Every business needs funding. A business cannot survive without
adequate capital which it can use to pay for its operations. While it
may be easy to start a business with initial capital put up by the
founders, there could be instances and situations where additional
funding and capital infusion will be required.
A great option
for businesses looking for capital to ensure smooth operations is to
avail of a Business Loan. A Business Loan allows firms/companies to
meet their operational and expansionary expenditures without the need
to provide any collateral. Such loans are available with flexible
repayment options so that businesses can set their own repayment timeline.
What is a Business Loan?
A Business Loan is a loan that is specifically meant for
businesses. Such loans have been tailor-made to meet the needs of
businesses. Some of the key features of Business Loans include high
disbursal amounts without the need for collateral, fast and smooth
disbursal process, highly attractive interest rates, a simplified
documentation process, and extended loan tenures. A Business Loan can be used for a wide
variety of purposes such as managing operational costs, boosting
working capital, hiring and training staff, improving business
infrastructure, restocking inventory, and so on. But how do you
calculate the cost of your Business Loan? How much will you need to
pay each month and for how long?
If you take out a Business Loan
of Rupees 10,00,000 then how much will you pay the lender each month
to service the loan?
This is where a commercial loan EMI
calculator comes in.
What is a Business Loan Calculator?
A Business Loan calculator is a tool that helps you know the
monthly amount that you will need to pay to service a loan. A Business
Loan calculator considers the entire cost of a loan. It converts your
principal amount and your interest into a simple monthly amount so
that you know exactly how much you need to be paying each month.
All you need to know to use an EMI calculator is the loan amount (the
sum that you’ll be borrowing), the rate of interest of your loan (this
can be estimated or you can reach out to your lender to ascertain the
interest rate), and the tenure of your loan (the amount of time that
you will take to completely repay the loan).
How are the Loan Costs Calculated?
Three factors need to be considered to ascertain your payment
amount. These are the loan amount, the amount of interest payable, and
the tenure of the loan.
Once this data is collected, the monthly
payment schedule can be calculated by a commercial loan EMI
calculator. When you take out a loan, you will receive an
“amortization schedule” which takes all this data and puts it into an
easily readable table. The amortization schedule is essentially the
distribution between the loan amount and the interest that you’ll be
paying each month and the total amount left to be repaid after each
month. Since the amortization schedule is released after a loan is
sanctioned, you can simply use a Business
Loan calculator to get an indication of the required monthly
repayments.
What are the Benefits of a Business Loan Calculator?
Here are some of the key benefits of using a Business Loan calculator:
Provides exact and accurate calculations
The monthly repayment calculation can be performed manually.
However, this result can be prone to errors. A computer is much better
suited for performing simple mathematical calculations such as the
ones involved in calculating monthly payments.
Through a
Business Loan calculator, you’ll be able to accurately gauge your
monthly repayment amount. You can also check the difference in this
amount if you change the loan amount or the repayment tenure.
This amount must be completely accurate because you can’t afford a
miscalculation. If you avail of a loan that you can’t afford to repay,
then you may find yourself in an undesirable situation. Such
situations can be best avoided by using a calculator which has been
designed specifically for this purpose.
Also Read: Top
5 Challenges for MSME Business Loans
Helps you determine the Business Loan criteria
Making a loan application and then waiting for approval or
rejection can be a time-consuming process if you’re not sure whether
you meet the Business Loan criteria. Rather than waiting for the loan
processing officer to determine whether you meet the Business Loan
criteria and then tell you, you can calculate your eligibility by
using a calculator.
If you see a monthly loan amount that can be
easily repaid by your business, then you can be assured that you’re
eligible for the loan (assuming that all the other non-monetary
eligibility requirements have been met).
It’s easy and quick
Calculating the repayment amount manually can be very
time-consuming. Even if you’re excellent at maths, you’ll need to
spend at least an hour going over your calculation and making sure
that they’re correct. However, if you use a calculator, then you can
have the result within seconds, with a surety that the result is as
accurate as possible.
It’s quite easy to use the calculator
since you only need to enter a few details such as the loan amount,
the tenure of the loan, and the interest rate. The calculator will do
the rest.
It’s mobile friendly
A commercial loan EMI calculator can be used on your mobile phone
(assuming that you have a smartphone). You don’t even have to open
your laptop or your tablet. You can easily check the required monthly
payment on your mobile screen.
It only requires you to type a
few quick numbers such as the loan amount and the loan tenure. It’s
effortless even if you use it on your mobile phone.
Wrapping Up
A Business Loan calculator is an excellent tool that will allow you to gauge the suitability of a Business Loan for your needs. You will be able to determine whether a loan is affordable and whether it will help you meet your business goals. Rather than making the calculations manually, you can allow technology to do the heavy lifting for you.