Business loan EMI calculator: 5 myths and facts explained

There are several options to repay a business loan. The simplest one is payment is through EMIs. In this method, the amount of credit is divided into fixed equal sums which you can pay every month until repayment of the loan.

The business loan EMI calculator helps in the evaluation of monthly payment on the business loan. The calculator pre-determines the amount that you need to pay after availing a business loan from any financial institution. It facilitates in planning your future resources. Here share four facts associated with the business EMI calculator:

1. Determining business loans EMI

These ate the factors which affect loan EMI:

●        Amount: For the amount that you borrow from financial institutions, the rate of interest is directly proportional to the rate. More the amount, higher the EMI

●        The rate of Interest: The rate of interest is directly proportional to the EMI. Higher rates will result in more EMIs and vice versa.

●        Loan tenure: Loan tenure is inversely proportional to EMI, which means longer loan tenure resulting in low EMIs and vice-versa. In India, the longest tenure for business loans is five years. 

2. Schedule of EMI for Business Loan

It is imperative to understand the amortization table before taking up any bank loans for business. The process of repayment is not that simple, what it appears to be. You might assume that the amount is divided into EMIs, so you are paying an equal amount each month. But this is not how it works. The interest payment and principal payment are not the same every month. Initially, the interest component is high, and the principal component is low. That is why when you check the amount due, the principal amount remains high in the first couple of years.

3. The formula for EMI calculator

To calculate the EMI on business loans, you require the following inputs:

●        Amount of loan

●        Rate of interest

●        Time for repayment

            The most commonly used mathematical formula is:

                        P*R* (1+R)^N/([(1+R)^N]-1)

                        Where,

P is the loan amount

R is the rate of interest

N is the time for repayment

4. The Advantages

Following are the advantages of a Business loan calculator:

●        Saves time: You need to enter basic detain, and the calculator will save you from complex calculations.

●        Accuracy in results: If you have entered correct data, the result will be precise.

●        Helps in planning finances for future