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Term loan calculator

Any business enterprise needs funds to operate, expand, grow, diversify, and ultimately to generate profits. The need of funds can be variable depending on the business activity, size, scale, and purpose of the loan.

In India, the primary source of funds for a business enterprise is Banks, NBFC and of recent origin, the Fintech NBFCs. They are rewriting the contours of small business loans with innovative products and fast lending principles.

Most business loans are term loans, and the primary step for availing of a suitable loan is to check for viability through a term loan calculator. This is available at the official portal of the lender or any aggregator.

term loan EMI calculator will serve the same purpose enabling you to calculate the EMI and the total interest outgo for the entire tenor of the loan.

Loan Amount

1 lac

2 Cr

INR

Tenure

6 Months

36 Months

Months

Interest Rate

1%

21%

%

Principal Amount

Rs.1,00,000


Interest Amount

Rs.291


Monthly EMI

Rs.16,715

Total Amount Payable:

Rs.1,00,291

What is Term Loan?

You can define a Term Loan, as a loan taken from a lender for a specific amount and repayment schedule or time limit.

The rate of interest applied on the term loan can either be flat or floating, best calculated using a business term-loan interest calculator.

It is ideal as a small business loan, but on the flip side may require payment of margin by the borrower to temper the total credit amount and cost of loan enabling a comfortable term loan repayment schedule.

How does a Term Loan work?

Generally, a term loan has a repayment period of 1 to 25 years, depending on the size and purpose of the loan.

Small business seeks term loans to acquire fixed assets primarily and sometimes also as working capital for streamlining cash flow resulting out of seasonal fluctuations or accumulation of receivables.

A business can best use long term loan calculator and EMI calculator for a term loan in excel for the same results. In the latter, you also get the benefit of the amortization chart showing the entire pattern of the loan. 

Types of Term Loans:

Term loans usually reflect its lifespan, and thus also the determinant of their type.

  • Short Term LoanUsually, the tenor of such loans is less than a year and at times can extend up to 18 months.
  • Intermediate-Term Loan: They are designed for tenors in a range from 1 year to 3 years at the maximum.
  • Long Term Loan: It can run for periods exceeding upto three years and inclusive of 25 years. Generally, you need collateral to secure these loans.

Benefits and features of Term Loans:

  • A Term Loan comes from a lender for a fixed amount with a fixed repayment schedule calculated through a term loan repayment calculator. 
  • Term loans are ideally suitable for the purchase of equipment or buildings/structures often termed as fixed assets.
  • Long term loan repayments are ensured through fixed installments and not balloon payments as for lower terms. The best check is through a term loan installment calculator.

What is Term Loan Formula?

The formula is handy in determining payment on different types of loans, including business loans. The use of funds does not affect the outcome, but the deviation in repayment standard fixed amortization available through term loan calculator excel file may give differing results. Let us check the formula used to calculate a loan payment.

p=r(pv)/1-(1+r)-n

P = Payment

PV = Present value which is also the original loan amount

R = Rate per period

N = Number of periods.

Eligibility criteria of Business Term Loan:

The criteria differ from lender to lender and the repayment term envisaged for the loan. In banks, the rules and standards are stringently applicable as compared to new age Fintrechs like Lendingkart. Additionally, Fintechs cater for only short term and intermediate-term loans. The criteria enumerated below match that of Lendingkart.

  • The eligible borrower enterprises can be any of the following:
    • Proprietorship
    • Partnership
    • Limited Liability Company
    • Private Limited Company
  • The list of ineligible entities include:
    • Trust
    • Charitable Institution
    • NGO
  • The business must be in operation for a minimum period of six months.
  • Preceding quarterly turnover in excess of Rs.90K.
  • Business activity and location should not appear in the negative list.

Documents required for Business Term Loans:

Documentation is integral to any loan proposal. The list of required documents depends a lot on the size and type of loan, other than ownership. The compilation of the list of documents as a summary is in very general terms.

The determination of the actual requirement will be at the time of application and the need of the lender, which may seek specific documents for their records.

  • KYC documents of the Borrower and the Business inclusive of PAN card.
  • Proof of existence of business.
  • Business registration certificate and other related licenses.
  • Copy of Partnership deed, Certificate of Incorporation, Memorandum of Association as the case may be.
  • Different financial documents.

How to apply for Business term loan:

Unlike banks, Fintech companies provide a digital platform for the loan application as well as processing. In banks also, there is a provision for online application of loans, but it is equivalent only to the expression of interest.

The actual application proposal, documentation, sanction, and disbursal confine themselves to brick and mortar branches or Credit Hubs. The three simple steps at Lendingkart are:

  • Submit application online.
  • Upload requisite documents.
  • Get sanction and disbursal after evaluation and vetting of documents.

Fees, Charges and other Features:

Rate of interest calculated using the term-loan interest rate calculator is crucial to the cost of the borrowed fund. Besides, other features impact the life of the term loan in general.

Rate of Interest

12% to 24% per annum

Processing Fee

One-time 1% to 2% of the loan amount

Tenure

Up to a maximum of 36 months.

Repayment Mode

EMI or fortnightly

Security

Since the loans are unsecured, no collateral is required.

Term Loan Calculator FAQs:

1. What is the quantum of term loan granted at Lendingkart?

You can avail a term loan from Rs.50K to Rs.2Cr.

2. Are there any foreclosure charges?

Normally there are no foreclosure charges, but it is best to ascertain from the lender.

3. What is the time taken for processing loan at Lendingkart?

The maximum time taken is 72 hours.

4. What are the factors involved in determining the rate of applicable interest?

The factors taken into account to fix the applicable rate of interest are: • Loan amount • CIBIL score • Age of business • Balance sheet

5. Are there any hidden charges involved in Term Loan at Lendingkart?

Not only are there no hidden charges, transactions are also transparent.