How To Use A Business Loan EMI Calculator More Efficiently?

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Every business needs steady cash flow to meet daily requirements. Although there are several ways to fund organisational costs, Business Loans from a reputable loan provider can swiftly meet any financial shortfalls that your business may encounter while expanding operations. Furthermore, there is no need to put down a personal or professional asset as a deposit because these loans are unsecured.

Numerous lending institutions offer Business Loans. Usage of the loan amount is restricted to business-related expenses only. Before making any decisions, conduct thorough research on the loan product and provider. Since you need to pay the loan in instalments, there will be an increase in the company’s monthly expenses. In this blog, let us understand how to apply for an MSME loan.

Before applying for a Business Loan or any other loan product, you should determine your loan EMI using the Business Loan EMI calculator. We will further discuss how to use the Business Loan EMI calculator effectively.

What is Business Loan EMI?

EMI, or Equated Monthly Instalments, is a recurring monthly payment made to the loan account. The loan’s principal balance and the interest accrued make up most of it. Throughout the loan’s tenure, interest is added to the principal loan amount. Every month, a set sum is paid. It is determined using the loan’s principal, interest rate, and tenure.

What is a Business Loan EMI Calculator?

A Business Loan EMI calculator will help you determine how much you can borrow for your company without significantly impacting your monthly expenses. It determines the monthly payment that you have to make.

The EMI calculator will compute your due monthly payments and the total amount of interest on your Business Loan that you will pay over the loan term if you check your EMI amount beforehand. It is a wise idea to know your monthly payment amount before applying, as it will have a positive impact on your budget, future finances, and more. 

The EMI will be calculated as follows:

EMI = [P * R * (1+R) ^ N] / [ (1+R) ^ (N-1)],

Where,

  • P = Principal amount
  • R = Rate of interest
  • N = Loan Tenure 

The formula mentioned above is how the EMI calculator operates. In certain cases, when the interest rate is dropped, the interest is computed each month anew on the lower principal amount.

How to Use a Business Loan EMI calculator?

A Business Loan EMI calculator provides users with quick access to Business Loan EMI calculations.

To use an EMI calculator, use the following steps:

  1. Click on the Business Loan EMI calculator tab.
  2. Enter basic details of the loan such as Loan Amount, Interest Rate, and Loan Tenure
  3. Click’ Calculate,’ and the Business Loan EMI will be immediately calculated and displayed on the user’s screen.

Benefits of Using the Business Loan EMI calculator

  • Shows an approximate estimate of the EMI for the suggested Business Loan 
  • Best for effective loan planning
  • Shows an amortisation plan to give a thorough overview of repayment
  • Aids in better future financial planning
  • Provides a choice of schedules and EMI instalment lengths according to your needs

Factors Affecting Business Loan EMIs

  • Loan amount – The amount you plan to borrow will determine your EMI. When the amount is larger, the EMI is higher; when it is lower, the EMI is lesser. But it also depends on how long the loan will take to pay off.
  • Rate of interest – This factor is crucial in determining loan EMIs and should only be selected after carefully weighing the loan possibilities of various lending institutions. Instead of simply choosing the lowest interest rates.
  • Loan Tenure – The loan tenure, also known as the repayment period, is crucial in determining the EMI. A longer-term guarantees lower EMI, whilst a shorter term guarantees a higher amount.

Finally, 

Calculating your possible EMI in advance is a good start to begin the process of securing business finance. For more information on how to apply for an MSME loan,  visit Poonawalla Fincorp’s website for detailed information.

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