There are three pieces of information that are compulsory to determine business Loan EMI.
Loan Amount:The amount of money you are required to borrow is the primary factor for calculating the business loan EMI. This illustrates that the loan amount is directly proportional to the EMI. Hence, opt for a loan amount required explicitly for business workflow so that you will be able to pay the recurring EMI amounts without any financial burden.
Loan Tenure:This is the second important factor in speculating business Loan EMI. The loan tenure specifies the actual time you will get to repay the business loan with the ascertained EMI amount. The longer the assignment of a business loan, the lower the EMI amount will be, as the loan tenure is inversely proportional to the EMI amount.
Rate of Interest:
After specifying the loan amount and the loan tenure, the next factor determining the EMI calculation is the interest rate. The interest rate is directly proportional to the EMI, which is based on your credit score, income, turnover of the business, and repayment capability. That suggests that the higher the interest rate, the higher the EMI amount.
Once you have all the information mentioned above, you’ll be able to calculate your monthly installment payable on the loan amount.
Benefits of Using Business Loan EMI Calculator
There are several benefits of calculating your EMI on your business loan amount beforehand, some of which are mentioned below.
Save tedious calculations and time:Those days are gone when you had to use paper and a pen to figure out what the monthly payments would look like. With the help of this EMI calculator, you can save precious time and hard work. It can determine your EMI account in seconds with efficiency and accuracy.
Visualization benefits:Using this straightforward calculator to find business loan EMI can reduce your doubts and insecurities in half. It provides informative pie charts and tables to create a proper visualization of the actual scenario of taking business loans. So that you can be confident while planning on borrowing a business loan.
Assists in financial planning:Doing business is very uncertain, and there is no way of knowing what will happen. Financial decisions are pretty hard as they involve large amounts of money and the implications of non-payment for a business loan which is not the same as for an individual loan. As a result, If you already know how much you will have to pay every month for the EMI and what the total interest amount on your loan amount is going to be. Then planning out the finances and making decisions will be easier.
Business Loan Interest Rate Offered by Different Banks/NBFCs – December 2022
Bank/NBFCs Names | Interest Rate |
ICICI Bank | 17% onwards |
HDFC Bank | 10.00% – 22.50% p.a. |
FlexiLoans | 1% per month onward |
ZipLoan | 1% 1.5% per month (Flat ROI) |
Axis Bank | 14.65% – 18.90% p.a. |
IDFC First Bank | 14.50% onwards |
Kotak Mahindra Bank | 16% – 19.99% |
Fullerton Finance | 17% – 21% |
Bajaj Finserv | 15% – 25% p.a. |
RBL Bank | 17.50% – 25% p.a. |
Indifi Finance | 1.5% – per month onwards |
Lendingkart Finance | 1.5% – 2% per month |
Tata Capital Finance | 19% p.a. onwards |
NeoGrowth Finance | 19% – 24% p.a. |
Hero FinCorp | Up to 26% p.a. |
Businessloan interest rateis updated as of 1st December 2022
Calculation of Business Loan EMI
You can easily calculate the total amount of EMI you have to pay on a certain principal amount with a fixed rate of interest and the tenure for repaying the total amount with interest.
For instance, let’s see the below table to understand better.
Required information:
Principal Amount – Rs 4, 00,000
Interest Rate – 15% p.a.
Tenure – 3 years, 4 years, 5 years
Loan Tenure | 3 years (In Rupees) | 4 years (In Rupees) | 5 years (In Rupees) |
EMI amount for a loan amount of Rs 4 lakhs at a 15% interest rate (Monthly) | 13,866 | 11,132 | 9,516 |
Total amount need to pay, to the loan provider (Principal amount + Interest amount) | 4,99,181 | 5,34,350 | 5,70,958 |
Total Interest amount you need to over loan tenure | 99,181 | 1,34,350 | 1,70,958 |
In this case, if you borrow a business loan of 4 lakhs rupees at a 15% interest rate, then the monthly payment of the EMI will be Rs 9,516 for five years of tenure. However, for the total EMI for the assignment of 5 years, you have to pay a sum of Rs 1, 70,958.
On the other hand, if you take a business loan of 4 lakhs rupees at 15% of interest, then the monthly EMI amount will be Rs 13,866 at three years of loan tenure, and the total EMI will be Rs 99,181.
This illustrates that the higher the loan tenure, the higher the interest amount (EMI). So it would be best if you were always careful while opting for the best business loan package. As a result, to plan the financial structure for your business, use the business loan EMI calculator for optimum accuracy and efficiency without any hassle.
Relationship between Loan Amount, Tenure, and Interest Rate with EMI
There are several factors that link loan amount, tenure, and rate of interest with EMI. Read below for detailed information.
The loan amount is directly proportional to the EMI amount because when you choose a higher principal amount, then the amount of EMI will also be higher. If the loan amount is lower, the EMI amount will be lower.
In the case of loan tenure, when you opt for a higher time period to repay the loan amount, then the EMI amount will be lower. In addition to this, if you choose lower loan tenure, then the EMI amount will be higher as the loan tenure is inversely proportional to the EMI amount.
The interest rate is the same as the loan amount and is directly proportional to the EMI amount.
Now let’s move ahead to see the manual formula to calculate the business loan EMI and the algorithm used by the business loan EMI calculator.
Formula Used to Calculate Business Loan EMI
You can also determine business loan EMI using the formula described below.
EMI = P x R x (1+R) ^n/ ((1+R) ^n-1)
Here,
P denotes the Principal Amount
R represents the Rate of Interest per Month
“n” denotes the tenure approved by the bank
It is quite difficult to compute the EMI amounts by using manual calculation. Therefore, it is advised that you use a business loan EMI calculator for better evaluation and accuracy of EM
