SBI Business Loan EMI Calculator India Nov 2020

• Business loan EMI (or equated monthly installment) is a fixed amount of money paid by you to SBI against the loan taken. This is towards repayment of your loan to the bank. Every month, it is due on a fixed day of the month till your loan is fully paid back.
• SBI offers business loans with loan tenure up to 48 months that translates into a lowest loan EMI of ₹ 2,594 per lakh, which makes it affordable for business loan borrowers. Lowest Rate of interest offered by SBI on business loan is 11.20%.

Business loan EMI for ₹ 10 Lakh loan amount at lowest 11.20% interest rate offered by SBI for different tenures

	1 year	2 year	4 year
SBI EMI for loan amount of ₹ 10 Lakh at 11.20%	₹ 88,475	₹ 46,701	₹ 25,943
Total amount you pay back to the bank including principal and interest	₹ 11,16,792	₹ 12,47,225	₹ 15,55,571
Interest you have to pay over loan tenure	₹ 1,16,792	₹ 2,47,225	₹ 5,55,571

• The above table shows the longer your loan tenure, lower is the EMI you pay on the loan. However, your total interest outgo is significantly higher in a long tenure loan. In the above example, if you take ₹ 10 Lakh loan for a period of 4 years, you pay the lowest EMI of ₹ 25,943. However, you pay an interest of ₹ 5,55,571 on a ₹ 10 Lakh loan.
• In contrast, if you take a ₹ 10 Lakh loan from SBI at the lowest loan rate offered for a period of 1 year, you pay a higher loan EMI of ₹ 88,475 and pay an interest of only ₹ 1,16,792 which is less than half of what you paid in a 4 year loan. Hence, it is advisable to choose your loan tenure wisely as longer tenure means high interest expenses.

• Loan amount - This is the amount borrower promises to repay to the bank with the interest applied. SBI gives minimum business loan of ₹ 5,00,000 up to an amount of ₹ 1,00,00,00,000.
• Interest rate - Interest rate is the rate charged over the principal amount borrowed. Higher interest rate increases your loan EMI which will increase the total cost of the loan. Lowest interest rate offered by SBI is 11.20%. Do complete market research and compare rates online before you apply for a business loan.
• Loan tenure - This is the period in which you can repay your business loan to the bank. Longer loan tenure means lower loan EMI. Generally, SBI offers business loan for a maximum tenure of 48 months.

An amortization schedule is a table of periodic loan payments that shows the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term.

In the Amortization schedule, your Business Loan monthly EMI will be equal, but the component of EMI, which consists of interest payment and principal payment will not remain the same every month, it keeps on changing.

Illustration: How to read an amortization schedule

Suppose if you take a Business Loan of ₹ 5 Lakh for 2 years at an interest rate of 13.50%. EMI calculated for this loan amount is ₹ 23,889 and the total annual EMIs to be paid annually is ₹ 2,86,662. The EMI schedule of loan for 2 years is explained below in the table –

Amortization Schedule for a Business Loan of ₹ 5 Lakh over the 2 years

Year	Interest paid during the year	Principal repaid during the year	Total amount paid during the year (Interest + Principal)	Outstanding Principal
2020	₹ 11,045	₹ 36,732	₹ 47,777	₹ 4,63,268
Nov	₹ 5,625	₹ 18,264	₹ 23,889	₹ 4,81,736
Dec	₹ 5,420	₹ 18,469	₹ 23,889	₹ 4,63,268
2021	₹ 48,140	₹ 2,38,522	₹ 2,86,662	₹ 2,24,746
Jan	₹ 5,212	₹ 18,677	₹ 23,889	₹ 4,44,591
Feb	₹ 5,002	₹ 18,887	₹ 23,889	₹ 4,25,704
Mar	₹ 4,789	₹ 19,099	₹ 23,889	₹ 4,06,605
Apr	₹ 4,574	₹ 19,314	₹ 23,889	₹ 3,87,290
May	₹ 4,357	₹ 19,531	₹ 23,889	₹ 3,67,759
Jun	₹ 4,137	₹ 19,751	₹ 23,889	₹ 3,48,008
Jul	₹ 3,915	₹ 19,973	₹ 23,889	₹ 3,28,034
Aug	₹ 3,690	₹ 20,198	₹ 23,889	₹ 3,07,836
Sep	₹ 3,463	₹ 20,425	₹ 23,889	₹ 2,87,411
Oct	₹ 3,233	₹ 20,655	₹ 23,889	₹ 2,66,756
Nov	₹ 3,001	₹ 20,888	₹ 23,889	₹ 2,45,868
Dec	₹ 2,766	₹ 21,122	₹ 23,889	₹ 2,24,746
2022	₹ 14,139	₹ 2,24,746	₹ 2,38,885	-₹ 0
Jan	₹ 2,528	₹ 21,360	₹ 23,889	₹ 2,03,386
Feb	₹ 2,288	₹ 21,600	₹ 23,889	₹ 1,81,785
Mar	₹ 2,045	₹ 21,843	₹ 23,889	₹ 1,59,942
Apr	₹ 1,799	₹ 22,089	₹ 23,889	₹ 1,37,853
May	₹ 1,551	₹ 22,338	₹ 23,889	₹ 1,15,515
Jun	₹ 1,300	₹ 22,589	₹ 23,889	₹ 92,926
Jul	₹ 1,045	₹ 22,843	₹ 23,889	₹ 70,083
Aug	₹ 788	₹ 23,100	₹ 23,889	₹ 46,983
Sep	₹ 529	₹ 23,360	₹ 23,889	₹ 23,623
Oct	₹ 266	₹ 23,623	₹ 23,889	-₹ 0

Each Business Loan EMI consists of both amounts of interest as well as the principal repaid. The interest component of EMI goes down while the principal component goes up in both cases while doing the calculation.

