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A Guide to Business Loan Calculators: How and Why to Use Them?

With business loans available at the tap of a finger, applying for a sum greater than your need is not uncommon. However, doing so significantly increases your debt burden and might make it challenging to repay the borrowed sum at regular intervals. That is where a business loan calculator comes in handy. This online tool helps you figure out the monthly obligations before submitting a loan application. 

How to Use a Business Loan EMI Calculator?

A business loan calculator requires 3 to 4 simple steps to display results. These steps are —

Step 1

Browse to a search engine and enter the official website of your preferred lender. Navigate to the business loan section by clicking on the product category. Scroll down to the bottom, and you will find a business loan EMI calculator.

Step 2

Under the loan amount option, move the slider to enter the sum you wish to borrow. The amount should be within the minimum and maximum sums your lender offers. For example, if you apply with Godrej Capital, the amount cannot be more than Rs 50 lakh.

Step 3

In the next section, use the slider to input the interest rate. If you have yet to submit your loan application, you can enter a rate near the minimum interest rate mentioned on the lender’s website.

Step 4

Now input the repayment tenure. You have two tabs here. In the first tab, move the slider to select the number of years and the number of months in the next column. For example, if you wish to close your loan in 39 months, your repayment tenure would be three years and three months.

Step 5

The calculator will now display the EMI for the entire loan duration.

Why to Use a Business Loan EMI Calculator?

The following reasons will establish why you should use a business loan EMI calculator:

  • Quick Comparison

Each lender has something different to offer. The loan amount, duration, and even the rate of interest they impose vary. Using a business loan EMI calculator, you can input the offerings of different lenders and evaluate which one is cost-effective for your business and who offers adequate funding.

  • Choosing Cost-Effective Options

Your EMI and interest payable change significantly for different tenures. Suppose you wish to opt for a Godrej Capital business loan of Rs 40 lakh and believe your profile will help you get approval at an 18% interest rate. Let’s see how different tenures will impact the loan variables:

Parameters  Repayment Tenures
1 Year 2 Years 3 Years 4 Years 5 Years
Loan Amount  Rs 40,00,000 Rs 40,00,000 Rs 40,00,000 Rs 40,00,000 Rs 40,00,000
Interest Rate 18% 18% 18% 18% 18%
EMI Rs 3,66,720 Rs 1,99,696 Rs 1,44,610 Rs 1,17,500 Rs 1,01,574
Interest Payable  Rs 4,00,640 Rs 7,92,714 Rs 12,05,945 Rs 16,40,000 Rs 20,94,423
Total Payable  Rs 44,00,640 Rs 47,92,714 Rs 52,05,945 Rs 56,40,000 Rs 60,94,423

Note: Extending the repayment tenure, even if you have a decent revenue stream, can make your borrowing costlier.

Budget Planning 

Business loan repayment requires thorough planning. You need to note down your company’s fixed and variable expenses. For example, your fixed expenses include existing debt obligations, staff salaries, office rent, and a few other parameters. On the other hand, variable expenses include utility bills, raw materials required in specific seasons, and many other considerations.

Suppose your monthly fixed expenses are Rs 85,000, and variable expenses stand between Rs 30,000 and Rs 50,000. Your company makes around Rs 2.5 lakh in revenue. Here, your ideal loan amount and tenure should be such that the EMI is around a maximum of Rs 50,000, so you have sufficient income to deal with any crisis that may arise in the future. 

A loan EMI calculator can help figure out such an amount.

Plan your Loan

Loan calculators not only inform you of your monthly obligations but also give you information on how much you are paying towards interest and principal repayment. When you input the variables to compute the EMI and click the submit button, the webpage displays an amortisation table. This table splits the EMI into interest and principal from the first month to the last. 

When you closely observe the table, you will find that during the initial years of repayment, you pay more towards interest and less towards the principal amount. The EMI has more of the principal component as the loan term progresses.

Deciding on Prepayment

Prepayment refers to the condition where you, as a borrower, decide to close the loan well ahead of the binding due date or wish to make a partial prepayment. The amortisation table can be handy to help you decide on prepayment. 

How Does Business Loan Prepayment Affect Your Loan Terms and Conditions?

When you opt for partial prepayment, your outstanding balance is reduced substantially. In such cases, lenders give borrowers the option either to lower the EMI and keep the tenure as it was or to keep the EMI unchanged and shorten the tenure. If your budget permits, go for a shorter tenure to save more on interest. Remember, making a prepayment is always a wise idea. It improves your creditworthiness significantly.


A business loan EMI calculator is a useful tool for managing your debt obligations. It simplifies determining your monthly payments, helping you compare different loan offers and plan your budget effectively. By inputting the loan amount, repayment period, and interest rate, you can easily see how different variables affect your EMI. This helps you avoid unnecessary debt and maintain a healthy financial balance for your business.