Calculate the monthly EMI, total interest, and total cost of a business loan, including the impact of a one-time processing fee typically charged by lenders.
How to Use the Business Loan EMI Calculator
Enter the "Loan Amount (₹)" you plan to borrow for your business.
Enter the "Annual Interest Rate (%)" quoted by your lender.
Enter the "Loan Tenure (months)" over which you'll repay it.
Optionally enter a one-time "Processing Fee (%)" charged by the lender.
Click "Calculate EMI" to see your monthly EMI, total interest, and total cost of the loan.
Worked Example: ₹20 Lakh Term Loan for a Small Business
A shop owner borrows ₹20,00,000 at 15% a year for 48 months to buy equipment, with a 2% processing fee. The calculator gives an EMI of ₹55,661.50 and total interest of ₹6,71,752. The fee is ₹40,000, so ₹19,60,000 is disbursed, and the total cost of the loan is ₹7,11,752. In the first 12 months, about ₹2.74 lakh of the EMIs is interest and the balance falls to roughly ₹16.06 lakh.
Same ₹20 lakh loan
EMI
Total interest
15% for 36 months
₹69,331
₹4,95,904
15% for 48 months
₹55,662
₹6,71,752
15% for 60 months
₹47,580
₹8,54,792
11% for 48 months (secured or scheme-backed)
₹51,691
₹4,81,170
18% for 48 months (unsecured, thinner track record)
₹58,750
₹8,20,000
Can the Business Carry the EMI?
Lenders judge a business loan mainly on whether the business generates enough cash to pay it. A common yardstick is the debt service coverage ratio (DSCR): the cash profit available for repayments divided by the loan instalments due. If the shop above earns ₹75,000 a month after all operating costs, its DSCR is 75,000 ÷ 55,661.50, about 1.35. Many lenders look for a DSCR comfortably above 1, often around 1.25 or higher, so that a slow month does not lead to a missed EMI. If your figure is tight, a longer tenure lowers the EMI, though, as the table shows, it raises the total interest.
Seasonal businesses should test the EMI against their weakest months, not their average. For stock purchases and other short-term needs, a cash credit or overdraft limit can suit better than a term loan, because interest is charged only on the amount actually used. Those facilities do not have a fixed EMI, so this calculator applies to term loans.
Collateral-Free Options for MSMEs
PM Mudra Yojana: loans for non-farm micro enterprises through banks, NBFCs and microfinance institutions, in categories Shishu (up to ₹50,000), Kishore (above ₹50,000 up to ₹5 lakh), Tarun (above ₹5 lakh up to ₹10 lakh) and Tarun Plus (up to ₹20 lakh, for borrowers who have repaid an earlier Tarun loan). No collateral is required.
CGTMSE: the Credit Guarantee Fund Trust for Micro and Small Enterprises guarantees eligible collateral-free loans that banks give to micro and small enterprises, which makes lenders more willing to lend without security. The guarantee limit was raised to ₹10 crore in 2025.
Udyam registration: registering your enterprise on the government Udyam portal is free and is usually needed to access MSME schemes and priority-sector lending.
Scheme limits, guarantee fees and eligibility are revised from time to time. Check the current terms with your bank or on the official Mudra, CGTMSE and Udyam websites.
Tax and GST Points on a Business Loan
Interest on money borrowed for the business is generally allowed as a business expense, so it reduces taxable profit. The principal part of the EMI is not an expense. In the example, first-year interest of about ₹2.74 lakh would cut tax by roughly ₹82,000 for a business taxed at 30%, before cess.
Lenders charge GST, normally at 18%, on the processing fee. On the ₹40,000 fee that is another ₹7,200. A GST-registered business can usually claim this as input tax credit if the loan is used for business.
Because the fee is deducted upfront, the real annual cost of the example loan is about 16.1%, not 15%. Use the annual percentage rate (APR) in the Key Fact Statement to compare lenders on equal terms.
This is general information. How interest and fees are treated depends on your business structure and records, so confirm with your chartered accountant.
Frequently Asked Questions
The EMI math is the same reducing-balance formula, but business loans are usually assessed on business turnover, credit history, and sometimes collateral, and often come with larger loan amounts, longer tenures, or higher processing fees than personal loans.
The processing fee is deducted upfront by the lender, so your "Net Amount Disbursed" is lower than the loan amount you applied for, even though your EMI is still calculated on the full loan amount.
It uses the standard reducing-balance EMI formula: EMI = [P × R × (1+R)^N] / [(1+R)^N - 1], where P is the loan amount, R is the monthly interest rate, and N is the tenure in months.
Typically KYC of the owners and the business, business registration or Udyam certificate, GST returns, 6 to 12 months of bank statements, and income tax returns with financial statements for the last two or three years. Newer businesses may also be asked for a project report. Requirements differ between lenders and loan types.
It depends on the lender, the loan type and whether the rate is fixed or floating. The RBI has restricted prepayment charges on floating-rate loans to individuals and to micro and small enterprises, while fixed-rate loans often carry a foreclosure fee. Check the prepayment clause in your sanction letter and Key Fact Statement before you sign.