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Business Loan EMI Calculator India

Business Loan Calculator

Last Updated 16th Jul 2020

  • Lowest business loan EMI as on 16 Jul 2020 is Rs. 2,301 per lakh.
  • Banks offering lowest EMI on business loan are Corporation Bank.
Loan Amount1 Year Loan3 year loan5 year loan
₹ 1 Lakh₹ 8,955₹ 3,394₹ 2,301
₹ 5 Lakh₹ 44,776₹ 16,968₹ 11,505
₹ 10 Lakh₹ 89,552₹ 33,935₹ 23,010
Business Loan EMI Calculator
Lowest Interest Rate

Lowest Business Loan EMI per lakh Jul 2020

Bank Lowest EMI per lakh Max Tenure
SBI Business Loan ₹ 2,594 48 months
HDFC Bank Business Loan ₹ 2,816 48 months
ICICI Bank Business Loan ₹ 3,540 36 months
Citibank ₹ 2,432 60 months
RBL Bank ₹ 3,528 36 months
Tata Capital ₹ 2,990 48 months
Lendingkart ₹ 3,321 36 months
Bajaj Finserv ₹ 2,938 48 months
IDFC First Bank ₹ 3,819 36 months
IIFL ₹ 2,432 60 months
Bank of Maharashtra ₹ 3,442 36 months
IndusInd Bank ₹ 2,327 60 months
Kotak Bank ₹ 2,432 60 months
Fullerton India ₹ 2,886 48 months
Indifi ₹ 2,877 60 months
Neogrowth ₹ 5,065 24 months
IDBI Bank ₹ 2,237 60 months
Allahabad Bank ₹ 1,720 84 months
Yes Bank ₹ 3,528 36 months
PNB ₹ 2,257 60 months
OBC ₹ 1,733 84 months
Indian Overseas Bank ₹ 2,374 60 months
Dhan Laxmi Bank ₹ 2,270 60 months
DCB Bank ₹ 1,118 180 months
Andhra Bank ₹ 2,419 60 months
United Bank of India ₹ 2,275 60 months
Corporation Bank ₹ 1,849 84 months
Syndicate Bank ₹ 2,257 60 months
Bank of Baroda ₹ 3,423 36 months

As per the current rate of 13.50%, DCB Bank offers the lowest business loan EMI of ₹ 2,301 for 5 years on per lakh loan amount. The EMI can vary depending upon the interest rate, loan amount and loan tenure. Higher the loan amount, higher will be the EMI.

Factors affecting Business loan EMI

  • Loan amount – The amount you need to borrow for business expansion or purpose. Higher the loan amount, higher will be the EMI.
  • Rate of interest – The interest rate on a loan is an important determinant of the EMI. Higher the interest rate, higher will be the EMI and vice-versa.
  • Loan Tenure – Longer the loan tenure, lower the EMI. Longest loan tenure for business loan in India is 5 years.

The following table provides a comparison of EMI for a ₹ 1 Lakh loan at different tenures:

For a business loan at 13.50% interest rate, the EMI per ₹ 1 Lakh loan amount is as below:

Loan Tenure 2 years 3 years 5 years
EMI amount for loan amount ₹ 1 Lakh at 13.50% ₹ 4,778 ₹ 3,394 ₹ 2,301
Total amount you pay back to the bank including principal and interest ₹ 1,30,414 ₹ 1,48,931 ₹ 1,94,227
Interest you have to pay over loan tenure ₹ 30,414 ₹ 48,931 ₹ 94,227
  • At the lowest business loan rate of 13.50% for a maximum tenure of 5 years, the lowest EMI translates to ₹ 2,301 per lakh. In this case, you have to pay an interest of ₹ 94,227 on your loan amount of ₹ 1 Lakh over a period of 5 years.
  • If you decide to take a loan for 2 years only, for the same rate of interest you will pay a higher EMI of ₹ 4,778. In this scenario you pay a total interest of ₹ 30,414 on your loan amount of ₹ 1 Lakh over a period of 2 years, which is less than half of what you paid for a 5 years loan.

EMI Schedule for Business loan

An amortization schedule gives a detailed break-up of monthly EMIs on a business loan. Each EMI is composed of principal and interest component. EMIs are equal installments you pay to repay your loan.

While each EMI is equal, the components of EMI, that is the interest payment and principal payment are not the same every month. In early days of repayment, interest component is high and principal component is low. This is the reason that many times when you decide to prepay your loan you are surprised to know that a significant proportion of your loan is outstanding, despite having paid numerous EMIs.

