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Loan Amount Rupee

Loan Tenure Year

Rate of Interest

Monthly Payment (EMI)

49,919

Total Interest Payable

69,80,558

Total Payment

1,19,80,558

Business Loan issuers in India

Introduction

A Business Loan is a kind of financing offered by banks and NBFCs to meet your business needs. These loans can be utilized to meet your working capital needs, to purchase and acquire assets and raw materials and to expand your current business.

Business loans of Rs. 50,000 to Rs.100 crores are available for eligible businesses. These loans are repaid in equated monthly instalments or EMIs. They come with a repayment tenure range of 3 months to 7 years.

It is important to plan your business loans based on your business needs and repayment capability. Defaulting on these loans have an adverse effect on your credit score and future loan eligibility.

All the banks and NBFCs lending business loans have a Business Loan EMI Calculator to guide the borrower on the approximate EMI that he may have to pay based on the loan amount and the expected interest rate.

Before you take a business loan, it is ideal to know about the amount of EMI you are going to pay every month. A business loan EMI calculator simplifies this process. All you have to do is to enter the tenure, rate of interest, and total loan amount. Then, the EMI amount gets calculated instantly.

What Is A Business Loan EMI?

The business loan EMI or the equated monthly installment is the monthly repayment you make to the business loan issuer. It can be broken into two parts - a part of the principal amount borrowed and the accrued interest. The accrued interest is computed on the interest rate that is quoted at the time of loan disbursal.

Types of Business Loan Interest Rates

There are two types of Business Loan Interest Rates

  • Diminishing Rate
  • Flat Rate

A diminishing rate or a reducing balance rate is levied every month on the balance loan amount. In this method, the amount on which the interest is calculated reduces every month. The below formula is used to calculate the interest:

Interest payable per EMI = Interest Rate per EMI X Remaining loan amount

This reduces the burden on the borrower with regards to the interest compound of the EMI. This also allows for faster repayment of the loan.

In a Flat Rate Interest method, the interest component of the EMI is constant until the end of the repayment tenure. It is calculated on the total loan amount and the total repayment tenure. The EMI is not reduced in this case and the borrower repays till the end of the tenure. The Flat Rate interest rate is calculated by this formula:

Interest Payable per EMI = (Original loan amount * Number of Years * Interest Rate per annum)/Number of Payments

Thus, your monthly EMI is calculated based on the following –

  • Type of interest rate applied
  • The actual interest rate on your loan
  • Repayment tenure
  • Total loan amount

Comparison of Various Business Loan Lenders

Bank/NBFC

Interest Rate

Bank/NBFC

Interest Rate

Flexiloans Business Loan

1% per month onwards

IndiFi Finance Business Loan

1.5% per month onwards

Lendingkart Business Loan

from 1.25% per month

MCapital Business Loan

1.75% per month

Protium Business Loan

18%

SME Corner Business Loan

18%

AYE Finance Business Loan

22%

Axis Bank Business Loan

11.5% onwards

HDFC Bank Business Loan

11.90% to 21.35% per annum

Kotak Mahindra Bank Business Loan

16% to 19.99% per annum

Hero FinCorp Business Loan

Upto 26% per annum

Fullerton Finance Business Loan

17% to 21% per annum

Neogrowth Finance Business Loan

19% to 24% per annum

BajajFinserv Business Loan

17% per annum onwards

ICICI Bank Business Loan

18% onwards

RBL Bank Business Loan

17.50% to 25% per annum

ZipLoan Business Loan

1% to 1.5% per month (Flat ROI)

Tata Capital Finance Business Loan

19% per annum onwards

IIFL Finance Business Loan

11.75% to 25.75% per annum

L&T Business Loan

10.75% to 20.5% per annum

DHFL Business Loan

17% per annum

IDFC First Bank Business Loan

14.50% onwards

What Is A Business Loan EMI Calculator

A Business Loan EMI Calculator is an online tool that enables you to compute the approximate EMI you can expect on your Business Loan.

