How can business loan have lower EMI amount?

As a chartered accountant (CA) or tax consultant, when you take a business loan, one of the prime considerations is the EMI. The monthly EMIs you pay for the loan has a major impact on your cash flow. A high EMI results in a greater monthly outflow and vice-versa. Flexi business loans from Bajaj Finserv address the issue of high EMIs that can deter you from procuring a loan. Let's see how this loan results in a lower EMI.

New-age Loans Where Interest is Calculated on the Amount Utilised

Flexi business loans are new-age loans where you get a flexi loan limit for a tenor. You can withdraw funds as and when required from your approved flexi loan limit. However, one of the major aspects that differentiate flexi business loans from term loans is the fact that you need to pay interest only on the amount you utilize and not on the entire flexi loan limit. This is not the case with term loans as the interest is payable on the entire loan amount.

For example, suppose you get a flexi loan limit of Rs. 20 lakh at a yearly interest rate of 16% for a 4-year-tenor. Out of this, you utilize only Rs. 10 lakh for buying new equipment and technological upgradation for your practice. Hence, the total interest you need to pay for 4 years amounts to Rs. 6,40,000.

However, in case of a business term loan, the interest would’ve been charged for the entire Rs. 20 lakh, irrespective of whether you’ve the utilized the entire amount or not. At the end of 4 years, you would have ended up paying an interest of Rs. 1,28,000.

Flexi Interest-only Loan to Further Bring Down EMIs

An essential variant of flexi business loans from Bajaj Finserv is the flexi interest-only loan. This flexi variant ensures that the EMIs constitute just the interest component and not the principal, which can be repaid at the end of tenor. This further brings down your monthly EMIs. In a term loan, the EMIs constitute the principal and interest components.

The table below highlights the difference in the monthly EMIs you need to pay for flexi business loans and term loans:

You can utilize the amount saved on EMIs to improve the cash flow of your practice and address other needs.

The flexi interest-only loan variant and the charging of interest only on the utilized loan amount ensure a drastic reduction in monthly EMIs.

Unsecured Loan Resulting in Minimum Documentation and Fast Approval

Being unsecured in nature, flexi business loans require no collateral. When you’ve just started your CA or tax consultancy practice, pledging a collateral can be difficult. However, with no collateral required, the loan application process is fast, quick and seamless. Also, it leads to minimum documentation. You get your loan approved and disbursed in your account within 24 hours.

Thus, flexi business loans ensure you get the required funds for your practice without worrying about high EMIs.

• To know more about Flexi Business Loans for tax consultants, click here.
• To know more about flexi Business loans for CAs, click here.