On an average, you repay back only 17-18% of your loan in year 1 of taking a five year business loan and not more than 50-55% of your business loan till year 3. So, if you take a loan of ₹ 10 Lakh and you decide to prepay your loan at the end of three years, you will still need to pay back ₹ 5,00,000 or more to your bank. Hence, it is important to understand your amortization table, before taking a loan.

Illustration: How to read an amortization schedule

Suppose you take a loan for business of ₹ 10 Lakh for 5 years at an interest rate of 13.50%. At this rate, your monthly EMI is calculated at ₹ 23,010 and total annual EMIs to be paid is ₹ 2.76 Lakh. The EMI schedule of your business loan for next 5 years (from January 2017 to December 2021) is explained below in the table

Amortization Schedule for a business loan of ₹ 10 Lakh over the 5 year period
Year Interest paid during the year (as a % of annual EMIs) Principal repaid during the year (as % of annual EMIs) Cumulative principal repayment (in %)
201763%37%16.7%
201852%48%35%
201939%61%54.8%
202024%76%76.4%
20218%92%100%
  • Each EMI comprises of a component of interest and principal repaid. Component of interest paid goes down while component of principal repaid goes up in each consecutive EMI. In the earlier years, you repay a very amount of your principal component.
  • In the above illustration, on a business loan of ₹ 10 Lakh, interest component is around 63% while principal component is around 37% in year 1 of disbursements. You repay back only 16.7% of the total principal despite paying 12 EMIs during first year.
  • In year 2019 (year 3), on the same loan, interest comprises 39% of total EMI payments with the rest 61% constituted by principal repayments. Up to year 3, you cumulatively repay only 54.8% of your total loan after paying EMIs for 3 year or 36 months. If you decide to prepay your loan at this stage, you will have to prepay 45.2% of our original loan amount.

Business Loan EMI Calculator Formula

It is difficult to calculate EMI manually as it is a very long and time consuming process. To calculate EMI, you need to know about the loan amount, interest charged on the amount and the tenure for which you want to borrow the amount. The mathematical formula by which business loan EMI is calculated is mentioned below

P*r* (1+r)^n/([(1+r)^n]-1)

In above formula,

P is the loan amount that you want to borrow

r is the rate of interest per month

n is the tenure of loan repayment in months

It is advised to calculate loan EMI by using EMI calculator which gives you quick and accurate estimates.

Business Loan Calculator Benefits

EMI calculator business loan calculates your EMI and has multiple benefits, which are listed below:

  • Time saving : Using EMI calculator calculates EMI in seconds and saves your time in doing cumbersome calculations. You only need to enter the basic loan details like loan amount, interest rate and loan tenure to calculate the loan EMI.
  • Accurate results : Manual calculations can sometimes lead to wrong calculations and hence, wrong results. EMI calculator allows you to calculate error free EMI instantly.
  • Plan your finances : Calculating EMI allows to assess if you would be able to service a particular level of EMI, based on your income and savings level.
  • Allows to evaluate multiple schedules: EMI calculator also allows you to view the amortization schedules and EMIs for various combinations of loan tenures and interest rates, thus allowing you to choose the EMIs that suits your repayment or servicing capabilities.

Business Loan Prepayment

Part prepayment is the amount that you decide to pay before the end of loan tenure, if you have surplus money. When you part prepay your loan, bank gives you two options:

  • To reduce your EMI and keep the tenure same
  • To keep the EMI same and reduce your repayment tenure.

The choice between the two options depends on your monthly repayment capacity. We have explained the way in which EMI or tenure re-adjust after part prepayment of loan in the illustration below:

Suppose you take a loan of ₹ 7,00,000 for 5 years at an interest rate of 13.50%. Your loan EMI works out at ₹ 16,106 per month, with annual EMIs of ₹ 1,93,282. This is how your original loan schedule looks like till Year 5.

