Business Loan EMI Calculator

Most term loans for businesses in India, from banks and NBFCs alike, are repaid in equal monthly instalments on a reducing balance: each month interest is charged only on the principal still outstanding, and the rest of the EMI pays the principal down.

Business loans come in two broad kinds. Unsecured loans need no collateral and are sanctioned mainly on the business's turnover, banking history, years in operation and the owner's credit score. Secured loans are backed by property, machinery, stock or deposits, and usually carry a lower rate and a longer tenure because the lender's risk is lower.

The rate you are offered depends on the lender, the loan type, whether it is secured, your business vintage and cash flows, your credit score and existing borrowings. Rates vary widely between lenders and borrowers, so use the exact rate in your offer rather than an advertised range.

The EMI here covers interest and principal only. Lenders usually charge a processing fee, often deducted from the amount disbursed, plus GST on fees, documentation or stamp charges and sometimes foreclosure charges. Ask for the full schedule of charges and add them to the interest to compare offers fairly.

Some lenders quote a flat rate, which charges interest on the original amount for the whole tenure. A flat rate costs much more than the same headline reducing rate, so convert it before comparing.

Worked example: a ₹10 lakh business loan at 14% for 5 years has an EMI of about ₹23,268 and total interest of about ₹3.96 lakh. A ₹5 lakh unsecured loan at 18% over 3 years has an EMI of about ₹18,076 and costs about ₹1.51 lakh in interest.

Small businesses may also qualify for loans under the government's Mudra scheme; the Mudra Loan EMI Calculator covers those. To see how much a lender may sanction on your income, use the Loan Eligibility Calculator, and for loans secured on property, the Loan Against Property EMI Calculator.