About the Subvention Savings
The interest subvention calculator shows how much a government interest subsidy can save you on a business loan. Enter the loan amount, the bank's interest rate, the subvention percentage offered under your scheme and the tenure, and the tool compares the EMI with and without the subsidy and reports the total saving over the full repayment period.
It is useful for MSMEs, agri-entrepreneurs, food processors and startups that are weighing a scheme-linked loan against an ordinary bank loan, and for consultants who need to show the benefit in a project report. Seeing the saving in rupees, rather than as a percentage, makes it easier to decide whether the extra paperwork a scheme demands is worth the effort.
The saving grows with the loan amount, the tenure and the size of the subvention. The tool assumes that the subsidy applies for the entire tenure on a reducing balance. Many schemes cap the eligible loan amount or limit the number of years for which subvention is paid, so your actual benefit can be lower than the figure shown.
How to use it
- 1Enter the loan amount and the interest rate your bank charges.
- 2Enter the subvention percentage under your scheme; the field starts at 3%, which you can change.
- 3Enter the tenure in years.
- 4Compare the EMI without the scheme and with it, and read the total saving over the tenure.
How this is calculated
EMI without scheme = EMI(P, R, n). EMI with scheme = EMI(P, R − S, n). Total saving = (EMI without − EMI with) × n. P = loan amount, R = bank rate (% a year), S = subvention (% a year; the net rate is never taken below 0), n = years × 12 months. EMI uses the reducing-balance formula P × r × (1 + r)^n ÷ ((1 + r)^n − 1), with r = annual rate ÷ 12 ÷ 100.
Frequently asked questions
What is interest subvention?
Interest subvention is a subsidy under which the government bears part of the interest on an eligible loan. If your bank charges 11% and a scheme offers 3% subvention, your effective cost falls to about 8% on the covered portion. It lowers the cost of borrowing but does not reduce the principal you must repay.
How does the interest subvention calculator work out the saving?
It computes two EMIs with the standard reducing-balance formula — one at the bank's rate and one at the bank's rate minus the subvention — and multiplies the monthly difference by the number of instalments. The result is the total interest saved if the subsidy applies throughout the tenure.
What subvention percentage should I enter?
Enter the rate notified for the scheme you are applying under. The field starts at 3%, and the hint cites the Agriculture Infrastructure Fund and Madhya Pradesh's Udyam Kranti scheme as examples. Subvention rates, eligible loan limits and periods are revised from time to time, so confirm the current terms on the scheme's official portal.
Is the subvention available for the whole loan tenure?
Not always. The calculator assumes it is, but many schemes pay subvention only for a fixed number of years or only on a loan amount up to a ceiling. If your scheme has such a cap, treat the figure shown as an upper limit and ask the lender for a schedule that reflects the cap.
Will my EMI actually drop, or is the subsidy paid separately?
It depends on the scheme. In some, the lender charges you the net rate; in others you pay the normal EMI and the subsidy is credited to your loan account later, often only if repayments are regular. The calculator shows the EMI as though the net rate applied from the start, which is the simplest way to compare.
Is interest subvention the same as a capital subsidy?
No. A capital subsidy, such as the PMEGP margin-money subsidy, reduces the project cost you have to finance. Interest subvention reduces the interest charged on the loan. Some projects can combine both, subject to each scheme's rules. Use the PMEGP subsidy calculator on this site to estimate a capital subsidy.