount.

Calculate EMI-Estimate for Business Loan

What is an EMI?

First things first, yes, before you move forward to make any calculation and proceed to Apply Business Loan Online, you need to understand the terminology EMI. EMI stands for Equated Monthly Installment. In simple words, it is the amount that you repay to the financial institution on a monthly basis. This amount is calculated based on the loan amount, rate of interest, and tenure of the loan.

Three Factors that influence the Business Loan EMI

      1. Amount Taken As Loan – This is the money that you have borrowed from the financial institution for your business purpose. Obviously, the greater loan amount will demand more EMI than lesser loan amount taken.
      1. Interest Percentage – It is the rate at which the loan is given by the banker. The percentage varies from bank to bank and hence higher the percentage greater is the need to make more EMI as repayment.
    1. Duration of the Loan – Here if you prefer to take more time to repay, then you can pay a small amount as EMI in the place of short term repayment option. The maximum duration for business loan repayment in India is 5 years.

For Instance – If you take 5 years to return 10 lacs, then you can split that for 60 months and include interest to repay in every EMI. Instead of repaying in 3 years, which will require you to pay more during every EMI.

EMI Payback Schedule

The business loan calculator will help you understand the payback amount and schedule. However, you can understand the concept following this section. By now you are aware that EMI is the monthly installment to be paid based on the interest rate and loan amount. It looks easy but is little confusing to make the EMI calculation on your own.

Hence we have provided an individual business loan EMI calculator. This will just need your loan amount, interest percentage, and the duration. 

However, read this to learn how it works.

The EMI amount will include both loan amount and the interest amount and hence the calculation is not straightforward. It depends on whether the interest component or the loan amount is higher in the monthly repayment.

Beware, usually in long term repayment model, the first year you will repay only up to 18% of the loan amount and by 3rd year you might have paid 50%. Which means you still have 50% to be repaid from the loan amount alone in the last 2 years. Therefore always prepayment may not be a wise decision. EMI calculator will help to check these options beforehand.

The EMI calculator formula for your reference

Loan Amount X % (1+ %) ^n / ([(1+%0^n]-1)

% – Rate of interest

N – Tenure

This formula will lead to a cumbersome calculation and hence it is advised to choose the EMI calculator. It is complicated because the rate of interest on floating type of loan will vary from time to time.

Importance of EMI Calculation

  • It is good to know your expenditure in repaying the loan before you take the loan as that will help you make your future business plan accordingly.
  • Also, you can maintain stability in making payments.
  • Based on your income and expenses plan your EMI amount by calculated in advance. In case you can only pay a small amount, then you can opt for a longer tenure.

Points to Remember About Business Loan EMI

You will be required to pay EMI on a monthly basis and in the event of a failure the financial institution will take action. Therefore make sure you don’t over commit. Not more than 45% of your net income should be your EMI amount. You need to make a rough estimate of your net income and then use the calculator to know the EMI amount. Only, then decide the loan amount and the tenure.

Check for various payment options like different interest rate and loan tenure before you freeze on the loan amount.

Business loan EMI can be availed for a small amount and short duration. You can repay them to opt for another loan. This will give you the confidence of repayment and also your records will be clear for getting another loan.

Likewise, if you know your plans clearly and your net income, then go for the long term and you can save time on documentation work.

Benefits of Using Business Loan EMI Calculator

    • EMI calculator can be used for any amount and tenure and interest rate and you can find the payment amount in one click.
    • It is available online so you can check the amount before you initiate a meeting with the financial institution.
  • Even you can compare rates during the meeting and make a quick decision.

If you are a business owner or a company, please click here to apply for a business loan.