On loan amount of ₹ 7 Lakh, you make payment of ₹ 16,106 every month and annual payment of ₹ 1,93,282. By the end of year 3, you have outstanding principal of ₹ 3,37,127 and you have to pay another 24 EMIs to fully pay down your loan. The original schedule of your loan till year 3, has been shown in the table below:

Amortization Schedule for a business loan of ₹ 10 Lakh over the 5 year period
Loan Amount ₹ 7 Lakh
Tenure (in months) 60
Interest Rate 13.50%
Monthly EMI, Rs. 16,106

Loan schedule Principal repaid Principal outstanding
Year 1 ₹ 1.05 Lakh ₹ 5.95 Lakh
Year 2 ₹ 1.20 Lakh ₹ 4.75 Lakh
Year 3 ₹ 1.37 Lakh ₹ 3.37 Lakh

Now at the end of year 3, you have surplus amount of ₹ 1 Lakh and you decide to prepay the loan. You have two options:

Option 1: Reduce your loan tenure and keep your EMI same

Option 2: Reduce your EMIs and keep the loan tenure unchanged

Option 1: Reduce your loan tenure and keep your EMI same

If you have ₹ 1 Lakh as surplus amount and decide to keep the EMI same and reduce the tenure, this is what will happen.

At the end of 3 years, when you prepay an amount of ₹ 1 Lakh, outstanding principal is reduced to ₹ 2.37 Lakh as compared to ₹ 3.37 Lakh in your original schedule. As your loan outstanding reduces and you opt to reduce your loan tenure, at the end of 3 years you are left to pay only 17 more EMIs compared to 24 EMIs as planned in your original loan schedule. As a result of this change, your total loan tenure gets reduced to 53 months compared to 60 months, which was scheduled earlier. Please refer to table below to understand the EMI calculations in case of a prepayment:

Revised Schedule, after prepayment of ₹ 1,00,000 at the end of year 3
Option 1: Same EMI, shorter tenure
Loan Amount
Tenure (in months) 60
Interest Rate 13.50%
Monthly EMI, Rs. 16,106
Early Payment, Rs. ₹ 1 Lakh in 3rd year

Loan schedule Principal repaid Principal outstanding
Year 1 ₹ 1.05 Lakh ₹ 5.95 Lakh
Year 2 ₹ 1.20 Lakh ₹ 4.75 Lakh
Year 3 ₹ 2.37 Lakh ₹ 2.37 Lakh
Year 4 ₹ 1.93 Lakh ₹ 43,845

Option – 2 : Reduce your EMI and keep the loan tenure same

At the end of 3 years, when you prepay an amount of ₹ 1 Lakh outstanding principal is reduced to ₹ 2.37 Lakh as comparison to ₹ 4.75 Lakh in your original schedule. As your loan outstanding reduces and you opt to reduce EMI, your revised EMI stands at ₹ 11,329 compared to ₹ 16,106 earlier. Your remaining loan tenure remains unchanged at 24 months and you pay an EMI of ₹ 11,329 which is lower by ₹ 4,777 as per your original loan amortisation schedule. Please refer to table below to understand the EMI calculations in case of a prepayment under Option 2:

Revised Schedule, after prepayment of ₹ 1,00,000 at the end of year 3
Option 2: Same tenure, lower EMI
Loan Amount ₹ 7 Lakh
Tenure (in months) 60
Interest Rate 13.50%
Early Payment, Rs. ₹ 1 Lakh in 3rd year

Loan schedule Monthly EMI Principal repaid Principal outstanding
Year 1 16,106 ₹ 1.05 Lakh ₹ 5.95 Lakh
Year 2 16,106 ₹ 1.20 Lakh ₹ 4.75 Lakh
Year 3 16,106 ₹ 2.37 Lakh ₹ 2.37 Lakh
Year 4 11,329 ₹ 1.11 Lakh ₹ 1.26 Lakh
Year 5 11,329 ₹ 1.26 Lakh 0

However, you still pay higher interest compared to Option 1, in which you decide to reduce your loan tenure after prepayment. If you plan to prepay, continuing to pay same EMI over a shorter tenure can result in significantly lower interest amount on your loan and hence, should be the preferred choice whenever possible.

Process for stopping EMI payments during Coronavirus Lockdown

The RBI on 22nd May 2020 has extended the moratorium in repayment of EMIs for next months till August 2020. The earlier deadline for EMI moratorium was 31st May 2020 which now makes it a total of 6 months of moratorium. This extension means that borrowers may not pay any EMI for next three months subject to bank approval. After RBI's announcement of moratorium on 27 March 2020, all banks have announced the option to opt-in or opt-out for the moratorium option. Under this policy, your EMI will be deferred and the repayment period will be extended accordingly. Along with it, the interest on working capital loans has also been deferred due to the impact of the pandemic. It is important to note that this delay in repayment of Business Loan EMI's will not be treated as default and will not have any negative impact on the borrower's credit score. To know more about the moratorium option, you may contact your bank’s customer care or its nearest branch.

FAQs

What if I miss EMI payment or there is an ECS bounce?

