Most commercial enterprises, large or small, run on two types of capital – equity and debt. According to economists, a healthy balance between these two forms of capital helps to keep a business running smoothly. If done right, a mixture of owned capital and a commercial loan can ensure that the cash flow remains uninterrupted, thus allowing daily operations to continue without a hitch.
In recent times, various types of commercial loans have become much more accessible. However, like all business decisions, you should undertake the process of securing a commercial loan only after thorough cost-profit analysis to ensure you can optimise your benefits. To do so, you can utilise a commercial loan EMI calculator before applying for a loan.
EMI Calculations through a Commercial Loan Calculator
Commercial loan EMI calculators are online tools, available on the website of most financial institutions for free usage. With a commercial loan calculator, you can compute the EMI, net payable amount, and total interest overdue for the loan amount you want to borrow. It’s a hassle-free, easy-to-use tool requiring minimal technical know-how on the user’s part to generate results.
To compute your EMI amount, you will need to input three variables into a commercial loan EMI calculator:
- Principal or loan amount
- Repayment tenure
- Rate of interest
These three variables determine the cost of a loan you need to bear each month as the repayment amount. A standard loan EMI calculator uses the following formula:
E = P x R x (1 + R) ̂n / {(1 + R) ̂ (n – 1)}
In this formula,
- E is the EMI
- P stands for the principal amount
- R denotes the rate of interest on a per month basis
- n represents the tenure in months
For better understanding, here’s an example:
You opt for a commercial loan of Rs. 5 Lakh with a tenure of 3 years and a rate of interest of 18% p.a. According to the formula, your monthly instalment amount will be:
E = Rs. [500000 x 0.18/12 x (1 + 0.18/12)3 / {(1 + 0.18/12)3 – 1}]
Or, E = Rs. 18,076
Advantages of a Commercial Loan Calculator
Before you undertake a commercial loan online apply procedure, you can use this calculator and enjoy the following benefits:
- Get a cost estimation
As demonstrated above, you can get an accurate figure of the monthly instalment amount you will need to pay by using this calculator. This way, you can manage your commercial loan repayments much better. What’s more, a loan calculator will show you the total interest you will be paying by the end of the tenure. These pieces of information can provide you with a comprehensive understanding of the cost of a commercial loan, facilitating simple cost-profit analysis.
- Helps in decision-making
Commercial loans usually come with a tenure of 1 year – 5 years. You can customise the instalment amount by tweaking the tenure for your loan. If you go for a shorter tenure, it will result in higher EMIs and vice versa. At the same time, a shorter tenure will also mean less interest payable in total.
Thus, by utilising a commercial loan EMI calculator, you can decide which tenure works for you total cost and EMI-wise. Ensure that you take into account contingencies when assessing your options.
- Allows comparison
The commercial lending sector is expansive, with numerous institutions offering loans to small and medium-scale businesses. In such, weighing your options is of utmost significance. You would not want to go with a lender that rips you off and bypass one with which you can enjoy better deals. Thence, you can use a loan calculator to compare the cost of a loan with different lenders efficiently. Note that, even fractional difference in interest rates can save or cost you thousands of rupees in interest payment.
- Accuracy
Compared to manual calculation, when you use a commercial loan EMI calculator, chances of inaccuracy is virtually non-existent. It is also time-saving. So, you won’t have to spend hours analysing cost-profit interplay or comparing lenders.
This online tool makes for an ideal way to analyse profitability before opting for the commercial loan online apply process. On that note, a business loan might not be viable for every scenario. For one thing, since a loan like that is unsecured it invites a hefty interest rate.
A traditional business loan from a bank or NBFC also involves a several red tapes, with its extensive documentation, as well as stringent commercial loan eligibility criteria. If you require instant funding, this might be a significant hindrance.
To do away with such inconveniences, you can opt for alternative avenues of availing financial backing.
A gold loan, in this regard, can be an ideal financing option for your business. You can tap into the equity of gold items in your possession to finance your business adequately and cost-efficiently.
Why gold loans? Take a look!
Features and Benefits of a Gold Loan for Commercial Purpose
You might have your share of doubts about the suitability of a gold loan to meet commercial requirements. If that is the case, take a look at the following points:
- Fast-tracked loan disbursal
Instances where you need immediate cash in a business are fairly commonplace. You might need to replenish your inventory or have to pay a creditor with strict urgency. A gold loan can save the day for you during such times. What’s more, you can also enjoy doorstep loan services with Rupeek Fintech Private Ltd., one of the leading lenders of gold loans in India.
When you apply for a gold loan with this financial institution, through its app, website or by placing a call, a loan manager will be appointed to visit your home for KYC registration and gold appraisal.
After completion of these formalities, and approval of the application, you will receive the loan amount in your account immediately. The whole process takes only around 30 minutes. This way, you can instantly address any emergency expense without hassle.
- Complete safety
Gold is an invaluable asset in a typical Indian household and holds significant sentimental value. That’s why reputed lenders take great cautionary measures to ensure that your gold item stays safe. In this regard, Rupeek ensures that your gold’s safety remains uncompromised during the loan tenure.
For instance, the loan manager leaves with the pledged items in a GPS-traceable bag, only after the loan amount is disbursed to your account. It is then stored in a highly secure vault of the NBFC’s partner bank within 3 kms of your house. Moreover, there will also be an insurance cover in place for your gold, valid until you release the pieces of jewellery and ornaments after final repayment.
- Low interest rates
You can secure a gold loan with noticeably low interest rates since it is a secured financing facility. This way, you can avoid overburdening the cash flow in your business, and repay the loan efficiently.
- High Loan-to-Value ratio
A gold loan comes with a considerable Loan to Value ratio. It refers to the amount you can avail against the market value of the pledged gold items. Rupeek provides the highest per gram rate of 75% for gold loans.
Additionally, a gold loan does not come with any end-use restriction. So, you can use it to address several kinds of expenses without limitations. Such advantages make a gold loan as a suitable commercial loan option for small-scale businesses. Nevertheless, it still holds that you use a commercial loan EMI calculator, before applying for the loan, to ensure maximum benefits from your borrowing.
