Running a business is not simple or cheap. It requires a lot of hard work and capital. Fortunately, through business loans, you will not have to worry about the latter. From expansion to marketing, you can make use of this borrowing option to expand the operations of your business.
Since business loans are unsecured loans, the interest rates are high. Owing to this, paying equated monthly instalments (EMIs) to repay the loan might be a strenuous task for some businesses. A company that falls into a debt trap will not only harm its finances but will also cause significant pain to its employees and the industry as a whole.
To avoid such a situation, you can use a business loan EMI calculator. Keep reading to learn more about this tool.
Availing a high-interest loan can be risky and requires an in-depth analysis of one’s financial history and budget. Before applying for a business loan, one needs to build a repayment strategy.
Making financial decisions can be a daunting task as it usually involves a large sum of money. Fortunately, most business loan providers offer an EMI calculator to make this task easier for you. Calculating the monthly instalment amount manually is possible but highly tedious. To avoid any hassle and inaccuracy, one can use a business loan EMI calculator to compute the monthly amount instantly.
Not only does this quantitative tool help with budget building and analysing your repayment capacity, but it also helps you choose the most suitable loan scheme. By changing any of the values, you can try multiple combinations and find a loan with an affordable EMI.
Rate of Interest (P.a)
Loan Tenure (Months)
The working of EMI calculators is based on a standardised formula that considers multiple parameters (loan amount, tenure and interest rate).
By entering the required values in the following formula, you will instantly get the EMI payable:
EMI = P x R x [(1+R)^N]/ [(1+R)^N-1]
Here’s an example to understand how business loan EMI is calculated:
Let’s say Aman wants to obtain a business loan of Rs. 30 lakh to improve his company’s marketing. A lender offers this amount to him at a 16% interest rate to be repaid in 3 years. Thus, going by the calculation, Aman has to pay an EMI of Rs. 1,05,471
After analysing his company’s monthly revenue and expenses, he realises that a monthly payment of Rs. 1,05,471 is too costly. With the help of an EMI calculator, he can try another loan amount or change the tenure to find an affordable EMI.
The benefits and uses of a business loan EMI calculator are not just limited to the computation of EMI. It also provides a break-up of the total amount to be repaid (interest payable and principal amount).
As mentioned above, the interest rate on business loans is very high. Thus, being informed about the amount is crucial to one’s financial planning. Let’s continue with the above-mentioned example and see how a business loan calculator determines the interest.
Rs. 1,05,471 (EMI) x 36 months (tenure) = Rs. 37,96,960 (Total amount payable)
Thus, interest is Rs. 37,96,960 (Total amount) – Rs. 30,00,000 (Borrowed amount) = Rs. 7,96,960.
On Navi’s fully digital platform, you can get easy access to a free EMI calculator. All you have to do is follow these steps to get the result:
Note that you can also access this EMI calculator by downloading Navi’s mobile app.
As clear from the formula, the EMI amount is dependent on three primary factors, which are as follows:
EMI and interest rate have a directly proportional relationship. If your lender levies a higher interest rate, your interest amount and total amount payable increase.
The relationship between your loan amount and EMI is simple and straightforward. The higher amount you opt for, the higher you repay monthly.
The tenure that a borrower opts for is also an important factor with regard to the monthly instalment amount. The longer the tenure, the lower will be the EMI amount. However, note that the tenure and interest payable have a direct relationship. This means that if you opt for a longer tenure, you’ll have to pay higher interest.
Download the Navi app to avail a personal loan for a business of up to Rs. 20 lakh. Apart from competitive interest rates, you can enjoy a fully digital and paperless borrowing process. Once the information provided by you is successfully verified, the loan amount is transferred to your bank account within minutes.
Business loans can be the boost your company requires. However, applying for this type of financial assistance should not be a hasty decision. Regardless of your credit history or business financials, the rate of interest on business loans remains comparatively higher than secured loans (home loans, gold loans, and more).
To repay a higher loan amount without harming your net profit, you can take the help of a business loan EMI calculator.
Ans: Eligibility criteria can vary across financial institutions. The minimum annual turnover or gross revenue requirement can be as low as Rs. 10 lakh and go up to Rs. 1 crore. Thus, before applying for a business loan, make sure to check the lender’s eligibility criteria.
Ans: You can choose to pay your EMIs through a direct debit. Alternatively, you can opt for electronic clearing service (ECS) as a mode of repayment. Keep in mind that you can also visit your lender’s nearest branch and pay the EMI via cheque.
Ans: Yes, all doctors are eligible to obtain business loans to meet the expenses related to their profession. They can utilise the loan amount to start an independent practice, open a clinic, buy medical equipment, etc.
Ans: A primary benefit of an online business loan EMI calculator is that it provides accurate and instant results. However, if your lender charges a different interest rate or offers a higher/lower loan amount or tenure, the EMI amount you calculated earlier can be different.
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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