# How to calculate the EMI on a MSME loan

MSME (Micro, Small and Medium Enterprises), loans are financial products that help small businesses grow and expand. These loans are typically provided by banks or financial institutions. The borrower must repay the loan amount and interest in regular installments. These monthly installments are known as Equated Monthly Instalments or EMI. We will be discussing how to calculate the EMI of an MSME loan.

Before we get to the calculation, let us first understand the components of an MSME loan EMV. Loan Amount: This is the total amount borrowed from a lender.

Rate of Interest: This is the interest rate charged to the borrower on the amount of the loan. Loan Tenure: This refers to the term of the loan.

Formula for EMI Calculation:

The following formula is used to calculate EMI:

EMI = [PxRx1+R]N] /[(1+R]N-1]

Where:

P = Loan amount

R = Monthly interest rate

N = Loan tenure (in months)

Let’s look at an example to show how EMI is calculated for a MSME loan.

Let’s say you take a loan of Rs. 10,00,000. This is for a term of five years (60 months), at a 10% interest rate.

First, calculate the monthly interest rates (R). Divide the annual interest rate (R) by 12 to get the number of months in a calendar year. The monthly interest rate in this example would be:

R = 10% / 12 = 0.083333

We can now use the EMI formula for the calculation of the monthly instalment. After entering the values, you will get:

EMI = [10,00,000.00 x 0.008333x (1+0.008333),60]/[(1+0.008333,60-1]

EMI = Rs. 21,865.21

The EMI for the loan amount, interest rate, and tenure given is Rs. 21,865.21.

To sum it all, it is important to calculate the EMI of an MSME loan in order to effectively plan and manage your finances. The EMI calculation formula can be used to calculate the monthly payment. Simply enter the loan amount, the interest rate and the tenure. You should choose a loan with an affordable EMI that meets your cash flow and business needs.