How is EMI calculated for secured business loan?

EMI (Equated Monthly Instalment) for a secured business loan is calculated based on the following factors:

• Principal Amount: The total amount borrowed.
• Interest Rate: The annual interest rate charged on the loan.
• Loan Tenure: The duration of the loan, typically expressed in months or years.

The following formula is used for the calculation of the secured business loan EMI:

EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]
Where:

• P = Principal amount
• R = Interest rate per month (annual interest rate / 12)
• N = Number of monthly instalments

Example:
If you borrow ₹10 lakhs at 12% annual interest for 5 years, the EMI would be:
EMI = [10,00,000 x 0.01 x (1+0.01)^60] / [(1+0.01)^60 - 1] EMI ≈ ₹22,244.45

It is important to note that secured business loans often offer lower interest rates compared to unsecured loans due to the collateral provided. This can result in more affordable EMIs for borrowers. Additionally, some lenders may offer flexible repayment options, allowing businesses to adjust their EMI amounts based on cash flow patterns or seasonal fluctuations in their industry.