Working Capital Loan EMI Calculator
It is unwise for any business to not plan how it would source the funds required for its day-to-day operations. An entity requires a healthy working capital so as to incure varius expenses involved in running as business- be it purchasing raw materials, or paying the salary of staff. Working Capital Loans thus offer an avenue to source the funds required for such sundry expenses.
It is then imperative to not only learn more about Working Capital and how it is used, but also about the EMIs to be paid on Working Capital Loan for effective budgeting.
What is a working capital loan EMI calculator?
A working capital loan EMI calculator is a financial tool that helps businesses calculate the equated monthly instalment (EMI) that they will need to pay on their working capital loan. Calculated EMI depends on factors like loan amount, interest rate and loan tenure. Businesses can use a Working capital loan EMI calculator to calculate their tentative EMIs and maintain a positive cash flow.
What is Working Capital?
Working Capital is nothing but the liquid assets a business has to fund its short-term obligations (maturing within 12 months). The formula for working capital is: Working capital = current assets – current liabilities
Working Capital usually consists of Current Assets, which include-
- Cash and its equivalents– Cash in hand, Commercial Paper, Treasury Bills, etc.
- Accounts Receivable– Outstanding Bills of Exhange.
- Inventory– Stock of goods with the business.
- Prepaid Expenses and other liquid assets– Assets which have been paid for but not yet received.
The assets constituting the Working Capital are different from other assets such that they’re highly liquid and can easily be to converted into cash.
Uses of a Working Capital Loan
A Working Capital Loan could be used for financing the following requirements-
- Wages/Salaries– It could used for paying the salaries or wages of the staff.
- Purchasing Raw Materials- It could be used to purchase raw materials for production.
- Marketing campaigns– It could be used for funding marketing campaigns of a business.
- Outstanding Loans– It could be used repay loans maturing within the fisal year.
- Interest Payment– It could be used to timely pay interest on outstanding loans of a business.
- Accounts Payable– It could be used to pay any outstanding bill of exchange drawn upon the business.
- Renovation– It could be used for renovation of the office space.
- Taxes– It could be used to pay the tax liabilities arising within the fiscal year.
- Upgradation of machinery– It could be used for upgrading the machinery or equipment.
- Purchasing softwares for digitalisation– It could be used for purchasing softwarres required for digitalisation of a business.
What is a Working Capital Loan EMI?
A Working Capital Loan EMI is an Equated Monthly Instalment the borrower has to pay upon the outstanding working capital loan. The Working Capital Loan EMI has 2 components, ie. the interest accrued on the outstanding loan amount and a part of the principal to be repaid.
How to use OneNDF Working Capital Loan EMI Calculator?
The Working Capital Loan EMI Calculator works similar to the way a Business Loan EMI Calculator works.
There are only three inputs required by the user, namely:
Loan Amount– The user has to enter the loan amount they plan to avail.
Interest Rate– The user has to enter the rate of interest on the loan.
Loan Tenure– The user has to enter the tenure of the loan in either years or months.
Once these values are entered in the calculator, our Working Capital Loan EMI Calculator would automatically show the monthly EMIs to be paid on the loan along with the total amount to be repaid.
For better analysis and insight, the Working Capital Loan EMI Calculator breaks up the amount to be repaid into the component of the principal, and the component of interest.
How is a Working Capital Loan EMI calculated?
Working Capital Loan EMI is calculated based upon the principal loan amount, the tenure of the loan, and the monthly interest rate.
The formula to calculate Working Capital Loan EMI is-
E=P * r * (1+r)^n/{(1+r)^n – 1)} wherein,
E = EMI (Equated Monthly Instalment) amount
P = Principal Loan amount.
R = Rate of interest on the loan amount.
n = Repayment period, or the tenure of the loan.
Disclaimer
The results generated by the Working capital loan EMI calculator are indicative in nature and may vary depending on the prevailing interest rates at the time of loan booking. The calculator is intended to provide you with an estimate of your monthly payments and is not certified or endorsed by OneNDF Private Limited.
Please note that the Working capital loan EMI calculator is only a tool to help you arrive at estimated results based on the data input by you. It is not intended to be a substitute for financial or professional advice from OneNDF Private Limited.
