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Exploring the Advantages of Employing a Business Loan Calculator

Published on May 24, 2024Updated on Jun 3, 2024

Exploring the Advantages of Employing a Business Loan Calculator

Introduction

Running a business requires strategic financial planning. Often, that plan involves taking out a business loan to invest in expansion, working capital, and purchasing equipment. But how does one ensure that the repayments are manageable and do not strain the regular cash flow?

This is where a business loan Equated Monthly Instalment (EMI) calculator comes in. It is a generally free, easy-to-use tool to estimate the EMI for a business loan. It is extremely helpful to get a realistic picture of the monthly obligations to manage a business budget effectively.

In this article, we will see in detail how a business loan calculator works, the steps to use it, and how it can benefit your business’s financial management.

What is a business loan calculator?

A business loan calculator is a tool that helps estimate the approximate monthly repayment amount for a business loan. It factors in the loan amount, interest rate, and repayment tenure to provide a good estimate of what you are expected to pay each month. 

Overall, a business loan calculator can help you with the following:

  • Assess whether your business can comfortably handle the monthly repayments alongside existing expenses.
  • Choose the most suitable option for your business by comparing EMI estimates from different lenders.

Steps to use our business loan EMI calculator

SMFG India Credit offers an online, easy-to-use business loan EMI calculator. It only requires the loan tenure, interest rate, and total loan amount. 

Here is a step-by-step guide on how to use it:

  • Adjust the slider to set the total loan amount.
  • Choose the desired tenure for your loan.
  • Enter the interest rate that suits your business's financial profile.
  • Once you click submit, your EMI amount will be generated. 

How does a business loan calculator work?

A business loan calculator uses a mathematical formula that takes into account the following main factors:

Loan amount/principal: This is the total sum of money you borrow from the lender.

Interest rate: One of the most important elements of the EMI, it is calculated on several factors such as your age, income, credit score, and more. A lower interest rate can reduce the overall cost of the loan.

Repayment tenure: This is the time (measured in months and years) taken to pay off the entire loan including interest. Longer tenures result in lower monthly EMIs but lead to higher interest costs, and vice versa.

The formula used is:

EMI = PxRx(1+R)n/(1+R)n-1 

Where P = loan amount

R = interest rate

n = repayment period 

Benefits of employing a business loan calculator

Accurate calculations

Manual calculations take more time and are prone to errors, making them less reliable. Business loan calculators provide speedy and precise calculations of monthly repayments, ensuring you have a clear understanding of the financial obligations. 

Budget-Friendly repayments

By knowing the loan payment beforehand, you can factor this amount in your business budget. This ensures that repayments are manageable without affecting critical business expenses.

Loan customisation

Business loan calculator allows for easy customisation of loan terms such as loan amount, interest rate, and repayment tenure. This allows you to make informed decisions and find the most suitable loan option for your specific business needs.

How to apply for a business loan?

Here are the general steps you need to follow when applying for a business loan:

Assess your financial needs

Assess the financial needs of the business and determine the amount and the type of loan required (working capital, term loan, etc.). Once this is done, research different lenders and compare their loan terms to choose the best option that suits the business's requirements.

Check eligibility

Lenders have specific eligibility requirements such as years of business existence, credit score, and financial history. Review these factors to ensure you qualify. 

Prepare documents

Keep all necessary documents required for the loan ready beforehand to ensure a faster application process. 

Submit application

Fill out the lender's application form and submit the required documents. Make sure that the form is complete and free of errors.

Loan approval and disbursal

Your application will go through various stages of verification, after which you can get a loan offer tailored to your needs. Once you accept the terms and validate the agreement, the loan will be disbursed to your account. 

Conclusion

A business loan EMI calculator serves as an important tool for businesses to manage their finances effectively. It provides accurate estimates of monthly loan repayments, which can be factored into your existing expenses to create a budget-friendly repayment schedule. Using a business loan calculator before applying for a loan can also help you determine the loan amount that comfortably aligns with your business’s financial capacity.

If you are considering starting a new enterprise or expanding business operations, SMFG India Credit provides business loans of up to INR 75 lakhs* without any collateral. For loan amounts more than INR 75 lakhs*, collateral is required for a successful loan application. Our interest rates are competitive so the cost of borrowing remains low. Check out our user-friendly business loan EMI calculator to foresee your monthly payments. Apply online or contact us to know more.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

FAQs

How accurate are the calculations provided by business loan calculators?

Business loan calculators typically provide highly accurate calculations of monthly repayments. However, it is important to remember that these are estimates and rely on the information you provide. The actual loan terms may differ depending on your eligibility and the lender’s policy at the time of loan application.

Can I use a business loan calculator for personal loans?

While a business loan calculator is specifically designed to estimate monthly repayments for business loans, it can also be used to get a rough idea of monthly repayments for personal loans.

What factors should I consider beyond the calculated figures?

Beyond calculated figures, you should consider additional fees such as loan processing fees, existing monthly obligations, and potential future expenses for a more complete picture.

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