Calculate your small business loan EMI
Year-by-year repayment schedule
| Year | Principal paid | Interest paid | Balance at year end |
|---|
Reducing-balance method. Results are estimates for planning; the lender's Key Fact Statement is final. Insurance, legal and other charges are not included.
Small business loans are quick and mostly unsecured, so rates and fees are higher than secured MSME credit. Check whether the EMI is collected monthly or as daily or weekly deductions.
Small Business Loan at a glance
The figures the calculator starts with come from these typical ranges. Change them to match the offer in front of you.
| Feature | What to expect |
|---|---|
| Typical loan amount | Roughly ₹50,000 to ₹25 lakh, depending on lender and profile |
| Tenure | Typically 6 months to 5 years |
| Indicative interest rate | Roughly 12% to 26% a year, depending on lender and profile; Mudra loans may be priced lower at some banks |
| Processing fee | Often around 1% to 4% of the loan amount plus GST; varies by lender |
| Security / collateral | Mostly unsecured; Mudra loans do not require collateral for eligible borrowers |
| Typical time to disbursal | One to seven days for digital applications with complete documents |
From our Small Business Loan guide. Ranges are indicative; your offer may differ.
Small Business Loan EMI table at 18%
Monthly EMI for common small business loan amounts at an example rate of 18% a year, on the reducing-balance method lenders use. Read across a row to see how a longer tenure lowers the EMI, and remember that it raises the total interest: on ₹7.5 lakh, the interest is ₹1,11,378 over 18 months but ₹2,26,115 over 3 years.
| Loan amount | EMI for 18 months | EMI for 2 years | EMI for 3 years |
|---|---|---|---|
| ₹2.5 lakh | ₹15,951 | ₹12,481 | ₹9,038 |
| ₹5 lakh | ₹31,903 | ₹24,962 | ₹18,076 |
| ₹7.5 lakh | ₹47,854 | ₹37,443 | ₹27,114 |
| ₹10 lakh | ₹63,806 | ₹49,924 | ₹36,152 |
How the interest rate changes your small business loan EMI
Your rate depends on your credit score, income, the lender and the loan details. On ₹5 lakh over 2 years, the gap between the lowest and highest indicative rate is ₹81,613 in total repayment, which is why it pays to compare offers before you accept one.
| Interest rate | Monthly EMI | Total interest | Extra vs lowest rate |
|---|---|---|---|
| 12% | ₹23,537 | ₹64,882 | — |
| 18% | ₹24,962 | ₹99,089 | +₹34,208 |
| 22% | ₹25,939 | ₹1,22,538 | +₹57,656 |
| 26% | ₹26,937 | ₹1,46,495 | +₹81,613 |
The real cost of a small business loan: fees and APR
The EMI covers interest and principal only. Lenders also charge a processing fee, commonly around 1% to 4% of the amount on small business loans, plus 18% GST, and it is usually deducted from the money you receive. Because you pay the EMI on the full amount but receive less, the annual percentage rate (APR) is higher than the interest rate. For ₹5 lakh at 18% over 2 years:
| Processing fee | Fee incl. GST | Money in hand | APR |
|---|---|---|---|
| 1% + GST | ₹5,900 | ₹4,94,100 | 19.23% |
| 2.5% + GST | ₹14,750 | ₹4,85,250 | 21.11% |
| 4% + GST | ₹23,600 | ₹4,76,400 | 23.05% |
Every lender must show the APR and total repayable amount in the Key Fact Statement before you sign. Compare offers on that figure, not on the headline rate. At a 2.5% fee, this loan's APR is about 21.11%.
Can you afford this EMI?
Lenders usually keep all your EMIs together within about 40% to 50% of net monthly income. For an EMI of ₹24,962 with no other loans, that means a take-home income of at least ₹50,000 at the 50% limit, and about ₹63,000 to stay within a more comfortable 40%. Existing EMIs, including credit card EMIs, reduce what is left for this one.
If sales are seasonal, borrow before the peak and repay from it, and avoid taking the maximum amount offered just because it is approved.
Prepay to cut the interest
Paying a lump sum towards the principal reduces the interest for the rest of the loan. On ₹5 lakh at 18% over 2 years, a part-prepayment of ₹50,000 after the first year:
- with the EMI kept at ₹24,962, closes the loan about 2 months early and saves roughly ₹9,172 of interest;
- with the tenure kept, cuts the EMI to about ₹20,378 and saves roughly ₹5,008 of interest.
