Every business needs financial stability, more so due to constant market fluctuations. Loans and advances come to the rescue when enterprises face sudden financial challenges.
If market conditions were predictable and consumer tastes remained the same, Nokia would have still been the king of the cell phone market today. These two factors are some of the leading causes of businesses hitting rock bottom.
SMEs are more prone to these situations as compared to large businesses. The latter may have a surplus that can cater to deficits; however, small businesses may not have the necessary funds for addressing emergency financial needs.
They need to maintain continuous cash flow in the business for its smooth running. Hence, in such cases, an unsecured business loan can fulfil the immediate cash requirements. Even there are business loans specifically for women entrepreneurs.
Also Read – Business loan for charted accountants
Furthermore, some financial institutions provide a business loan EMI calculator that can help an applicant calculate his/her EMIs instantly.
Financial institutions sanction these loans within 24 hours as they don’t require any collateral. Bajaj Finserv is a reputable NBFC which provides pre-approved offers on their Business Loans, thereby reducing the time taken for availing finance and simplifying the entire process.
Pre-approved offers also come with personal loans, home loans, EMI product financing, and other financial products and services. You can have a look at your pre-approved offer by providing a few necessary details online.
Furthermore, some financial institutions provide a business loan EMI calculator that can help an applicant calculate his/her EMIs instantly.
EMI calculator and how it works:
Applicants can easily calculate their EMIs based on their principal amount, tenure, and rate of interest with this online tool. An EMI calculator delivers precise results that manual calculation may not.
An EMI calculator for unsecured business loan works on the following formula: E = P x r x (1 + r) ^ n / [(1 + r) ^ n – 1]
In this formula:
- E denotes the EMI that the customer has to pay.
- P is the loan principal or the total amount.
- r is the rate of interest per year. Here, it is calculated monthly – r/12.
- n is duration or tenure of the loan.
The following example showcases how this formula and the EMI calculator work for determining EMIs.
Loan amount – Rs. 1 Lakh; Tenure – 3 years; Rate of Interest – 15%. So, the EMI will be:
E = 1,00,000 x 2.4/100 x (1 + 2.4/100) ^ 36 / [(1 + 2.4/100) ^ 36 – 1)
E = 3467
Hence, the EMIs stand at Rs. 3,467.
Note: Some financial institutions often charge nominal processing fees when applicants avail loans. A loan processing fee usually ranges from 1 to 2%.
How to use?
As mentioned above, users have to provide the following for using an EMI calculator:
- Principal – The total amount of unsecured business loan one borrows.
- Tenure – Duration of the loan.
- Rate of interest – The applicable rate of interest by the lender.
These are mainly the 3 easy steps to calculate one’s monthly repayments. The EMI calculator will generate Total Payment, i.e. the total amount a customer has to pay including interest, the Total Interest Payable, and the EMI.
An EMI calculator thus lessens the hassle that manual calculation involves and also delivers accurate results. Business owners can use this tool for evaluating their repayments and planning their finances accordingly.
Business loans multiples features and benefits. So, borrowers can use the amount for the following situations:
- Debt consolidation: Businesses can find themselves in massive debts when faced with poor market conditions. In this case, opting for a business loan can help owners get out of debt and ensure business continuity effectively.
- Working capital: A working capital loan can come to the rescue of entrepreneurs when they want to start a business. Furthermore, these loans can also help business owners finance their liabilities like rent, electricity, wages, etc.
- Purchasing/upgrading plant & machinery: Plant & machinery will require considerable investment, whether it is purchasing or upgrading. Hence, a business loan can be an ideal fit for such occasions. An unsecured business loan comes without any end-use restriction and thus can be utilized to address any financial shortcoming. Applicants availing this loan can use an EMI calculator and assess their repayment capabilities even before applying for a business loan.
