calc / business loan / EMI
Business Term Loan EMI
The instalment on a business term loan — plus the effective cost once the processing fee is counted, and a warning about “flat rate” quotes that are nearly double what they sound.
Term loan cost reducing-balance basis
§1Same EMI formula, different traps
A term loan amortises exactly like a home loan — EMI on reducing balance. What differs is the pricing around it:
§2The gotchas
NBFC quotes of “11% flat” charge 11% on the original amount every year, ignoring repayments. On a 3-year loan that's equivalent to roughly 19–20% reducing — almost double. Always ask: “flat or reducing?”
A 2% processing fee on ₹20 lakh means ₹19.6 lakh hits your account, but EMIs are computed on the full ₹20 lakh. The effective-cost figure above prices that in.
Unsecured business loans run 14–24%. The same business pledging property (LAP) borrows at 9–12%, and CGTMSE-covered MSME loans sit in between. If you have collateral, don't accept unsecured pricing.
Unlike floating-rate home loans, business loans routinely carry 2–5% foreclosure charges, sometimes with a 6–12 month lock-in. Read the schedule of charges before signing.
§3Related
Running stock and receivables on a limit instead? Price it on the OD/CC interest calculator. Check what your cash flow can service on eligibility.