Business Loan Interest Rate

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A business loan is a form of financing extended to entrepreneurs by financial institutions to fund the various operational expenses associated with their company. Business loans are an easy way to finance expenses, from regular ones like employee salaries and overheads, to larger outlays like machinery purchase. Business loans can be serviced through equated monthly installments (EMIs), which pay off a portion of the principal amount as well as the interest accrued.

The interest rate on a business loan is determined based on several factors, including loan amount, tenure, and the lender’s policy, and can vary significantly. Kinara Capital’s business loan interest rate is calculated on a reducing rate basis, which means that as the outstanding loan amount gets smaller with each repayment, the EMI amount reduces as well. This is because the interest is calculated on the outstanding loan amount, rather than the total principal disbursed at the outset.

Kinara Capital offers business loans for working capital and machinery purchase for micro-small-and-medium enterprises (MSMEs). These collateral-free loans are offered with minimal documentation and can be disbursed within as little as 24 hours after approval. Kinara Capital’s loans accrue interest starting at a rate of 24% p.a., and the interest is calculated on a reducing rate basis.

The interest accrued on a business loan is calculated based on the principal loan amount, interest rate, and loan tenure. Interest on Kinara Capital’s business loans starts at 24% p.a., and is calculated on a reducing rate basis. This means that as the outstanding loan amount gets smaller with each repayment, the EMI amount reduces as well. This is because the interest is calculated on the outstanding loan amount, rather than the total principal disbursed at the outset.

Various factors affect the interest rate of a business loan. Among these are macro factors like the sector and geography within which the business operates. In addition to these, the following individual factors might influence the interest rate as well: the loan amount required, the business turnover, the purpose of the loan.