Every company need capital. Without sufficient cash that it can utilize to pay for its activities, a firm cannot thrive. While it might be simple to launch a company with the original funds provided by the founders, there may be times and circumstances where extra finance and capital injection are 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.
