When you search the internet for getting a small business loan for your enterprise, a number of business loan EMI calculators and loan offerings pop up in your search results. For a person applying for their first commercial loan, it might get confusing. This post helps you in understanding the formula used by an online EMI calculator to calculate the monthly instalment for your MSME loan. Furthermore, we try to dispel some common myths associated with business loans.
How EMI Calculators Work?
EMI means Equated Monthly Instalment. It is basically the amount you pay every month until the loan is paid in full to the lending institution. Every EMI has two components, principal and interest. Both components are paid off with every consecutive EMI payment.
Here is the formula used for calculating an EMI –
Using the formula, you can self determine your monthly EMI on a business loan. Lending institutions such as banks and NBFCs charge a minimum processing fees and other charges for disbursal which are generally deducted from your total loan amount.
Benefits of Business Loans
Unsecured business loans let businesses fund their exigencies and can be used for expansion or to meet working capital requirements. Also, unsecured business loans are one of the quickest ways to raise liquid capital without putting up a collateral or security.
NBFCs such as Lendingkart offer quick renewal of loans upon repayment without any extra charge, which means you can easily maintain your working capital in-flow indefinitely.
Myths Associated with Small Business Loans
There are several rumours and myths that float around the web and in business circles about getting a business loan from an NBFC or banks. However, not everything you see or hear online is true.
Myth 1: Getting a business is the hardest thing to do
Obtaining a business loan is not an insurmountable task. You can reduce a lot of frustration by doing some due diligence before applying for a small business loan. With your documents and eligibility requirements in order, you can easily get an unsecured business loan from an NBFC or a bank.
Lendingkart promises loan amount disbursal’s within 3 days of document verification. What’s more? The process is completely online. You can simply login on the Lendingkart website or mobile app to apply for a business loan.
Myth 2: A Perfect Credit Score is Required for Getting a Business Loan
While your CIBIL score will be taken into account by the lending agency, it does not have to be perfect. A good CIBIL score that is more than 700 is mostly enough to qualify for a business loan. There are a number of other factors such as your business’s health, years of operation and profit margins, which are considered by the lenders.
Myth 3: The Best Way for Getting a Business Loan is Through a Bank
Well, this is no longer true because banks have a very narrow product portfolio considering the flexible credit requirements of modern MSMEs. Therefore, Non Banking Financial Companies are a much better choice for availing quick working capital loans and unsecured business loans.
Along with fast processing times for MSME loans, NBFCs also offer the ease of renewal and waiver of pre-closure charges.
As the digital reforms to our economy take off, getting online finance for business is going to become even more easier. At Lendingkart, we have already limited the process of getting business loans to a few simple steps. You can use our online EMI calculator to plan and manage your monthly installments as well.
To apply for a business loan, click here.