Keeping the EMI and shortening the tenure saves more. Floating-rate loans to individuals cannot carry prepayment charges; fixed-rate loans may, so check your agreement first.
How small business loan EMI is calculated
Lenders use the reducing-balance formula: EMI = P × R × (1 + R)N ÷ ((1 + R)N − 1), where P is the loan amount, R is the yearly rate divided by 12 and by 100, and N is the number of monthly instalments.
For ₹5 lakh at 18% over 24 months, R is 0.015 and the EMI comes to ₹24,962. In the first month, ₹7,500 of it is interest and ₹17,462 repays principal. Each month the balance falls, so the interest part shrinks and the principal part grows. In the first year you pay about ₹71,818 in interest, which is 24% of what you pay in that period. The year-by-year schedule in the calculator shows the full split.
Before you apply for a small business loan
The calculator tells you what the loan costs. Before you apply, check whether you qualify, what documents lenders ask for and the mistakes borrowers most often make.
Related EMI calculators
Planning tools
Small Business Loan EMI: frequently asked questions
What is the EMI for a small business loan of ₹5,00,000?
At 18% a year for 2 years, the EMI is ₹24,962 and the total interest is ₹99,089. Over 18 months the EMI rises to ₹31,903 but the interest falls to ₹74,252.
How is small business loan EMI calculated?
With the reducing-balance formula EMI = P x R x (1+R)^N / ((1+R)^N - 1), where R is the monthly rate and N the number of months. Interest is charged only on the balance still outstanding, so the interest part of each EMI falls over time.
Does the small business loan EMI include the processing fee?
No. The EMI covers interest and principal. The processing fee, usually around 1% to 4% of the amount plus 18% GST, is generally deducted upfront. Use the APR in the Key Fact Statement to compare total cost.
How can I reduce my small business loan EMI?
Choose a longer tenure, borrow less, or get a lower rate by improving your credit score or comparing lenders. A longer tenure lowers the EMI but raises the total interest, so pick the shortest tenure you can comfortably afford.
Is the rate in this calculator my actual small business loan rate?
No. 18% is an example within the indicative range of about 12% to 26%. Your rate depends on the lender, your credit score, income and the loan details. Enter the rate in your own offer for an exact EMI.
Does prepaying a small business loan save money?
Yes. Here, prepaying ₹50,000 after one year saves roughly ₹9,172 of interest if you keep the EMI. Floating-rate loans to individuals cannot carry prepayment charges; fixed-rate loans may.
Rates, fees and limits are indicative ranges for India, reviewed on the date above. KhatuLoans is not a lender and does not decide approval or pricing. Read our editorial policy and how we make money.
Official sources and further reading
These guides are written from Reserve Bank of India rules and official scheme pages. Rules, rates and scheme terms change, so check the current position on these sites and in your lender's Key Fact Statement before you apply.
- Udyam Registration Portal. The free government registration for micro, small and medium enterprises, needed for many MSME loan schemes.
- Pradhan Mantri MUDRA Yojana. The government scheme for collateral-free loans to small non-farm businesses.
- CGTMSE. The trust that guarantees collateral-free loans to micro and small enterprises through member lenders.
- RBI: Key Facts Statement (KFS) for loans and advances. The Reserve Bank of India notification that tells lenders to give every borrower a plain-language statement of the full cost of a loan.
- RBI Complaint Management System. Where to take a complaint against a bank, NBFC or other regulated lender if the lender does not resolve it.
- RBI (Pre-payment Charges on Loans) Directions, 2025. Bars pre-payment charges on floating-rate loans taken by individuals for non-business purposes, for loans sanctioned or renewed from 1 January 2026.
- Reserve Bank - Integrated Ombudsman Scheme, 2021. The single complaint scheme for customers of banks, NBFCs and other RBI-regulated lenders.
- RBI: Free Annual Credit Report to Individuals. Credit bureaus must give you one free full credit report with score every calendar year.
- RBI Financial Education. Consumer guidance from the Reserve Bank of India on borrowing, fraud and your rights as a customer.
Edited by Hemant Kumar. Rates on this site are indicative ranges, not offers.