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Are you in need of funds to take your business to the next level? Hero FinCorp offers business loans at affordable interest rates.
You may use the online business loan EMI calculator to calculate the business loan interest rate easily. You can use this calculator to estimate the total interest due at the end of the loan term. To utilise this calculator, simply enter three variables—principal amount, interest rate, and loan tenure, and then click the submit button.
The result will give you the amortisation schedule; a clear picture of the amount of interest you will be paying each month.
Every business needs funds for growth, expansion, digitalisation, and sometimes to meet operating costs. In such situations, a business loan can prove helpful. It is a financing option that enables companies to expand or meet their current business demands such as machinery purchase, staff expansion, and working capital requirements. In return, you pay the interest rate on the borrowed money over a set period.
However, before availing of a business loan, you must know all about different types of SME business loan interest rates, charges, and the factors that determine your business loan rate of interest. Let us look at them in detail:
At Hero FinCorp, we offer the most competitive and cost-effective interest rate on a business loan in India. Depending upon the various factors and risks involved in lending, our business loan rates go up to a maximum of 30%. In addition, we let you choose between the two types of small business loan interest rates—fixed and floating.
The rate of interest of a business loan is usually based on the loan amount and tenure. As a thumb rule, the longer the loan tenure, the higher will be the interest component. The two types of small business loan rates are:
To calculate your interest rate on a loan for business, you can use two methods—the flat rate method or the diminishing rate method.
Under this, the interest rate for a business loan is computed on the initial business loan amount. Regardless of how many instalments you have paid, it does not consider the outstanding principal amount. To calculate the business loan interest rate through this method, use the formula below:
Interest Payable = (Principal Amount х Interest Rate х Repayment Term) / 100
Under this, the rate of interest for a business loan is calculated on the outstanding balance and not the entire initial loan amount. To calculate the business loan interest rate using this method, use the following formula:
EMI = [P x R x (1+R)^N] / [((1+R)^N)-1)]
Where,
P stands for the loan amount
R stands for the interest rate
N means loan tenure
Do the following to get the lowest business loan interest rate in India,
Some of the common factors that impact the interest rate for business loans in India are:
Interest on business loans in India is also influenced by how well your business is doing. You are more likely to obtain the lowest business loan interest rate if your company has a high annual turnover and generates adequate revenue. When approving a loan, we consider your company's net earnings after paying all the business expenses.
As most business loans are unsecured, we assess the company's liquidity status. Businesses that are struggling to maintain a healthy cash flow are less likely to be approved for low-interest business loans than those that have sufficient cash on hand.
This is, without a doubt, one of the most important factors affecting your business loan approval and interest rate. If you have defaulted on any of your previous debts or are not disciplined in your EMI payments, the chances of your loan being approved would be slim. And if you manage to get your loan sanctioned, you are most likely to pay a higher interest rate.
If you run a seasoned or speculative business, then it can negatively impact your application for a business loan with a low interest rate. However, there is a lending sector classification, and if you fall under the priority sector
lending category, you can easily acquire lower small business loan rates. Due to the risk involved, the non-priority sector receives a higher interest business loan.
As the experience grows, the risk associated with running a business decreases. Therefore, if you have spent more years in your existing business, you have a better chance of securing business loans with lower interest rates.
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