OneNDF Private Limited shall not be held liable for any errors or discrepancies in the results resulting from the usage of the calculator; use of the calculator is solely at your own risk.
Before making any financial decisions, we strongly advise you to speak with one of our loan experts. They can assist you in understanding the loan’s terms and conditions as well as any fees, charges, and interest rates that may be involved.
Benefits of a Working Capital Loan EMI Calculator
A Working Capital Loan EMI Calculator is an effective tool to reckon EMIs with differing inputs so as to get an idea about the monthly instalments to be paid on those specific terms of the loan.
The Working Capital Loan EMI provided by OneNDF has the following benefits-
- Time Efficiency– OneNDF Working Capital Loan EMI Calculator saves the time of the user by allowing them to calculate EMIs on their business loans instantly.
- Graphical Representation– The calculator shows the total amount to be repaid in a graphical format that helps user easily understand the breakup and the components of the amount to be repaid.
- Easy calculation of EMIs with different inputs– With the Working Capital Loan EMI Calculator provided by OneNDF, a user can easily check the EMIs they would have to pay if there was any alteration in their rate of interest, tenure of the loan, or the principal amount. This allows them to optimise their spending accordingly.
How do you apply for a Working Capital Loan?
The process to apply for a Working Capital Loan differs from lender to lender. Usually, lenders have their own parameters to gauge the eligibility of a borrower for a Working Capital Loan.
However, you can make the process of availing a Working Capital Loan efficient by signing up on the platform and get a Financial Health Card prepared for free, so you could only apply for a working capital loan from the lenders you’re eligible with.
The process of applying for a Working Capital Loan is as such-
- Sign up with just your mobile number on the OneNDF Sign up page.
- You would be required to proceed with a 4 digit OTP.
- After the OTP authentication, you would be taken to the dashboard for initiating your application for a loan.
- Select ‘Working Capital’ as the loan type from the drop-down menu and fill the information sought for generating a new request for a loan.
- Once the information about the tenure of the loan and the amount required is filled, a request for a Working Capital Loan would be generated on the portal and lenders on the platform would be able to initiate the application if you fulfil their eligibility criteria.
FAQs
1. What is interest rate on working capital loan?
The interest rate on working capital loans ranges from 10% to 30% based upon the lender and the borrower profile. Usually, the interest rate on Working Capital Loans is floating, ie. benchmarked to the repo rate and thus can change during the tenure.
2. How is Working Capital Loan repaid?
Working Capital Loans are repaid depending upon the type of debt instrument availed for working Capital. For instance, money borrowed through an Overdraft may be repaid as per the convenience of the borrower, while a Call loan may be repaid as and when the lender seeks repayment, and money borrowed through a term loan may be repaid as per the repayment schedule decided upon sanctioning the working capital loan.
3. What type of loan is working capital loan?
A loan amount with the repayment tenure ranging from 6 to 36 months is considered a working capital loan. However, the lenders may at times increase the tenure of the loan to 48 months. Thus, a working capital loan is the type of loan taken to finance the operations of a business.
4. What is the formula for working capital needs?
To determine the working capital needs of a business, usually Net Working Capital is calculated with the following formula-
Net Working Capital = Current Assets – Current Liabilities.
When the difference between the two is positive, it reflects that the business has enough liquid assets to cover the short-term liabilities arising within a fiscal year.
5. Who can take a Working Capital Loan?
All entities registered either as Private Limited Company, Public Limited Company, LLP/LLC, Partnership firm, Sole Proprietorship, or One-person Company can take a Working Capital Loan. The entity must have the Registration Certificate as a proof.
6. Who can give a Working Capital Loan?
Banks and NBFCs with a valid licence are allowed to disburse Working Capital Loans.
7. Can I prepay my working capital loan?
Yes, most lenders allow borrowers to prepay their working capital loan without any penalty charges.
8. Is collateral required for a working capital loan?
It depends on the lender and the borrower’s creditworthiness. Some lenders may require collateral, while others may offer unsecured working capital loans based on the borrower’s credit score and business performance.
9. How accurate is the working capital loan EMI calculator?
The working capital loan EMI calculator provides accurate results based on the input values provided by the user.
10. How can I improve my chances of getting a working capital loan?
To improve your chances of getting a working capital loan, you should maintain a good credit score, have a solid business plan, and provide accurate financial statements.
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