Business Loan Calculator

Take a business loan for: expanding operations or opening new branches, purchasing machinery or equipment, managing working capital during lean seasons, fulfilling large orders requiring upfront investment, renovating business premises, acquiring inventory in bulk, or consolidating expensive short-term debts. Ensure the loan helps generate revenue that exceeds the EMI cost.

To secure best rates: maintain business vintage of 3+ years, show consistent revenue growth and profitability, keep credit score above 750, maintain good banking relationship, file ITR and GST returns regularly, offer collateral if possible for secured loans, compare offers from multiple lenders, apply during promotional periods, and consider government-backed schemes like MUDRA, CGTMSE for lower rates.

Required documents: business registration proof (partnership deed/incorporation certificate), PAN and Aadhaar of promoters, ITR of business (2-3 years), GST returns (12 months), bank statements (6-12 months), balance sheet and P&L statements, business address proof, office rent agreement, existing loan statements if any, and business plan or purpose statement. Requirements vary by lender and loan amount.

General eligibility: business vintage of 1-3 years minimum, annual turnover of ₹10 lakhs+ (varies by lender), promoter age 21-65 years, credit score 650+ (preferably 750+), profitable operations in recent years, regular ITR filing, and business should not be in negative list. Manufacturing, trading, and service businesses are generally eligible. Startups may need higher documentation.

Tax benefits include: entire interest paid is deductible as business expense (no upper limit unlike home loans), processing fees and other charges are also deductible, depreciation can be claimed on assets purchased through loan, and reduces overall tax liability of the business. Keep proper documentation of loan usage for business purposes to claim these benefits during ITR filing.

Yes, prepayment is allowed but terms vary. For floating rate loans, most banks don't charge prepayment fees. Fixed rate loans may have 2-5% prepayment charges. Some lenders offer partial prepayment without charges after 6-12 months. Prepayment makes sense when you have surplus funds, as the interest saved exceeds potential returns from alternative investments. Check loan agreement for specific terms.

Processing fees range from 1% to 3% of the loan amount, plus GST. For a ₹10 lakh loan, expect ₹10,000-30,000 as processing fee. Some lenders charge flat fees (₹5,000-25,000) for smaller loans. Additional charges may include legal fees, valuation charges for secured loans, and documentation charges. Total upfront costs can be 1.5-4% of loan amount.

Secured Loan: Lower interest (11-15%), higher loan amounts (up to ₹5 crores+), longer tenure (up to 15 years), requires collateral (property, equipment, inventory), complex documentation. Unsecured Loan: Higher interest (14-24%), lower amounts (up to ₹50 lakhs typically), shorter tenure (up to 5 years), no collateral, faster approval. Choose secured for large amounts and longer tenure; unsecured for quick, smaller funding needs.

Loan amount typically ranges from 10-30% of annual turnover depending on profitability, credit score, and lender policies. For example, with ₹50 lakhs annual turnover, you may get ₹5-15 lakhs as unsecured loan or up to ₹25-35 lakhs with collateral. Lenders also consider debt service coverage ratio (DSCR) - net operating income should be 1.25-1.5 times the annual debt obligation (EMI × 12).

MUDRA (Micro Units Development and Refinance Agency) provides loans up to ₹10 lakhs for small businesses through banks/NBFCs with government backing: Shishu (up to ₹50,000), Kishore (₹50,001-5 lakhs), Tarun (₹5-10 lakhs). Benefits include: lower interest rates (8-12%), no collateral for amounts up to ₹10 lakhs, easier approval for small businesses, and CGTMSE guarantee coverage. Processing fees and documentation are minimal.

Failure to repay leads to: late payment penalties and penal interest, credit score damage affecting future borrowing, invocation of personal guarantees (promoters become personally liable), attachment and auction of collateral if secured loan, legal proceedings and recovery suits, business operations can be affected, and difficulty in getting supplies or credit from vendors. Always communicate with lender early if facing difficulties to explore restructuring options.

Business Loan: Lump sum disbursal, fixed EMI, term-based (1-10 years), interest on full amount, good for specific purchases/expansion. Business Line of Credit: Revolving facility, withdraw as needed, pay interest only on utilized amount, flexible repayment, typically 12 months renewable, higher interest, good for working capital. Choose loan for one-time needs, line of credit for ongoing cash flow management.