Every business enterprise needs credit for operation, growth, and expansion. In India Banks, NBFCs and Fintech are the major sources of funding for Businesses. Most pre-approved business loans are term loans. Businesses can check their suitability for a business loan through a term loan calculator.
Let’s understand what is a term loan, how to apply and calculate EMI for term loans.
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A term loan is a loan approved by a lender for a fixed amount that should be repaid in a specific time. The rate of interest of a term business loan can be both fixed and floating. The repayment tenure is between 12 to 60 months. Apart from business loans, personal loans, home loans, education loans, and auto loans are also term loans. Many banks offer pre-approved business loans to businesses with which they have a long relationship.
To apply for a term loan, visit the official website of the lender, and fill the loan application form online. After submission lender will review and contact the applicant to proceed with the other formalities. Applicants should choose the right loan scheme as per their needs.
EMI calculators are available on all the financial websites. These can help to determine the EMI of the term loan that the applicant wants to take. There is a mathematical formula to calculate the EMI of pre-approved business loans.
EMI= P x R x (1+R)^N]/[(1+R)^ (N-1)
EMI - Monthly instalment.
Which factors determine the term loan interest rates?
Factors determining the rate of interest include the loan amount, CIBIL score, age of business, and balance sheet.
Which loans are term loans?
Any loan for a specific amount that has a specified repayment period is called a term loan.
Does CIBIL score affect business loans?
Yes, poor CIBIL history can lead to rejection of loan application. If you have a poor CIBIL score you have to opt for a high rate of interest.
What is term loan and overdraft?
In simple language a term loan is a loan that can be used for business purposes, which will be paid back after a specific time period. While overdraft is a credit line facility. In which you can withdraw funds from your current account, even if your account balance is zero.
Which is long term loan?
Long-term loans refer to those loans that have a longer tenure or repayment period. The repayment period of a loan can range from a year to 30 years.
