About this calculator
Business loans — MSME term loans, working capital, machinery finance — are priced on the strength of the business rather than a salary slip. Rates commonly run from 11% for secured MSME lending to 20% or more for unsecured loans to small firms.
A practical rule: the EMI should stay under 40–50% of the monthly surplus the loan itself generates. If it does not, the loan is funding a gap rather than growth, and a shorter tenure will make it worse.
How to use it
- Enter the amount you plan to borrow — not the asset price, unless you are financing the whole thing.
- Set the annual interest rate your lender has quoted, and the tenure in months.
- Read the monthly EMI, then check the amortisation table to see how much of it is interest in year one.
How the EMI is worked out
The calculator uses the standard reducing-balance formula used by every bank in India:
EMI = [P × r × (1 + r)n] ÷ [(1 + r)n − 1]
where P is the principal, r is the monthly rate (annual rate ÷ 12 ÷ 100) and n is the tenure in months. In Excel the same answer comes from =PMT(rate/12, months, -amount).
What decides your interest rate
- Collateral or a guarantee usually cuts the rate by 2–5 percentage points.
- GST turnover and ITR history are the core of the credit assessment.
- Vintage of the business: three years of filings opens up better pricing.
- Scheme loans under MUDRA, CGTMSE or stand-up India can be cheaper than open-market rates.
- Unsecured business loans price highest; secured MSME term loans lowest.
Indicative interest rates
Indicative ranges compiled 28 October 2026. Rates change with the repo rate and your credit profile — always confirm with the lender before deciding.
| Lender | Indicative rate | Typical tenure |
|---|---|---|
| SBI (MSME) | 10.90% – 14.50% | Up to 10 years |
| HDFC Bank | 12.00% – 18.00% | Up to 5 years |
| ICICI Bank | 12.50% – 18.50% | Up to 5 years |
| MUDRA / CGTMSE schemes | 9.50% – 13.00% | Up to 7 years |
What an extra ₹2,000 a month would do
Same loan, same rate, one extra payment every month. This is the cheapest way to cut the total cost of any loan.
| Scenario | Monthly payment | Loan closes in | Total interest |
|---|
Floating-rate home loans to individuals carry no prepayment penalty in India. Personal and car loans often charge 2–5% of the outstanding amount — check before you prepay.
Year-wise amortisation schedule
How the loan actually unwinds: the interest share falls every year while the principal share rises.
Show the year-by-year break-up
| Year | Principal paid | Interest paid | Balance left |
|---|
Frequently asked questions
What documents does a business loan need?
KYC, the last two to three years of ITR and financials, GST returns, bank statements for 6–12 months, and proof of business address. Collateral documents are needed for secured loans.
Can a new business get a loan?
It is harder. Lenders usually want two to three years of filings. Newer businesses can look at MUDRA loans or unsecured lending, which costs more.
Is a business loan EMI tax-deductible?
The interest portion is deductible as a business expense; the principal repayment is not. Keep the lender's interest certificate for the year.
What is the difference between a term loan and working capital?
A term loan funds an asset and is repaid over years. Working capital finance covers stock and receivables and is usually a limit you draw against, not a fixed EMI.
How much business loan can I get?
Commonly up to 30–40% of annual turnover for unsecured loans, and up to 75–80% of collateral value for secured ones.
Does a business loan affect personal credit?
If you are a sole proprietor or a guarantor, yes. Repayment is reported against your personal credit profile as well.
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Before you apply
Get the sanction letter and check three things: whether the rate is fixed or floating, what the processing fee is, and whether part-prepayment carries a charge. Those three lines decide the real cost of the loan, more than the headline rate does.
This page is updated when rate ranges change. Last verified 28 October 2026.