Business Loan EMI Calculator: You can calculate your EMI is easy steps in less than a minute by just entering the relevant information—principal amount, the rate of interest, and tenure. You can use EMI calculator to estimate your loan and analyze the interest paid on it and outstanding principal amount.
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Why do you need a Loan?
A business loan can be very helpful for small businesses, not just the ones who are facing a cash crunch but also the one who is witnessing an expansion opportunity. The money availed under business loans can be used to buy new machinery or equipment, expansion, increase inventory or working capital, etc.
What is the Eligibility for a Loan?
The business loan eligibility differs from one lender to another. In order to determine the creditworthiness of the borrower and ensure he would be able to repay the business loan, every lender sets the eligibility criteria which the borrower is expected to meet. The common eligibility for business loans is:
- Minimum Turnover of INR 10 Lakhs in the last 12 months.
- Last year ITR of more than INR 2.5 Lakhs.
- Either house or business premises should be owned.
- Business place should be separate from the residence.
- Business vintage (operations) for at least 2 years.
What are the Documents required for a Loan?
A few documents are required to check the eligibility of the borrower are:
- PAN card
- Last 12-months bank statement
- Last 2-3 year ITR
- Business place address proof
- Residence address proof
What is Loan EMIs?
Although business loans can be repaid in a number of ways, Equated Monthly Installment or (EMI) is the easiest method of repaying business loans. Here, you get your business loan divided into equal fixed sums which you will be paying every month until the business loan is fully repaid. Significantly, an EMI is the sum of two costs—principal amount and interest accrued.
The business loans make it possible for small businesses to get expensive machinery or equipment and operate to full efficiency even on tight cash. Whereas EMIs make it easy for the businesses to repay the business loans conveniently. So, repaying loans via EMIs is certainly an ideal way where you have to pay an amount on a fixed date for a pre-determined period.
What is a Loan Calculator?
The loan calculator helps you to calculate the EMI to be paid monthly on the debt. This calculator helps you determine the amount in advance that you would need to pay on the fixed date of every month. Additionally, a business loan calculator helps you to opt for the best EMI plan that would match your cash cycle, and thus plan your cash resources in a sound and best way.
How does a Loan Calculator Work?
The following are the parameters on which an EMI calculator works:
- Loan Amount
- Repayment Tenure
- Rate of Interest
The formula to calculate an EMI is:
E = P * r * (1+r)^n / ((1+r)^n-1)
Where ‘E’ is EMI
‘P’ is Principal Loan Amount
‘r’ is the Loan Interest Rate
And ‘n’ is the Duration of the Loan
How to calculate an EMI for an unsecured Loan?
A business loan EMI calculator is convenient and simple to use. All you have to do is enter the business loan amount, tenor (usually in months), and the rate of interest, and you are done. The rest business loan EMI calculator will do. The entire process will not take more than a minute and you will know your EMI amount.
What are the factors that affect Loan EMI?
There a number of factors which can affect the EMI calculation. As discussed earlier, an EMI is calculated on the basis of the principal loan amount, tenure, and interest rate, any changes in them can affect the EMI.
Change in Rate of Interest: The rate of interest can be fixed, floating, hybrid, or on the reducing amount. Depending on the type of interest, the EMI would be affected. For an instance, if the rate is fixed, the interest rate remains the same the entire loan tenure. Whereas a floating interest rate can change the EMI multiple times since it is linked to the Marginal Cost of Funds Based Lending Rate (MCLR).
Change in Loan Tenure: The change in tenure can increase/ decrease your EMI. Noteworthy, there is an indirect relationship between the tenure and EMI. If the tenure increases, EMI decreases and if the tenure decreases, the EMI increases. An online EMI calculator can help you determine this.
Prepayment of Loan: If you plan to prepay your business loan, the prepaid amount will be deducted from the remaining loan amount. It will reduce your loan amount as well. With this, if you decrease the tenure as well, the portion of EMI may either decrease or increase or remain the same. Again, an online business loan calculator can help the best with this.
What are the Benefits of an EMI Calculator Online?
Every business owner wants to know the EMI even before applying for a business loan. This helps them determine their ability to obtain a business loan. This can be done with the help of an online business loan calculator. An EMI calculator will help you budget the EMI payments in the best way. The benefits of EMI calculator include:
Accessibility: The EMI calculator can be used anytime and anywhere. Thus, you get access to make your budget calculations any time of the day or even in night.
Accuracy: An EMI calculator is accurate and gives you a precise number than calculation yourself.
Financial Planning: As discussed above, EMI calculation is usually done before applying for a business loan. An EMI calculator helps you with that.