Small business loans have been typically popular in the world of entrepreneurship lately. With increasing availability through more and more lending institutions serving the financing demand-supply gap, availing of a business loan has been simplified. Their small ticket size makes them suitable for financing as well as repayment.

Nevertheless, irrespective of the loan size, prudent borrowing is a must-stick-by rule that every business owner must follow. And when it comes to prudence, loan affordability occupies the top slot with several factors contributing to EMI determination. With available self-help tools like the business loan EMI calculator, it is now easier than ever to assess how much you would need to pay through a few simple entries only.

Key Factors Determining EMI For Small Business Loans

Important factors impacting business loan EMIs

Now, let’s take a look at a few factors that contribute to EMI calculation for a better understanding of your small business loan repayment liability.

1. Loan amount selected

The loan amount you seek to avail for business financing is one of the key factors impacting the EMIs payable each month. To strike affordability, choosing a loan amount that fulfills your financing needs while keeping the EMIs suitable is wise. Know how to use a business loan EMI calculator to better assess your EMIs accurately. Note that the change in EMI values is directly proportional to the change in amount.

It is best that you keep yourself aware of how to calculate EMIs using a business loan EMI calculator before proceeding.

2. Repayment tenor

The repayment tenor is another crucial factor that directly impacts the EMIs payable. Unlike the loan amount, however, the tenor selected impacts the EMI value inversely. This means, that if you choose a long repayment tenure, the EMIs reduce and vice versa. However, even though an increase in tenure brings down the EMIs, it shoots up the total interest payable, thus simultaneously interfering with the overall affordability. It is thus ideal to choose a tenor that balances between the total repayment liability and the interest liability.

3. Rate of interest applicable

The business loan interest rate also helps determine the EMIs payable, with high rates yielding higher installments and vice versa. Although business loans attract competitive rates, you can seek to secure financing at affordable rates through a few things in place. For instance, you can apply for financing after fulfilling all business loan eligibility requirements for affordable financing.

Lenders like Bajaj Finserv only further simplify financing by keeping the eligibility requirements minimal.

Their pre-approved offers also reduce the hassles of loan processing, ensuring quick financing. You can avail of these offers on a range of financial products, including business loans, credit cards, and personal loans. Provide only a handful of personal details to check your pre-approved offer.

3. Repayment capacity

Apart from the factors mentioned above, your repayment capacity contributes critically to the EMI determination. Lenders may agree to repayment in low EMIs for borrowers with limited repayment capacities if they hold necessary credit scores. You must also know what to do if your business credit score is low and take the required steps accordingly.

Along with these factors, you must also keep a check on your overall business financing affordability with other factors in mind. For instance, the amortization schedule that the business loan EMI calculator computes allows you to gauge the principal-interest component for each EMI payable. In case you plan to repay the advance, the schedule can allow you to time your lump sum payment suitably for maximum affordability.


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