Business Loan Calculator
Calculate monthly business loan payments, total interest, and amortization schedule.
About
Business Loan Calculator
This business loan calculator prices a loan the way a lender actually structures it, including the fees that never appear in the advertised rate. Borrow $10,000 at 10% over five years with a 5% origination fee and a $750 documentation fee, and the monthly payment is $212.47. The stated rate is 10%, but only $8,750 reaches your account, so the real APR is 15.933%. That gap between the rate you are quoted and the rate you pay is what this page exists to show.
Choosing how you pay it back
The repayment schedule changes the total cost more than most borrowers expect. The Pay back menu covers everything from daily to annual instalments, plus two structures that behave differently:
- Amortising: every payment covers the interest due and chips at the principal. The $10,000 example above costs $12,748.23 over five years.
- Interest only: you pay just the interest, $83.33 a month here, and the full $10,000 falls due at the end. Total interest is $5,000, higher than the amortising version, because the balance never shrinks. Real APR: 13.447%.
- In the end: nothing is paid until maturity and the interest compounds on itself. The same loan settles at $16,453.09 in one payment, with $6,453.09 of interest. Real APR: 12.696%.
Interest-only and balloon structures suit businesses expecting revenue later than the loan: a fit-out that opens in six months, equipment that starts earning next season, a contract that pays on completion. They are dangerous when that revenue does not arrive, because the principal is still waiting, undiminished.
SBA loans
Small Business Administration loans are not funded by the government. Banks, credit unions, and community lenders put up the money, and the SBA guarantees a share of it, generally 75% to 85% depending on the programme and loan size. That guarantee is why a lender will approve a business it would otherwise decline, and why rates sit below conventional equivalents.
The trade is paperwork and time. Expect more documentation, an SBA guarantee fee on larger loans, and weeks rather than days to close. Four programmes cover most needs:
- 7(a): the flagship, and the one people mean by "an SBA loan". Up to $5 million for working capital, equipment, acquisitions, or refinancing, with terms to 10 years for working capital and 25 for real estate.
- 504: long-term fixed-rate money for real estate and heavy equipment through a Certified Development Company, up to $5.5 million on 10, 20, or 25-year terms. It cannot be used for working capital or inventory.
- Microloan: up to $50,000 through non-profit intermediaries, averaging nearer $15,000, with terms to six years. Not available for refinancing debt or buying property.
- Disaster loans: up to $2 million to repair or replace property after a declared disaster, and the only SBA loans made directly by the agency.
SBA rates are capped as a spread over a base rate, which is the main protection they offer. Prepayment penalties exist on 504 loans and on 7(a) loans with terms of 15 years or more, applying in the first three years.
Conventional, online, and personal borrowing
A conventional bank loan carries no government guarantee, so the bank absorbs the whole risk and prices accordingly: shorter terms, tighter covenants, and usually two or more years of trading history plus collateral. For an established, profitable business it is often the cheapest option and the fastest to arrange with a bank you already use.
Beyond term loans, banks package credit in several shapes. A line of credit charges interest only on what you draw, which fits seasonal swings. Invoice financing advances money against unpaid invoices. Equipment financing secures the loan on the asset itself. Merchant cash advances take a slice of daily card takings, and while they are quick, the effective annual cost can run into triple digits once you convert the factor rate. Always convert a factor rate to an APR before comparing it with anything else.
Newer businesses without a trading record sometimes fall back on a personal loan or a personal credit card. Rates can be reasonable with strong personal credit, approval is fast, and there is no lien on the business. The catch is that the debt is yours personally, with no separation between the company's troubles and your own finances. The Personal Loan Calculator prices that route.
The fees, and why they matter more than the rate
Fees are where the quoted rate and the real cost separate. The two you will meet on nearly every loan are on this page:
- Origination fee: charged for processing and underwriting, usually 1% to 6% of the amount, often deducted from the disbursement rather than billed. A 5% fee on $10,000 means $9,500 arrives.
- Documentation fee: a flat charge for preparing the paperwork, commonly a few hundred dollars.
Others appear depending on the lender and the loan: application fees, monthly or annual servicing charges, packaging fees on SBA deals, prepayment penalties, late fees, wire fees, and referral fees to a broker. Not every lender charges every one, and some only bite in specific circumstances.
The reason to total them is arithmetic, not principle. In the example on this page, $1,250 of fees on a $10,000 loan lifts the effective rate from 10% to 15.933%. Enter every fee you have been quoted and compare lenders on the APR line, never on the headline rate. The APR Calculator and the Loan Calculator run the same comparison for non-business borrowing.
