Business Loan EMI Calculator

Business Loan EMI calculator

A business loan is a loan that is provided by financial institutions such as Banks and NBFCs to a business. This loan is usually taken by MSMEs, SMEs, Self employed individuals and corporates to help in their working capital and growth needs.

Business loans can take various shapes and forms depending upon various factors. However, business loans can be divided into two main categories i.e. Unsecured loan and Secured Loan.

Before taking a business loan, it is very important to ascertain actual EMI one has to pay against loan taken. EMI stands for equated monthly installments and are charged on a regular interval basis which is usually one month. It is one of the most uncomplicated method to pay off the loan taken.

Components of EMI

EMI will always have two components, they are closing principal balance and interest charged on previous closing balance. EMI is a structured payments in which burden of principal gradually reduces and at the end of tenure closing principal will always be zero

EMI calculator workings

Let us look at the workings of a business loan EMI calculator. AN EMI calculator is an easy utility that can be used to calculate an EMI for your loan

Business Loan EMI calculator on Excel

You can easily calculate your business loan EMI with the help of Microsoft Excel program. For calculation your loan EMI, you would be required to use PMT function in Excel. Working of PMT function is shown below –

In above example, Excel based Business loan EMI calculator has calculated EMI for a Rs 10 lakhs loan at the rate of 10% per annum for 60 months. Care should be taken to take uniform numbers while inputting formula. For example, if duration chosen is in months then rate of interest should also be inputted in months.

Business Loan EMI calculator foundation

where

E is EMI

P is Principal Loan Amount

r is rate of interest calculated on monthly basis. (i.e., r = Rate of Annual interest/12/100. If rate of interest is 10.5% per annum, then r = 10.5/12/100=0.00875)

n is loan term / tenure / duration in number of months

In most of the business loan products in the market, interest is usually charged on the reducing balance. Due to this reason, interest component of the EMI would gradually increase with time and principal would similarly reduce.

In this article, we have seen working and foundation for an EMI calculator used by industry. If you want to read more about business loan, you can visit our detailed articles on business loan here.

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