Business Loan EMI Calculator

How it works

The EMI uses the standard reducing-balance method. The APR adds the processing fee and GST, so you can compare lenders that quote different rates and fees on a like-for-like basis. If a lender quotes a flat rate, convert it first with the flat vs reducing rate calculator, because a flat rate is much more expensive than it looks.

Where to find the inputs: the sanction letter gives the amount, rate, tenure and processing fee. Business loans can also carry stamp duty on the loan agreement, a CGTMSE guarantee fee, insurance and charges for registering security. Ask for a full list in rupees, or the Key Facts Statement where the lender provides one, and add those in the offer comparison tool.

Worked example: the same ₹10 lakh from three lenders

₹10 lakh for 3 years:

The unsecured app loan costs about ₹2,19,871 more than the secured bank loan for the same money. If you have property, a loan against property may be far cheaper.

Match the EMI to your cash flow, not your turnover

Turnover is not what pays the EMI. What is left after suppliers, salaries, rent, GST and your own drawings is. Lenders look at the same thing when they check whether your profit can cover all loan repayments, so a comfortable margin helps you get approved too. ₹10 lakh at 16%:

If your business has a weak season, test the EMI against your worst month, not your average one. A missed EMI shows up on both the business's and the promoter's credit report.

Term loan, overdraft or daily repayment?

An EMI term loan suits a one-time need such as machinery, a fit-out or a vehicle. For working capital that rises and falls, an overdraft or cash credit limit is often cheaper, because you pay interest only on the amount you use and only for the days you use it.

Suppose you need ₹10 lakh for 4 months each year to stock up before a festival season, at 15% either way. A 1-year term loan costs ₹83,100 in interest. An overdraft drawn fully for 4 months and then repaid costs about ₹50,000. Overdraft limits are usually reviewed every year and may need security.

Some NBFCs and fintech lenders offer loans repaid daily or weekly, often deducted from card or UPI settlements. Those payments add up fast, and the rate is rarely shown in the same way as an EMI loan. This calculator assumes monthly EMIs, so ask such lenders for the APR in their Key Facts Statement.

Documents lenders usually ask for

• KYC of the business and of each owner, partner or director: PAN, Aadhaar, address proof.
• Udyam registration certificate, if you want to be treated as a micro, small or medium enterprise.
• GST registration and recent GST returns, which lenders use to check your turnover.
• Income tax returns with computation for the last two or three years, and audited financials if applicable.
• Bank statements of the main business account, usually for six to twelve months.
• Property papers or machinery invoices for a secured loan.

Common business loan mistakes

• Forgetting that lenders read your ITR. They lend on the profit in your returns, so every expense you claim to cut taxable income also cuts what you can borrow. Plan for this a year or two ahead.
• Using an unsecured loan for a long-term asset. Short, costly money for something that pays back over years squeezes cash flow. Look at a secured or Mudra loan first.
• Signing a personal guarantee without reading it. It makes your personal assets answerable for the business's loan.
• Taking several app loans at once. Overlapping daily deductions can drain the account faster than sales refill it.

Assumptions

• Equal monthly EMIs at a fixed rate for the whole tenure.
• The processing fee is paid upfront; stamp duty, documentation and insurance aren't included.
• Some business loans have other repayment structures (daily or weekly deductions, overdrafts). Compare full offers with the loan offer comparison.

Frequently asked questions