Many business owners search for business loan EMI calculator when they look for a small business loan online. The EMI calculators help them in assessing the monthly installment that they have to pay in order to repay the loan. In addition, it also helps in finalizing the best repayment plan that will suit the business owner’s pocket.
For a business owner applying for a loan for business for the first time, the process may get confusing. The post will help you understand the formula used by an EMI calculator to calculate Estimated Monthly Instalment (EMI) for your SME loan repayment.
How EMI Calculator Works?
Equated Monthly Instalment or EMI is basically the amount that the businessman has to pay towards his MSME loan account. EMI helps in repaying loans in easy monthly installments. EMI consists of two components, principal and interest. Both the components are paid off in every EMI. The formula for the same is:
E = P*r*(1+r)n/[(1+r)n-1]
- E represents the EMI
- P is the Principal Loan Amount
- R is the monthly rate of interest
- N is the duration of the business loan
Using the formula, the business owner can determine the EMI on the business loan. The loan lenders such as NBFCs also charge processing fees, file charges, and other charges which are deducted from the sanctioned loan amount before crediting in the business owner’s bank account.
What are the Benefits of availing a Business Loan?
The loan for business can be used to meet business exigencies and for expansion. The business owner can also fund to increase working capital. In addition, the loans for the business are one among the quickest ways to raise capital for the business without putting any stress on the working capital.
The business owner can choose between a secured or unsecured business loan. The online lenders and NBFCs offer quick business loans with flexible repayment tenure. This will help the businessmen in maintaining the working capital conveniently.
Myths associated with Business Loans
There are several myths associated with loans and EMI calculators that keep the business owner away from availing a loan for the business. However, not what you hear is always true. Let’s discuss myths in details.
Availing a Business Loan is Hard
Many small businesses think that availing an SME loan is a tedious task. However, if known all the steps carefully, a lot of frustration can be reduced while applying for a loan. With the documents and eligibility all in place, an NBFC business loan can be availed easily. Post verification, the sanctioned loan amount will be disbursed within 3 days. And to add more to convenience, the entire process is online.
Perfect Credit Score is required
While CIBIL score is extremely important to get the loan sanctioned, it is not necessary to have a perfect score. If the business owner has a score of more than 700, he will still qualify. The loan lender will also determine the business health, profit margins, and years of operation.
Bank Loans are the Best
Well, this is no longer true to the flexibility of the NBFCs and online lenders. Banks have a narrow portfolio and do not have flexible conditions. Therefore, NBFCs (Non-Banking Financial Companies) are a much better choice for availing convenient unsecured business loans and working capital loans. In addition, they have an online loan application, fast processing, low interest rates, and no prepayment charges.
As there is a digital transformation in the financial sector, getting loans have become absolutely easy and convenient. And with the help of EMI calculator, the business can calculate EMIs and manage his funds carefully.