If you run your own business, you must have considered taking a business loan. If so, you must also be aware of the hassle of the process. Many lenders in the market impose different eligibility conditions and offer varied interest rates. You must filter through options and choose the best one.
Moreover, there are many EMI options that differ based on factors like the loan amount and tenure. Knowing the value of EMIs beforehand is essential to preparing your financial plans. The most straightforward way to know this is by using an online business loan EMI calculator. Let us see how it works.
What is a business loan EMI calculator?
A business loan EMI calculator is a tool that you can easily access online to calculate the estimated EMIs for a business loan. Before applying for the loan, you can use this calculator to get an approximate value of the EMIs you would have to pay. This would help you plan your repayment better.
To get accurate results, you must make sure to input the correct information into the calculator. This includes the loan amount, interest rate, and loan tenure. You can also use the business loan calculator to compare different loans from different lenders. This would help you choose the best loan option for your business.
Let us see how you can use a business loan EMI calculator.
Steps to using a business loan EMI calculator
Follow the given steps to use a business loan EMI calculator:
1. Enter the loan amount that you require for your business.
2. Enter the interest rate at which you are planning to take the loan.
3. Select the tenure for which you would need the loan.
4. Based on your information, the EMI calculator would generate an estimated value of EMIs that you would have to pay.
EMIs are calculated with the formula:
EMI = P x r x (1+r) ^n/((1+r) ^n-1)
P = Loan amount
r = Rate of interest
n = Loan tenure
With an online business loan EMI calculator, all you must do is input the correct figures and hit 'calculate'. The EMI figure will be automatically generated and displayed on your screen. However, the input values may differ from lender to lender. Hence, it is important that you check with your lender before using the EMI calculator.
EMIs include the interest amount as well as the principal repayment. The interest amount is calculated based on the outstanding loan amount. On the other hand, the principal repayment is a fixed amount you would have to pay every month.
Let us see how calculating this figure will help us when availing of a business loan.
Advantages of using a business loan EMI calculator
The business loan EMI calculator has the following benefits:
Helps in planning the repayment
By using a business loan EMI calculator, you would be able to get an estimate of the EMIs that you would have to pay. You can also adjust the loan amount and tenure as per your repayment capacity. This would help you plan your repayment better.
Helps in comparing different loans
You can use the business loan EMI calculator to compare different loans from different lenders. Based on the estimated EMIs, you can choose which loan offer fits your plan.
Helps in making a pre-payment
If you have the capacity to make a pre-payment, you can use the business loan EMI calculator to calculate the EMIs after a pre-payment. This would help you become debt-free sooner, releasing you from the financial burden.
Helps in budgeting your expenses
The business loan EMI calculator would help you calculate the EMI amount that you would have to pay every month. This would help you budget your expenses better.
Helps in choosing the right loan tenure
You can use the business loan EMI calculator to calculate the EMIs for different loan tenures. This would help you choose the most suitable loan schedule for yourself, which is essential for financial planning.
Saves you time and effort
By using a business loan EMI calculator, you would not have to calculate the EMIs for different loans manually. The process is quick and only requires a small number of inputs from your end. The calculations are automated. This would help you make an informed decision without any hassle.
Factors that affect the EMIs of business loans
There are three main factors that affect the EMIs of business loans. These are:
1) The amount of loan: Generally, the higher the loan amount, the higher will be your EMIs. The reason for this is simple – a higher loan amount would mean more interest to pay. However, there are some lenders who have a fixed EMI structure for all loan amounts. In such cases, even if you take a higher loan amount, your EMIs would remain the same.
2) The rate of interest: The EMIs are directly proportional to the rate of interest. A higher rate of interest would mean higher EMIs and vice versa. This is because the interest amount is calculated on the outstanding loan amount, which would be higher for a higher rate of interest.
3) The loan tenure: The EMIs are inversely proportional to the loan tenure. A longer loan tenure would mean lower EMIs and vice versa. This is because a longer loan tenure would give you more time to repay the loan amount, and hence, the EMIs would be spread out over a longer duration. However, it is important to remember that a longer loan tenure would also mean that you would end up paying more interest in the long run.
These are the factors that are looked into while calculating the EMIs. Based on this, you can simply check the EMIs for different loan options. However, before you search for various lenders willing to extend you a business loan, you must check your eligibility. Let us see how you can do that.
How to check your business loan eligibility online?
Checking your business loan eligibility is an important task. You can easily do so by using online business loan eligibility calculators. These are free to use and only require some basic inputs from your end. The following is the list of information that you would need to enter:
● The amount of loan required: Entering the amount you need gives you an estimate of the loans you are eligible for.
● The purpose of the loan: Different lenders offer loans for different purposes. Based on this, the eligibility calculator would check if you were eligible for the loan or not.
● Your business profits/income: The value of profits the business earns helps determine your ability to repay. Higher profits make your business a good loan candidate.
● The repayment period and interest rate: You can select the tenure for repaying the loan amount. A longer tenure would mean lower EMIs but would also mean that you would pay more interest in the long run.
After entering the information, click submit. A list of loan offers where you are eligible will be displayed.
Let us now look at the factors that affect your eligibility to avail of a business loan.
Factors affecting business loan eligibility
Some of the main factors that banks and NBFCs look into include your age, profile, nature of business activities, and the requirements of your business.
The following are the rules to be eligible for a business loan:
● Age: You must be at least 18 years old to be eligible for a business loan. However, most lenders set the minimum age to 21 years. The maximum age for the same is 65 years.
● Business age: Your business must have been operational for at least 1 year to be eligible for a business loan. However, this limit differs from lender to lender and may even go up to 3-5 years.
● Business turnover: Lenders look into your business turnover to ensure that you will be financially stable enough to make the repayments. The higher the turnover, the higher the chances of availing of the loan.
● Nature of business activities: You must be engaged in some sort of business activity to be eligible for a business loan. The riskier the business, the lesser the chance of getting the loan sanctioned. This is because the lender is less sure of your ability to repay. Lenders prefer businesses that are stable and earn a regular income.
● CIBIL score: Your credit score plays a vital role in determining your eligibility for the loan. It checks your financial record, income level, and other such factors. A high credit score (750+) would indicate that you are a low-risk borrower and have made timely repayments in the past.
These are the factors that affect your eligibility. Make sure you check (and meet) the criteria given by the lender to ensure that your loan request is approved. Business loan calculators prove extremely beneficial in such situations.
The bottom line
Checking your business loan eligibility is a very important task. You can use online calculators to do so. Moreover, once you determine the loans that you are eligible for, you can use online calculators to see the amount of EMIs you will have to pay and make your financial plan accordingly.
IndiaLends helps you get the lowest interest rate loan offers from multiple banks and NBFCs. Choose the best option based on your requirement in a simple and hassle-free way!