How is the business loan interest rate calculated?

Business loan interest rates are typically calculated based on a combination of factors, including:

• Base rate: The financial institution's base rate, which is often tied to a benchmark interest rate like the Prime Lending Rate (PLR) or the Marginal Cost of Funds-based Lending Rate (MCLR).
• Risk premium: A premium added based on the perceived risk associated with your business, such as creditworthiness, industry, and loan amount.
• Other factors: Additional factors that may influence the interest rate include your loan tenure, collateral provided, and any specific loan terms or conditions.

The exact formula for calculating the interest rate may vary depending on the financial institution. It's advisable to use an online calculator provided by the preferred financial institution or contact the financial institution directly for detailed information on how interest rates will be calculated.