You have to take big decisions almost every day if you are a business person. Often times you have to arrange money for the growth of your business. Along with this, you may also need funds for development and research or to open branches. You can take a business loan to fulfil these requirements. These loans are like long-term arrangements in which you will receive upfront payment. You then have to pay this money via EMIs.
The full form of EMI is 'Equated Monthly Instalment'. This simply means the money you will pay to the lender every month for clearing the loan. You can choose to pay either variable or fixed instalments for this loan. Also, you have the choice to pay the instalments via post-dated cheques or Standing Instructions that will allow debiting the amount from your account.
It is necessary to calculate the EMI before applying for the loan. If you won't be able to pay the EMIs, then not only the debt will keep on mounting, but it will negatively affect your credit score. It is recommended to use business loan EMI calculator to get the idea of the amount of the EMI.
The EMI can be found by doing the calculation yourself. The second option is to use the business loan EMI calculator online at loanbaba.com. You are supposed to give below given information:
When all the data is filled, you will be provided with the EMI amount, the interest you will pay and the total amount to be paid.
Formula for EMI calculation: EMI Amount = [P x R X (1 + R) ^ N] / [(1 + R) ^N - 1]
Here, P stands for principal loan amount, R stands for interest rate and N stands for number of instalments (monthly). If the yearly interest rate is 9%, then the monthly rate of interest will be 9/ (9 x 100).
Do check our business loan eligibility calculator for knowing your loan eligibility.
There are chances that you take a business loan to get some extra profits of temporary opportunities. After you fulfil your purpose, you may want to prepay some amount or get off the loan. By prepaying some amount, you get the advantage of reducing the remaining amount, as a result of which, due interest amount also reduces.
In this way, you increase the EMI amount contribution towards the principal amount and chances of clearing off the loan increase. Interest rate and loan tenure are two factors that play a vital role in deciding the amount of the EMIs. You should really use the online business loan EMI calculator to know the variations in the EMI amount on changing the tenure or rate.