Commercial Loan EMI Calculator


%
Monthly EMI 86
Principal Amount 1,000
Total Interest 32
Total Amount 1,032.00

Year Month Principal (A) Interest (B) EMI (A+B) Balance Loan Paid to Date (%)

Enter your loan amount, interest rate, and loan repayment period to calculate the EMI for a commercial loan.

A commercial loan is usually short-term financing that companies use to fund unexpected operational costs and capital expenditures. In the early stages of a business, opportunities for inorganic growth often arise, requiring significant capital to pursue.

A Commercial Loan EMI Calculator helps businesses estimate the monthly payments, interest costs, and overall loan expenses by inputting variables like loan amount, interest rate, and loan term, enabling better financial planning and decision-making.

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EMI Calculation of Commercial Loan

Commercial Loan EMIs are calculated based on the principal amount (loan amount), interest rate, and loan tenure (loan period) using a standard formula. Here’s the EMI formula:

EMI Calculation = P x R x (1+R)^n / [(1+R)^n - 1]

Where,

EMI is the Equated Monthly Instalment.

P - Principal amount

R - Monthly interest rate

N - Loan tenure in months.

Example:Let's calculate the EMI for a ₹15,00,000 commercial loan at a 10% annual interest rate with a 7-year (84 months) tenure.

Convert Annual Interest Rate to Monthly Rate

Annual Rate = 10%

Monthly Interest Rate (r) = 10*112*100= 0.00833

Substitute Values in Formula:

EMI= 1500000×0.00833×(1+0.00833)841+ (0.00833)84-1

By calculating the values, the approximate EMI reaches around ₹24,579 per month.

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Steps to Use Commercial Loan EMI Calculator

Using a Commercial Loan EMI Calculator simplifies the process of determining your monthly loan payments, allowing businesses to make informed financial decisions. Here’s how to use it:

1. Input the total amount you intend to borrow for the loan.

2. Add the annual interest rate percentage for the loan.

3. Enter the duration of the loan in months or years, depending on the calculator’s settings.

4. The calculator will automatically display the monthly EMI, total interest payable, and the total repayment amount.

Benefits of Commercial Loan EMI Calculator

A Commercial Loan EMI Calculator offers numerous advantages for businesses planning their finances, making loan management simpler and more efficient. Here are the key benefits:

  • Quick Calculations: Instantly compute EMI amounts, saving time compared to manual calculations.
  • Accurate Financial Planning: Provides precise monthly payment estimates, allowing businesses to forecast cash flow more effectively.
  • Interest Cost Comparison: Easily compare various interest rates and loan tenures to find the most cost-effective option.
  • Budget Management: Helps assess affordability by showing how a loan’s monthly EMI will impact your budget.
  • Flexible Scenarios: Experiment with different loan amounts, interest rates, and tenures to see how adjustments affect EMI, aiding better decision-making.

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Factors that Affect Commercial Loan EMI

Several key factors impact the EMI (Equated Monthly Installment) for a commercial loan, influencing the total repayment amount and monthly financial obligations. Here are the main factors:

  • Loan Amount (Principal): Higher loan amounts result in larger EMIs since the base amount to be repaid is greater.
  • Interest Rate: The rate at which interest is charged significantly affects the EMI, with higher interest rates leading to higher monthly payments.
  • Loan Tenure (Repayment Period): A longer tenure reduces the EMI amount by spreading payments over a more extended period, though it may increase the total interest paid.
  • Interest Type (Fixed or Floating): Fixed rates keep EMI constant while floating rates can cause EMI variations based on market changes.
  • Repayment Frequency: Opting for bi-weekly or quarterly repayments instead of monthly can impact EMI amounts due to compounding frequency.

Things to Know Before Applying for a Commercial Loan

Before applying for a commercial loan, it's essential to understand key aspects to make an informed decision and ensure the loan aligns with your business goals. Here are important things to know:

  • Loan Purpose and Requirements: Clearly identify the reason for the loan, whether for expansion, equipment purchase, or working capital, as lenders may have specific requirements for different purposes.
  • Interest Rates and Fees: Besides the interest rate, check for additional fees, such as processing fees, prepayment charges, or late fees, which can impact the overall cost.
  • Loan Tenure and Repayment Terms: Choose a tenure that balances manageable EMIs with total interest costs. Shorter tenures lead to higher EMIs but less interest, while longer ones reduce EMIs but increase overall interest.
  • Collateral Requirements: Many commercial loans are secured, so be prepared to provide collateral like property or inventory. Understand the risks involved if collateral is required.
  • Credit Score and Financials: A strong credit score and detailed financial records improve loan approval chances and can lead to better interest rates.
  • Repayment Flexibility: Check if the lender offers flexible repayment options, such as prepayment or restructuring, in case your business's cash flow fluctuates.

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Frequently Asked Questions

Interest rates on commercial loans vary widely based on factors like loan amount, tenure, credit profile, and the lender's policies. Rates typically range between 6% and 15% annually but can be higher for riskier profiles.

Yes, a commercial loan calculator can be used for various loan types, including equipment loans, real estate loans, and working capital loans, as long as you enter the correct parameters for each type.

The best rates are typically offered to businesses with strong credit scores, steady financials, and collateral. Rates vary by lender and market conditions, so comparing offers is essential.

While you can use a calculator to estimate initial EMIs for variable-rate loans, remember that payments may change over time as interest rates fluctuate.

A commercial loan calculator may include features to accommodate larger loan amounts, different loan tenures, and complex repayment structures compared to personal loan calculators.

Benefits include quick EMI calculations, interest cost projections, loan comparison capabilities, and helping businesses plan their budgets effectively before committing to a loan.

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