Most banks and financial lenders have a Business Loan EMI Calculator on their official website or mobile app. An EMI calculator needs you to enter the loan amount, the repayment tenure, and the tentative interest rate to compute the monthly EMI you will have to pay. This amount will not involve any charges or taxes that might be levied on your EMI.

How Is The Business Loan EMI Calculated

The business loan EMI is computed based on your loan amount, the interest rate quoted at the time of disbursal, and the total tenure of the loan. By using an online business loan EMI calculator, you can arrive at a rational figure for your total monthly EMI. It can help you decide on the loan tenure and the loan amount beforehand.

EMIs For Various Loan Tenures

Loan amount: Rs. 5,00000

Rate of interest: 13%

Loan tenure: 24 months

Calculation of EMI: Rs. 23,771

Payment tenure

2 years

3 years

4 years

5 years

EMI

Rs. 23,771

16,847

13,414

13,414

These are approximate EMI calculations and actual numbers may vary.

You can also compute the EMI of a business loan using the formula given below:

EMI = {P * R * (1 + R) ^ N} / {(1+R) ^ (N - 1)}

P = loan amount

R = Interest rate

N = repayment period

The business loan EMI calculator is a very easy to use and simple tool for financial planning. By exploring various scenarios, it aids in planning your finances and making better financial decisions.

Steps To Use The Business Loan EMI Calculator

Here are the steps to use the business loan EMI calculator

Step 1: Use the slider to select the total loan amount

Step 2: Select the duration for the loan

Step 3: Enter the interest rate that suits your current business profile

Step 4: After you hit the submit button, your EMI amount is generated.

What Are the Factors That Influence Business Loan EMI

The following are the factors that affect the computation of business loan EMI

Loan Amount: It is the base factor for computing the monthly loan EMI amount. When the loan amount increases, the EMI amount also tends to increase proportionally.

Rate of Interest: The rate of interest is based on your income, credit score, the financial statement of the business, and repayment capability.

Duration of the loan: The tenure of the loan has the maximum impact on the EMI amount. It is the time taken to repay the loan amount completely including interest. When the tenure increases, it will result in low EMI amounts.

The Benefits of a Business Loan EMI Calculator

The key benefits of using a business loan EMI calculator are,

  • You can avoid cumbersome calculations: Manual calculations are tedious to make. When you use a business loan EMI calculator, you can just enter a few details and click the enter key. You will get the results.
  • Evaluate multiple options: The EMI calculator enables you to change the input values to arrive at a suitable combination of loan amount and repayment tenure. If you find the EMI amount to be very high, you can alter the loan amount and tenure to find the best EMI amount that will suit your needs.
  • Visualization Benefits: Most business loan EMI calculators in India show you your payments in a visual format using pie charts and diagrams. It is a proven fact that visual representations are easier to understand than normal written text.
  • Useful for financial planning: The consequences of defaulting on a business loan are not the same as defaulting on an individual loan. If you know the monthly payment for an EMI and the total interest amount you are paying, planning out your finances and making other financial decisions will be easier.
  • It Gives Accurate Calculations: EMI computations should be accurate as you should not be taking a loan that you cannot afford to repay. The best way to avoid calculation mistakes is to use a calculator particularly for this purpose.
  • Determines the Business Loan Criteria: You can check the monthly loan amount through a business loan EMI calculator and also whether your business has the capacity to repay it. You can also check regarding all other non-financial eligibility requirements. Thus, on the whole, you can check whether you qualify for the loan. You don’t have to wait for lender officials to tell you if you qualify for the loan or not.
  • Mobile-Friendly And Quick: You can use a loan EMI calculator on a smartphone. It is easily usable and you just have to type the interest rate, amount, and loan duration and you get the answer. When you use a business loan calculator, you do not have to go through time-consuming, manual methods. You can get the calculations done easily, accurately, and quickly.

