Introduction

Whether you’re buying medical equipment, upgrading your clinic, or taking a working capital loan, EMI (Equated Monthly Installment) is how most MSMEs repay loans in India.

But do you know how to calculate EMI yourself without depending on a bank or app?

This article will help you:

1. Understand what EMI means

2. Use the EMI formula for the monthly calculation

3. Know how much interest you are really paying

4. Use shortcuts and tools for faster EMI estimation

Let’s simplify EMI calculation for small healthcare business owners.

1. What is EMI and why does it matter

EMI stands for Equated Monthly Installment. It’s the fixed amount you pay every month to repay a loan, which includes both:

• Principal (the actual loan amount)

• Interest (cost of borrowing)

A longer tenure means lower EMI, but more total interest paid.

A shorter tenure means higher EMI, but less total interest.

2. EMI Calculation Formula

Here’s the standard EMI formula used by all banks and NBFCs:

Formula:

EMI = \frac{P \times R \times (1+R)^N}{(1+R)^N – 1}

Where:

• P = Loan Amount (Principal)

• R = Monthly Interest Rate = Annual Rate ÷ 12 ÷ 100

• N = Number of months (loan tenure)

3. Example Calculation

Suppose you take a loan of ₹1,00,000 for 2 years (24 months) at 12% annual interest.

• P = ₹1,00,000

• R = 12% ÷ 12 ÷ 100 = 0.01

• N = 24

Plug into the formula:

EMI = \frac{100000 \times 0.01 \times (1+0.01)^{24}}{(1+0.01)^{24} – 1}

EMI = ₹4,707 (approx)

So, you will pay ₹4,707 per month for 24 months.

4. How to Know Interest Paid Over the Loan

Total Payment = EMI × Tenure

= ₹4,707 × 24 = ₹1,12,968

So, Interest Paid = ₹1,12,968 – ₹1,00,000 = ₹12,968

5. EMI Calculator Shortcut in Excel

You can use this formula in Excel:

=PMT(InterestRate/12, NumberOfMonths, -LoanAmount)

Example:

=PMT(12%/12, 24, -100000) → Gives ₹4,707

This is great for clinic loans, BNPL for medical equipment, or pharmacy purchases.

6. When to Use EMI vs Lump Sum Payment

Use EMI when:

• You need to preserve working capital

• You want to match the loan to the equipment’s life

• You have a steady monthly income

Pay a lump sum when:

• You can afford it

• You want to avoid interest costs

Conclusion

EMI calculation may look complicated, but with the right formula or a simple Excel calculator, it becomes easy.

It helps you plan finances, compare lenders, and avoid surprise costs.

If you’re a Healthcare MSME, use this knowledge to:

• Choose smarter loan options

• Avoid overpaying interest

• Match EMI with the clinic or pharmacy cash flow