Business loan calculator for term loans, overdrafts and repayment capacity
Most small businesses carry two kinds of debt: a term loan for equipment, a shop or expansion, repaid in EMIs, and working capital — an overdraft or cash credit limit on which interest is charged only on the amount drawn. This business loan calculator handles both, adds the processing fee and its GST to show the real APR, and lets you repay with an equal EMI, a step-up EMI that grows with the business, or a balloon at the end.
It then asks the lender’s question: can the business afford it? The debt service coverage ratio (DSCR) compares the cash the business generates with what the loans take each year. A quick-fill sets the amount to a Mudra (PMMY) category limit and labels any amount with its band. Everything runs in your browser and nothing is uploaded. Results are estimates, not financial advice.
How to use the Business Loan Calculator
- Enter the term loan’s amount, interest rate, tenure, processing fee and any other charges.
- Choose Equal EMI, Step-up (with the yearly rise) or Balloon (with the share left to the end).
- Add your overdraft or cash credit limit, the average share you use and its rate.
- Enter the cash available for loan payments each month, expected growth and the lender’s minimum DSCR.
- Read the EMI, APR and DSCR by year, then the schedule; press Download CSV to keep it.
Business Loan Calculator features
Three repayment structures
Equal EMI, step-up EMI that rises once a year, or a balloon due with the last EMI, with the balance compared on a chart.
Overdraft on the amount used
Interest on the average drawn balance only, with the unused limit shown separately.
DSCR for every year
Cash available against term-loan payments plus overdraft interest, with the weakest year flagged.
Borrowing limit from cash flow
The largest EMI and the largest equal-EMI loan your cash flow supports at the lender’s minimum DSCR.
Worked example: ₹20 lakh at 12% plus a ₹10 lakh overdraft
A ₹20 lakh term loan at 12% for five years has an EMI of ₹44,489 and total interest of ₹6,69,334. A 1.5% fee is ₹30,000, plus ₹5,400 GST, so the APR is 12.79%. The business also uses about 60% of a ₹10 lakh overdraft at 11%, which costs ₹5,500 a month, ₹66,000 a year.
If ₹75,000 a month is available to service debt, the DSCR is 75,000 ÷ (44,489 + 5,500) = 1.50×. At a 1.25× minimum the EMI could go up to ₹54,500, enough for a ₹24.5 lakh loan on the same terms.
A 10% step-up starts at ₹37,272 and ends at ₹54,570, for ₹7,30,619 of interest. With flat cash flow the DSCR slides to 1.24× in year five; with 10% yearly growth its lowest point is 1.75×. A 20% balloon lowers the EMI to ₹39,591 but leaves ₹4 lakh to pay or refinance at the end, and the interest rises to ₹7,75,467.
Mudra (PMMY) loan categories
Under the Pradhan Mantri MUDRA Yojana, loans to non-corporate, non-farm micro enterprises fall in four bands: Shishu up to ₹50,000, Kishore above ₹50,000 to ₹5 lakh, Tarun above ₹5 lakh to ₹10 lakh and Tarun Plus above ₹10 lakh to ₹20 lakh, the last for borrowers who previously took and repaid a Tarun loan. The ₹20 lakh limit and the Tarun Plus band were announced in Union Budget 2024-25 and apply from 24 October 2024 (PIB press release, PRID 2069170); the guarantee for the larger loans is through CGFMU. Check the current limits on mudra.org.in, which could not be opened when this page was written.
Mudra loans are priced by the lending bank, NBFC or MFI, so there is no scheme rate: enter your lender’s rate above. Adjust the rate, fee and tenure to your sanction letter.
DSCR: what lenders look for
DSCR = cash available for debt service ÷ (principal + interest due), usually worked out yearly from profit before interest and depreciation, after tax. Below 1 the business cannot meet its payments from operations. Many lenders want 1.25× or more, and more for riskier projects; the calculator rounds down so a borderline year is not overstated.
Check profitability first with the break-even calculator, then test the loan here.
MSME loan rules worth knowing (as of October 2026)
- Collateral: under RBI’s amended MSME lending directions of 9 February 2026, banks may not take collateral for loans up to ₹20 lakh to micro and small enterprises sanctioned or renewed from 1 April 2026, and may go to ₹25 lakh for good borrowers.
- Credit guarantee: CGTMSE covers loans to micro and small enterprises up to ₹10 crore since 1 April 2025; its annual guarantee fee is often passed on to the borrower — add it under other charges.
- Prepayment: on floating-rate business loans to individuals and micro and small enterprises sanctioned or renewed from 1 January 2026, commercial banks (other than small finance and regional rural banks), Tier 4 urban co-operative banks, upper-layer NBFCs and all-India financial institutions may not charge for prepayment; small finance banks, regional rural banks, Tier 3 urban, state and central co-operative banks and middle-layer NBFCs may not charge on loans up to ₹50 lakh. A cash credit or overdraft closed on its due date after notice carries no charge.
Business Loan Calculator FAQ
How is overdraft interest calculated?
On the daily balance you actually draw, not on the sanctioned limit, and usually debited monthly. The business loan calculator uses your average use, so a ₹10 lakh limit 60% used at 11% costs about ₹5,500 a month.
What is a good DSCR for a business loan?
Above 1.25× is a common minimum, and 1.5× or more gives a comfortable cushion. Below 1× the business needs fresh money to pay.
When does a step-up EMI make sense?
When revenue is expected to grow. It lowers early EMIs but costs more interest than an equal EMI, and the DSCR can fall if growth does not come.
What is the EMI of a Mudra loan?
It depends on your lender’s rate and tenure. For ₹5 lakh at 12% for five years the EMI is about ₹11,122; pick Kishore above, enter the rate on your sanction letter and read the exact figure.
Can I get a business loan without collateral?
Yes for micro and small enterprises up to ₹20 lakh at banks, under RBI’s rules from 1 April 2026, and larger loans backed by the CGTMSE guarantee.
Can I prepay a business loan without a penalty?
For floating-rate loans to individuals and micro and small enterprises sanctioned or renewed from 1 January 2026, most banks and large NBFCs cannot charge.