What Affects Business Loan EMI and How To Reduce It

The estimated business loan EMI amount may be too high for you. In that case, it is important to know what affects your EMI. The major factors that affect your monthly EMI amounts are as follows:

  • Rate of Interest: Your monthly EMI amount involves two major components - The principal amount that you are repaying every month and the accrued interest calculated. The rate of interest is a very crucial factor among banks and financial institutions because if the interest rate is lower, the number of customers who come into the bank will be higher. So, before you settle for a loan amount, explore all possible interest rates from all institutions. When the rate of interest is higher, the EMI will be higher. When the rate of interest is lower, the EMI will be lower.
  • Type of interest rate on your loan: As mentioned earlier, there are 2 types of business loan interest rates; a diminishing rate or a flat rate. Depending on the type of the interest being applied on your loan, the interest component on your EMI changes. A diminishing rate will have a lower EMI and a flat rate will have a higher EMI.
  • Loan Tenure: The loan tenure is the second major factor that affects your EMI amount. The loan tenure refers to the time period in which you will be repaying off your principal loan amount completely. When your loan tenure is longer, the EMIs will be lower but you will have to shell out higher interest. So, on one hand, you have an increase and on the other hand, you have a decrease. Try out all possible combinations of loan tenure and rate of interest using the business loan EMI calculator.
  • Loan Amount: The principal loan amount is the base for EMI calculations. When the loan amount is higher, your EMI will be higher. The lower your loan amount, the lower will be your EMI. As a business, you have different needs that involve a lot of money, so you cannot tweak the loan amount easily. This is where an online business loan EMI calculator will play an important part. Enter the loan amount you want, the tenure, and the rate of interest you wish to have. You can tweak one of these factors to know what loan amount you can take.

What is an Amortization Schedule

An Amortization schedule is a table that gives your loan repayment based on the EMI amount. There are columns for the principal repayment amount, the EMI amount, the interest component, the principal component and the balance amount. It is listed for the entire repayment duration. The last row would show the total interest amount repaid and the total of all the paid EMIs.

This table helps you to comprehend how your EMI is distributed between the principal and the interest. It allows you to decide on the repayment duration so as to reduce the total burden on the interest.

FAQs of Business Loan EMI Calculator

1. What are the details required to compute my EMI on the calculator?

You are usually required to input the loan amount, the interest rate, and the repayment tenure to compute the approximate EMI.

2. What will happen if I default on an EMI payment?

Defaulting on an EMI payment will result in penalty charges and late payment charges. It will also adversely affect your future loan eligibility.

3. How are monthly EMIs paid?

Monthly EMIs are usually paid through the ECS facility. Banks also accept post-dated cheques. If you want to make payments on your own, you can use credit/debit card, standing instructions, netbanking, cheques/DDs, or any other digital payment mode to make EMI payments.

4. Will my Business Loan EMI be constant or will it change at a later date?

Usually, business loans have fixed interest rates on business loans and so your EMI is fixed for the most part. However, if you make part prepayments, the EMI might decrease accordingly. Also, on need-based business loans, EMIs are computed only on the used amount and not on the computed loan amount. So the EMI will increase as and when you withdraw from the loan account.

5. What are the factors deciding my monthly EMI?

Your Business Loan EMI is determined by the following factors –

1. Type of interest rate applied

2. The actual interest rate on your loan

3. Repayment tenure

4. Total loan amount

6. What are the rules for a business loan?

The business must have a minimal annual income (ITR) of Rs. 1.5 Lakhs per annum. The applicant should be minimum 21 years at the time of applying for the loan. The age must not exceed 65 years at the time of loan maturity.

7. How many years is a business loan usually?

The maximum tenure for collateral-free business loans is usually 5 years. Generally,enterprises reach the upper limit of the loan tenure when a large sum, say Rs. 30 to 50 Lakhs is taken as a loan.

8. What are some types of business loans?

Some types of business loans are term loans, SBA loans, equipment loans, business lines of credit, invoice factoring, invoice financing, merchant cash advances,personal loans for businesses, business credit cards, and microloans.

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