Features And Benefits Of A Business Loan EMI Calculator

Business Loan

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.

Business Loan Calculator and Its Uses

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. 

Also Read: How To Choose A Proper Personal Loan Tenure?

How Does a Business Loan EMI Calculator Work?

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]

P = Principal amount

R = Rate of interest 

N = Tenure (in years)

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.

How Does a Business Loan Calculator Determine the Interest Payable?

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. 

How to Use Business Loan EMI Calculator? 

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:

Step 1: After opening Navi’s official website, select “EMI Calculator” from the dropdown menu present on the top navigation bar.

Step 3: Upon opening the calculator, move the loan amount slider to select an amount as per your requirement. 

Step 4: Do the same with the loan tenure and interest rate sliders. 

Step 5: After entering all the values, you will instantly see the EMI amount. 

Note that you can also access this EMI calculator by downloading Navi’s mobile app. 

Factors Affecting Business Loan EMI 

As clear from the formula, the EMI amount is dependent on three primary factors, which are as follows:

• Rate of interest 

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.  

• Principal amount

The relationship between your loan amount and EMI is simple and straightforward. The higher amount you opt for, the higher you repay monthly. 

• Repayment tenure

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. 

Also Read: Instant Personal Loan Apps

Final Word 

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. 

Frequently Asked Questions 

1. What should be a business’ minimum annual turnover to obtain a business loan?

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. 

2. How can I make my EMI payment?

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. 

3. Can a doctor avail business loan?

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.

4. Is a business loan EMI calculator always accurate?

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.

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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.