Calculate your business loan EMI — for working capital, equipment, or expansion.
Business loan interest is fully tax-deductible as an expense — so the real cost is much lower than the EMI suggests. We show you the math, the amortization schedule, and what to watch for in your loan agreement.
What this loan really looks like
The lifetime split is only part of the story. These show how the principal/interest mix shifts year by year, how slowly the balance falls, and the month your payment finally tips toward principal.
Amortization schedule
See how each payment splits between principal and interest, and how your balance reduces over time.
| Year | Principal paid | Interest paid | Total payment | Balance |
|---|
About business loan EMIs
Business loans in India come in several flavors — each with different rates, terms, and risk profiles. Pick the right one before borrowing.
For equipment or expansion
Standard fixed-tenure loans (3-7 years) for buying machinery, expanding premises, or major capex. Lower rates (12-16%) since the asset serves as security.
For day-to-day operations
Cash credit / overdraft facilities. You pay interest only on the drawn amount. Annual renewal required. Rates typically 11-15%. Useful for inventory and receivables financing.
Higher rates, faster approval
Available from banks, NBFCs, and fintech lenders. Rates 16-24%. Approval in days, sometimes hours. Better for short-term gaps, not long-term funding.
Government-backed
Mudra (loans up to ₹10 lakh), Stand-Up India, CGTMSE (collateral-free up to ₹2 crore). Lower rates and easier eligibility but more paperwork.
Full interest expense
Business loan interest is 100% deductible as a business expense under Section 36(1)(iii). This brings the effective cost down significantly — a 13% loan effectively costs ~9% to a business in the 30% tax bracket.
Don't forget
Processing fees and other charges on business loans attract GST, which is claimable as input tax credit if your business is GST-registered and the loan is for business purposes.
Frequently asked questions
At a typical rate of 13% per annum for 5 years, the EMI is approximately ₹22,753 per month. Total interest paid over 5 years: ₹3.65 lakh. After accounting for the tax deduction (business loan interest is fully deductible), the effective cost for a business in the 30% tax bracket is around ₹2.55 lakh — about 70% of the nominal interest.
Typical requirements:
- Business proof: GST registration, Udyam/MSME certificate, shop license, partnership deed, or company incorporation documents
- Financial statements: 2-3 years of audited financials, ITR returns, bank statements (6-12 months)
- KYC of all promoters/directors
- Business address proof and ownership/rental documents
- Project report or fund-utilization plan for the loan amount
For unsecured business loans below ₹10 lakh from fintechs, the requirements are simpler — often just GST returns, bank statements, and basic KYC.
Under Section 36(1)(iii) of the Income Tax Act, interest paid on capital borrowed for business is fully deductible as an expense. This reduces your taxable business income by the full interest amount.
The principal repayment is not deductible — only interest. So for each EMI, only the interest portion (calculated using the amortization schedule) is the tax-deductible expense. Most accounting software handles this automatically. The amortization table shown in our calculator gives you the exact split.
If you have collateral (property, FD, machinery) and can wait 2-4 weeks for processing: secured loan. Rates 3-6% lower, longer tenure, larger amounts. Best for major capex and long-term needs.
If you need money fast and don't want to pledge assets: unsecured loan. Approved in days, rates 16-22%. Best for working capital gaps, inventory financing, or short-term needs you can repay in 1-3 years.
Don't take an unsecured loan for long-term capex — the higher rate compounds over years and significantly raises the project's cost of capital.
The Pradhan Mantri Mudra Yojana (PMMY) is a government scheme for non-corporate, non-farm micro and small businesses needing loans up to ₹10 lakh.
Three categories: Shishu (up to ₹50,000 — for early-stage businesses), Kishore (₹50,000-₹5 lakh), Tarun (₹5-10 lakh). Available through all public sector banks, private banks, and many NBFCs.
Eligibility is broad: any small business in manufacturing, trading, or services — proprietorships, partnerships, small companies. No collateral required. Rates are typically 9-12%. Best option for first-time small business borrowers or those without significant collateral.