In the above illustration, on a Business Loan of ₹ 5 Lakh, taken at the lowest interest rate of 13.50%, EMI paid is ₹ 23,889 and an annual total of EMIs is ₹ 2,86,662, the interest component is ₹ 53,418 while the principal component is ₹ 2,33,244 in year 1 of loan disbursement. You repay only 46.65% of the total principal after paying 12 EMIs during the first year.

In year 2, the interest component of EMI is around 6.94%, while the principal component is around 93.06%. Upto 2 years, you have cumulatively repaid 100% of your total Business Loan.

P*r* (1+r)^n/([(1+r)^n]-1)
Here is an illustration of how SBI business loan EMI is calculated:
In above formula,
P = Loan amount. This can range from ₹ 5,00,000 to ₹ 1,00,00,00,000
r = Rate of interest per month. Current rate is 11.20%
n = tenure in month. For SBI, this can be 48 months

• Ascertain the amount you need to borrow: It is important that before approaching SBI for business loan, you need to estimate the amount of loan you need to borrow. Remember business loan is an unsecured short term loan, and hence it is advisable to minimize your loan amount to the extent possible. Also, based on the EMI you can service, try to opt for lowest tenure of loans as long tenure loans result in huge interest outgo.
• Review your current obligations: Before taking loan from SBI, it is advisable to do an evaluation of your current monthly expenses including any EMI obligations that you have on your current loans. The assessment will help you to estimate the amount of EMI you can pay comfortably after taking into account other obligations. Once you arrive at the EMI you can service, you can also decide on the right loan tenure.

After the announcement of RBI on 22nd May 2020, SBI has extended the loan moratorium for the term loans and interest of working capital loans to next three months till August 2020. As a borrower, you have the option to opt-in or opt-out of the moratorium by informing SBI. The interest will continue to accrue on the principal outstanding during this moratorium and the accumulated interest would be added to the principal amount resulting in the extension of loan tenure except in cases where the tenure extension is not possible will increase EMI amount. The moratorium on payment 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 SBI customer care or its nearest branch.

✅What is the calculation of SBI Business Loan EMI?

Business Loan EMI (or equated monthly installment) is a fixed amount of money paid by you to SBI against the loan taken. This is towards repayment of your loan to the bank. Every month, it is due on a fixed day of the month till your loan is fully paid back.

• Business Loan EMI (or equated monthly installment) is a fixed amount of money paid by you to SBI against the loan taken. This is towards repayment of your loan to the bank. Every month, it is due on a fixed day of the month till your loan is fully paid back.
• With SBI offering business loan with loan tenure up to 48 months, the loan EMI can be as low as ₹ 2,594 per lakh, to make it more affordable and convenient to meet your business needs. Rate of interest offered by SBI are as low as 11.20%. You can check EMI for other tenures using our SBI business loan calculator.
• This EMI consists of both interest payment and principal repayment. Though the EMI amount will remain constant, the principal component keeps increasing and on the other hand the interest component keeps reducing.

✅How does MyLoanCare business loan calculator calculate EMI?

This calculator calculates EMI considering a combination of loan amount, interest rate and loan tenure.

• This calculator considers “reducing balance basis” and assumes that payment of EMI is made in arrears (means interest is charged for the month preceding the EMI payment date) and not in advance.

✅Will the SBI business loan EMI remain constant or change in future? What happens in case of increase or decrease in interest rate?

Typically, the business loan EMI remains unchanged unless the customer requests for a change and the same is approved by SBI subject to its eligibility conditions (note that nominal charges may apply for effecting a customer initiated change in EMI).

• In case the floating rate of interest on your business loan increases, SBI will typically keep the EMI constant but increase the loan tenure. So, you will pay the same EMI but for a longer duration. In case the interest rates increase to an extent that the revised loan tenure is more than the maximum permissible by SBI, the bank may increase your EMI amount.
• For partly disbursed loans availed under tranche EMI scheme, your loan EMI will increase with each disbursement.

✅Will business loan EMI change in case of prepayment?

SBI allows prepayment at nil charges or penalty in case of floating rate business loans.

• When you make a prepayment, the outstanding principal amount on your loan reduces. In this case, you may choose to either keep the EMI same and reduce the loan tenure (that is paying off the loan faster) or reduce the EMI and keep the loan tenure same (that is paying lesser amount every month). It is beneficial to keep the EMI constant and reduce the loan tenure as you pay less interest to the bank in this option.

✅Why should I calculate SBI loan EMI before taking a loan?

In case EMI comes out to be more than your monthly budget, then you have the chance to apply for a lower loan amount which fits your monthly budget and makes EMI easily affordable.

• If you already know the EMI you have to pay each month, then you can plan your expenses accordingly.
• Based on the EMI amount, you can opt for making prepayment of your business loan in future when you have surplus amount.

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