Business Loan EMI Calculator
Working-capital and SME loans carry rates of 11–24%. Run the numbers before you sign — your margin and your runway depend on this calculation.
About this tool
A business loan EMI calculator built for the realities of SME and MSME borrowing in India — wide rate range (11–24%), 12 to 60 month tenures, and the cashflow planning that matters more than the headline EMI. Model term loans, working capital, and equipment finance with the same engine.
How to use it
Quick steps to get the most out of this utility.
- 1
Enter loan amount
Use the sanctioned amount net of processing fees, GST, and insurance — that is the actual cash that hits your account.
- 2
Add the rate (APR, not "flat")
Many lenders quote "flat rate" which sounds lower. Convert flat to reducing balance: reducing-rate ≈ flat × 1.85 for short tenures. Use the reducing rate here.
- 3
Set tenure
Match tenure to the asset life: 12–24 months for working capital, 36–60 months for equipment, longer for property-backed loans.
- 4
Stress-test cashflow
Take your worst recent month's profit. Does the EMI still leave room for it? If not, the loan is too big or the tenure too short.
- 5
Export for your CA
Download the schedule to your accountant before signing the agreement.
The two questions that matter more than the EMI
Most founders fixate on the monthly EMI. That is the wrong number. Two other questions decide whether the loan helps or hurts:
- What is the return on the borrowed capital? If the loan funds inventory that turns 4× a year at 30% margin, a 16% rate is a bargain. If it funds office renovation that returns nothing, 12% is a luxury you cannot afford.
- What is the breakeven scenario for repayment? Take your trailing 12-month worst month. Add the EMI. If you still have positive cashflow, you can survive a bad quarter. If not, you are gambling.
Working capital vs term loan, in one line each
- Term loan: borrow once, amortize over years — best for assets that produce revenue for years.
- Working capital / OD: revolving line, interest only on what you draw — best for smoothing inventory and receivables.
- Invoice discounting: short-term cash against a specific invoice — best when one big customer pays slowly.
- Equipment finance: term loan secured by the machine itself — usually the cheapest option for capex.
Frequently asked questions
How is a "flat rate" different from a reducing-balance rate?+
A flat rate is calculated on the original principal for the entire tenure, regardless of how much you have repaid. A reducing-balance rate is calculated each month on what you still owe. A flat rate of 12% over 3 years is roughly equivalent to a 22% reducing-balance rate — almost double. Always insist on quotes expressed as APR (reducing balance) and use those in this calculator.
What is a safe EMI-to-revenue ratio for a small business?+
A working rule: total debt service (all loan EMIs combined) should stay under 30% of average monthly EBITDA, and under 15% of revenue. Cross those thresholds and a single bad quarter can push you into default. Use the calculator to model "what if revenue drops 25% for two months" — if that scenario breaks you, the loan is too large.
Should I take a working capital loan or a term loan?+
A term loan is for one-time capital expenditure (machinery, fit-out, expansion) and is amortized over years. Working capital is a revolving facility for day-to-day cashflow (inventory, receivables) and behaves more like a credit line. If you are buying an asset that produces revenue for 5+ years, take a term loan; if you are smoothing cashflow, use working capital and never let it become permanent.
Are there prepayment penalties on business loans?+
Almost always, especially in the first 6–12 months — typically 2–5% of the outstanding amount. RBI has restricted prepayment penalties on floating-rate retail loans but business loans (even floating) are usually exempt. Negotiate the prepayment clause before signing — many banks will waive it for established customers, but only if you ask in writing.
What documents do business loans need?+
Standard set: 2–3 years of audited financials, latest 6–12 months of bank statements, GST returns, ITR, ownership / lease proof for the business premises, and KYC of all partners or directors. The biggest single delay is bank statements showing inconsistent cashflow — clean books and clear narration in your business account speed up approval by weeks.
Keep exploring
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More views of the same calculator
Open main calculator →Same underlying engine, written for different use cases. Pick the angle that matches your situation.