A recent survey by Home Credit India found that loans for business expansion and startups went up from 5% in 2020 to 21% in 2024, reflecting the growing reliance on borrowed capital for growth. While securing a loan is a crucial first step, managing repayment effectively is often where many businesses face challenges.
Using a business loan EMI calculator can help you plan your finances by providing a precise view of your monthly payments. In this article, we’ll explore how to use a business loan calculator and the advantages it offers for financial planning.
Why a Business Loan EMI Calculator is Essential?
There are several benefits of using this digital tool to calculate business loan EMI, such as:
1. Better Budget Planning
Knowing your monthly repayment amount allows you to create a well-structured budget, ensuring that loan repayments do not disrupt your day-to-day operations or interfere with future investments.
2. Time-Saving and Convenient
A business loan EMI calculator provides quick results with minimal effort. Instead of manually calculating EMIs or working with complex formulas, you can instantly get accurate results, saving time and simplifying decision-making.
3. Comparing Loan Offers
With varying terms from different lenders, it is necessary to select the loan that best aligns with your finances. By using a business loan EMI calculator, especially from a trusted financial institution like SMFG India Credit, you can easily compare interest rates, loan amounts, and repayment tenures. This helps you to avoid unsuitable loan options and even negotiate more favourable terms if needed.
How to Use a Business Loan EMI Calculator?
Here’s how you can calculate business loan EMI using SMFG India Credit’s EMI calculator:
1. Access the EMI Calculator
You can find the business loan EMI calculator here.
2. Enter the Loan Amount
Input the loan amount you intend to borrow. Ensure that you account for your existing and anticipated financial commitments while deciding this amount.
3. Input the Interest Rate
Next, enter the annual interest rate you expect. While you can test with different interest rates, note that the final rate lies at the sole discretion of the lender. The decision is dependent on several factors such as the business stability, net income, existing financial obligations, and so on.
4. Select the Loan Tenure
Your loan tenure can range between 12 and 48 months, though this can vary by lender. While a longer tenure generally leads to smaller EMIs, it can also result in higher overall interest payments. In contrast, shorter tenure can increase your EMIs but may lower total interest costs. To strike the right balance, it is important to opt for a tenure that keeps your EMIs manageable without significantly increasing your interest burden.
5. View the EMI Results
Once you’ve entered all the details, the calculator will immediately display your estimated monthly EMI.
6. Experiment with Different Scenarios
One of the key benefits of using a business loan EMI calculator is being able to simulate different loan scenarios. For instance, you can adjust the loan amount, try different interest rates, or shorten the tenure to evaluate how these changes impact your EMI. Doing so can help you find the most cost-effective loan amount and tenure for your business.
7. Understand the Impact on Cash Flow
Finally, consider the estimated EMI in the context of your business’s cash flow. It is a good idea to evaluate if your business can comfortably handle the monthly repayments without straining your working capital. A common rule of thumb is to ensure that your EMI does not exceed 40% of your net monthly revenue.
Key Factors to Consider Before Using a Business Loan EMI Calculator
While a business loan EMI calculator is a valuable tool, its effectiveness depends on the accuracy of the inputs and an understanding of the factors influencing the results. Here are a few critical points to keep in mind when calculating business loan EMI:
- Loan Amount: Carefully evaluate how much funding your business genuinely needs. Over-borrowing can strain your finances with higher EMIs, while under-borrowing may hinder your business’s growth prospects.
- Interest Rate: The interest rate plays a crucial role in determining your EMI. Research and compare rates from different lenders to find the most competitive option that aligns with your business’s financial profile and repayment capacity.
- Associated Fees and Charges: Beyond the EMI, loans typically include additional charges like processing fees, prepayment penalties, etc. While these may not be part of the calculator’s output, they add to the total cost of the loan. Consider these factors when planning your finances.
Summing Up
Using a business loan EMI calculator not only saves time and effort but also eliminates the guesswork in loan planning. It allows you to easily understand your monthly obligations and see how different loan terms impact your EMIs with just a few clicks. Making informed financial decisions is essential in a competitive business environment, and a business loan EMI calculator helps you do just that. By evaluating the EMI results alongside your current expenses and future investment plans, you can make confident borrowing decisions to support your business’s growth.
*EMI calculators only tell you an estimated figure. Your actual EMI, interest rate, and other
loan terms will depend on your eligibility and the lender’s policy at the time of the loan application.