If you miss your EMI payment or if there is an ECS bounce then bank may charge a penalty. In addition, it will also be reflected in your CIBIL report and your CIBIL score may get impacted.

What if I get delay in paying the business loan EMI?

Banks charges penalty for delaying EMI payment. The amount of penalty varies from bank to bank.

Why it is necessary to calculate EMI beforehand?

It is important to calculate your EMI in advance to maintain stability in future payments. When you avail loan, you promise the bank to pay a fixed amount at fixed date every month. So, before availing the loan you should consider the stability of your income, monthly expenses and the existing loan obligations to avoid any discrepancies in future payments.

Does the loan tenure affect my EMI for business loan?

Business loan can be availed for maximum tenure of 5 years. Tenure affects your monthly EMI. Longer the tenure of business loan, lower will be your EMI.

How MyLoanCare EMI calculator helps in calculating EMI?

MyLoanCare EMI calculator for business loan calculates the EMIs of different banks as per the details entered by you. You can easily compare the EMIs and opt for the best option. You also get to know about the interest charged on loan amount entered.

How is business loan EMI calculated?

You can calculate EMI of your business loan through our “Business loan EMI Calculator” which uses combination of loan amount, loan tenure and interest rate to calculate loan EMI instantly online.

  • The EMI calculator also tells you how much interest you would pay throughout the loan tenure. Longer the loan tenure, more the amount of interest for same loan amount you have to pay.

What will be my monthly EMI?

Monthly EMI depends upon your income and expenses. Generally, banks advise you to limit your EMI to 35% to 45% of your net income so that you can pay your EMI without any burden or difficulty. You can calculate your EMI online which will help you to know your repayment capacity.

Is the business loan EMI fixed or can it change in future?

Here are some situations in which your EMI can change:

  • Banks generally offer floating rate of interest on business loans if interest rates increases but banks typically keep the EMI constant and increase the loan tenure. So, you will pay same EMI but for a longer duration. However, if your loan tenure is maximum (as per permissible limit) then your bank may increase the EMI amount.
  • For partly disbursed loans availed under tranched EMI scheme, your loan EMI will increase with each disbursement.
  • You can prepay your loan or you can opt to reduce your EMI and keep the loan tenure same or keep the EMI unchanged and reduce the loan tenure. It is more beneficial to keep the EMI same and reduce the loan tenure.
  • However, you may opt to reduce the EMI in case you so desire.
  • Any other situations as per terms and conditions of the loan agreement.

Business Loan Reviews 4.3/5  by 46 customers
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Business Loan News - Jul 2020
  • 2020-07-16 : Federal Bank Q1 net profit up 4.3% news
    Federal Bank net profit backed by retail loans like home, personal, gold, car and two-wheeler along with business and mudra loans rose by 4.3% to Rs 400.77 crore in Q1 June 2020 over Q1 June 2019. Further, The Bank total deposits which include fixed and recurring deposits reached Rs 1,54,937.74 crore in Q1 June 2020, registering a 16.9% growth from Q1 June 2019.
  • 2020-07-16 : Bandhan Bank Q1 profit falls 32% at ₹550 crore news
    Bandhan Bank posted a 32% drop in net profit at ₹550 crores for the quarter ended June 30, 2020, against ₹804 crores in the corresponding period last year. The Bank net interest income backed by retail loans like home, personal, gold, car and two-wheeler along with business loans and mudra loans grew by 15% to Rs 1,811 crore. In addition to this, the bank deposit which includes fixed and recurring deposits increased by 35.30% year-on-year to Rs 60,610 crore.
  • 2020-07-15 : HDFC Bank lends Rs 10,800 crore in June quarter news
    HDFC Bank has lent Rs 10,800 crore in the quarter ended June 2020, a period marked by lockdown and partial easing. It had offered Rs 10,100 crore loan in April-June 2019 (Q1FY20). The bank’s advances backed by the home, personal, business, car, two-wheeler, gold and mudra loan expanded by 21% on year to Rs 1,004,500 crore, as of June 30.
  • 2020-07-14 : SBI plans to double YONO user base in 6 months news
    State Bank of India is planning to double its digital-banking app YONO (You Only Need One) customer base in the next six months. Currently, 24 million users are registered under YONO, the digital platform which offers financial services like a personal loan and lifestyle products and services of the lender.
  • 2020-07-10 : Muted growth for Q1 expected news
    Banks are likely to post muted growth in the first quarter of the current fiscal due to cut in the loans offered. Further, they are expected to make provisions for COVID-19-led economic woes.
*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More
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