The formula for Calculating Business Loan EMI

The basic formula to compute EMI is as follows:

EMI = P x R x (1+R) n / {(1+R) n-1}

Here:

• P = principal loan amount
• R = business loan interest rate
• n = loan tenure

Let’s now understand how the EMI is calculated using the above-said formula:

Supposedly, a business owner avails a small business loan of Rs 5,00,000 (P) whose interest rate (R) is 18%. The loan tenure is two years. As per the formula given above, the EMI calculation will be as follows:

EMI = 5,00,000 x 18%/12 x (1+18%/12)2 / {(1+18%/12)2-1}

EMI = Rs 24,963

Therefore, the loan EMI for a loan of Rs. 5,00,000 for two years at an interest rate of 2 years will be Rs 24,963.

ZipLoan also uses the same formula to compute business loan EMI. You can use our EMI calculator to determine the interest component in your monthly payment. The calculator is simple and straightforward to use. All you need to do is enter the required details to get the results. You can use our EMI calculator by entering the following details:

Loan amount, with the maximum limit of Rs 5 lakh
Loan tenure, if you have opted for two years, then enter 24 months
Applicable interest rate

Once you enter all these details, you will get the following results:

• Total interest payable
• Monthly instalment (EMI)
• Total payable (principal plus interest amount)

With the EMI calculator, you can determine the best loan amount and tenure that suits your business finances. Consequently, you can also apply for a business loan with ZipLoan to meet the various needs of your business.