What lenders look at
Approval usually turns on five things: personal credit score, business credit, time trading, annual revenue, and collateral. Most banks want two years of operating history and a personal score around 680 or better for conventional lending; SBA programmes are more forgiving, and online lenders more forgiving still, at a price.
Two points catch first-time borrowers. Nearly every small business loan requires a personal guarantee, meaning your own assets stand behind it even when the borrower is an incorporated company. And lenders assess debt service coverage, roughly your operating income divided by total debt payments, wanting to see about 1.25 times cover. Work out that ratio before you apply, because it tells you what you can realistically service.
Reading the results
The panel gives the payment, the total interest, interest plus fees, and the real APR, along with the cash you actually receive after fees come off the top. The donut splits everything you repay into principal, interest, and fees, so a loan where fees rival the interest is obvious at a glance. The second chart tracks the balance: falling steadily on an amortising loan, flat then vanishing on interest only, and climbing on a balloon loan where nothing is paid until the end. The amortization table underneath breaks out every payment, which is what you want when you are checking a lender's schedule against your own numbers.
What the SBA actually caps
The 7(a) program tops out at $5 million per loan. The agency guarantees 85% of a loan of $150,000 or less and 75% above that, which is what lets a bank approve a business it would otherwise decline. The guaranty is to the lender, so a default still leaves the borrower liable, usually with a personal guarantee attached.
Rates are capped as a spread over a base rate, and the spread narrows as the loan grows. The published maximums run from base plus 6.5 points on loans of $50,000 or less, to plus 6.0 up to $250,000, plus 4.5 up to $350,000, and plus 3.0 above that. Since the base is usually the prime rate, the ceiling moves whenever prime does, and a variable-rate SBA loan repriced upward mid-term is a common source of payment surprise.
Factor rates, and what they cost in real terms
Merchant cash advances and some short-term online lenders quote a factor rate rather than an interest rate. A factor of 1.3 on $50,000 means repaying $65,000, and the $15,000 sounds like 30%. It is not, because you repay on a schedule while the balance falls.
Repay that advance over six months and the implied annual rate is roughly 97%. Over three months it is far higher again. The shorter the repayment window, the larger the gap between the factor and the true annual cost, which is precisely why the product is quoted this way. Convert any factor rate into an annual rate before comparing it against a term loan, and treat daily or weekly debits as a cash flow problem as much as a cost problem.
Common questions
Frequently asked questions
The payment spreads principal and interest evenly across the term. $10,000 at 10% over five years, compounded monthly, comes to $212.47 a month and $12,748.23 repaid in total. Change the repayment frequency and the number of instalments changes with it, which shifts the total slightly.
The rate applies to the balance; the APR includes the fees you pay to get the money. Borrow $10,000 at 10% with a 5% origination fee and a $750 documentation fee and only $8,750 reaches you, which turns a 10% rate into a 15.933% APR. Compare lenders on APR, never on the rate.
You pay only the interest during the term and repay the whole principal at the end. On $10,000 at 10% that is $83.33 a month with $10,000 due at maturity, costing $5,000 in interest over five years. Payments are lower, but the balance never falls, so the total interest is higher than on an amortising loan.
Nothing is paid until the loan matures, so interest compounds on itself. $10,000 at 10% for five years settles at $16,453.09 in a single payment, with $6,453.09 of interest. It suits a project that generates cash only on completion, and it is the riskiest structure if that cash arrives late.
Usually 1% to 6% of the loan amount, and it is normally deducted from the disbursement rather than billed separately. A 5% fee on a $10,000 loan means $9,500 lands in the account while you owe and pay interest on the full $10,000.
Around 680 or above for conventional bank lending, with two years of trading history and collateral. SBA programmes accept lower scores, often from the low 600s, and online lenders go lower still while charging considerably more. Nearly all of them will ask for a personal guarantee whatever your score.
No, except for disaster loans. Banks and community lenders provide the money and the SBA guarantees 75% to 85% of it, which is what persuades a lender to approve a business it would otherwise turn down. The trade-off is more paperwork, a guarantee fee on larger loans, and a slower close.
Usually, but check for a prepayment penalty first. SBA 504 loans and 7(a) loans with terms of 15 years or more carry one during the first three years, and some conventional and online lenders charge either a penalty or a fixed total repayment amount that removes any saving from paying early.
Far more than the 30% it appears to be. A factor of 1.3 on $50,000 means repaying $65,000, but you repay it in installments while the balance falls, so the money is not outstanding for the whole period. Repaid over six months, that advance works out to roughly 97% a year. Always convert a factor rate to an annual rate before comparing it with a term loan.