Business Loan EMI Calculator

What is a Business Loan EMI Calculator?

A business loan EMI calculator is a financial tool for calculating the EMI of a loan you wish to take to expand your business or start a new one. It estimates the EMI amount you will be required to repay the loan.

To use Pocketful’s Business Loan calculator, one needs to enter the following inputs:

1. Loan Amount
2. Rate of Interest
3. Loan Tenure

The Business Loan calculator gives output in the form of :

1. Monthly EMI
2. Principal Amount
3. Total Interest
4. Total Amount

The Pocketful calculator helps you accurately calculate the Monthly EMI of a loan taken for business purposes.

How can a Business Loan Calculator help you?

The business loan calculator helps you calculate the monthly EMI, which can help you in the following ways:

1. Planning: One can easily plan the loan repayment obligations before taking any business loan, and with the help of this, they can account for these payments in their future budgets.
2. Comparison: You can compare different loan options offered by the lenders and can choose the best one for you.
3. Cost of Loan: It shows the total interest payable on the business’s loan, which helps assess the actual cost of a business loan.

How does a Business Loan calculator work?

The explanation of how a business loan EMI calculator works is as follows:

1. Data: To calculate the EMI of a business loan, the first step is to enter the specific information related to the business loan, such as the amount of loan, duration of loan, and rate of interest at which the loan is taken.
2. Applying Formula: The formula for calculating business loan EMI is used to calculate the EMI amount using the data provided earlier.
3. Result: After the application of the formula, you will get the desired result on the screen, which will show the monthly EMI amount, total interest, and the total amount payable, which includes both the principal amount and total interest.

Formula to Calculate Business Loan EMI

The formula to calculate the EMI payable for a business loan is:

EMI = P * r * (1 + r) ^ n / (1 + r) ^ n – 1

EMI:	Equated Monthly Installment
P	Principal Amount of Loan
r	Rate of Interest in monthly format at which the loan is taken
n	Tenure of loan in months

Moreover,
Total Interest = (Monthly EMI * Tenure in Months) – Principal Amount
Total Amount = Principal Amount + Total Interest

Example of Business Loan Calculator

Mr A has decided to take a business loan of INR 1,00,000 to expand his business. The bank offered him the loan at an annual interest rate of 12.5%, and he decided to take the loan for 2 years.

Now, let’s calculate the monthly EMI Mr A must pay.

In the case of Mr A, the following are the inputs:

1. Loan Amount or Principal: 1,00,000
2. Interest Rate: 12.5% P.A.
3. Loan Tenure: 2 Years

Now, we need to convert the annual interest rate into a monthly interest rate-
Monthly Interest Rate = 12.5% / 12 = 1.04166% = 0.01042

The tenure in years is also required to be converted into months:
Loan Tenure = 2 * 12 = 24 Months

Now, we have to apply the formula of the Business Loan EMI Calculator using the inputs given above:

EMI = [ P * r * (1 + r) ^ n ] / [ ((1 + r) ^ n) – 1 ]

= [ 1,00,000 * 0.01042 * (1 + 0.01042) ^ 24 ] / [ ((1 + 0.01042) ^ 24) – 1 ]

Once the formula is applied, your monthly EMI will come to around ₹4,731 per month.

Total Interest = (Monthly EMI * Tenure in Months) – Principal Amount
= (4,731 * 24) – 1,00,000 = ₹13,538

In the entire duration of loan tenure, you will be paying an interest of ₹13,538.

And the Total Amount payable = Interest + Principal Amount
= ₹1,00,000 + ₹13,538
= ₹1,13,538

Therefore, Mr A has to pay a monthly EMI of ₹4,731 for 24 months, which amounts to ₹13,538 paid as total interest on the loan. The total amount repaid is ₹1,13,538.

How to Use a Pocketful Business Loan Calculator?

Using Pocketful Business Loan Calculator is very easy; one can follow the below-mentioned steps to use it:

1. The first step to using the business calculator is to visit the Pocketful website.
2. On the home page of the Pocketful website, you need to scroll down to where you will find the tools section and click on it.
3. Once you click it, you will find the financial tools section; click on Pocketful’s Business Loan EMI calculator.
4. You will be prompted to enter the details of the loan, such as loan amount, interest rate, and duration of loan or loan tenure.
5. Pocketful’s Business Loan EMI calculator quickly calculates the monthly EMI, principal amount, total interest, and total amount.

Benefit of Using the Business Loan EMI Calculator

The significant advantages of using Pocketful’s Business Loan EMI calculator are as follows:

1. Estimation of EMI: The calculator instantly calculates the monthly EMI that an individual is required to pay for the business loan that they have taken.
2. Convenience: Using a business loan calculator helps you save the time and effort required to calculate the EMI amount.
3. Breakdown of Amount: A business loan calculator breaks down the total amount payable into total interest and principal amount to be paid over time and helps in planning prepayments of loans.
4. Comparison: Through a business loan EMI calculator, one can compare the interest rates and EMI terms offered by various vendors and select the most cost-effective option.