Business Loan Calculator

Calculate monthly payments, total interest, and real APR for your business loan with fees included

💼 Business Loan Calculator

What is a Business Loan Calculator?

A business loan calculator is a powerful financial tool that helps entrepreneurs and business owners estimate the cost of borrowing money for their business. By inputting key loan parameters such as loan amount, interest rate, term length, and fees, you can instantly see your monthly payment amount, total interest paid, and the true cost of the loan including all fees.

This calculator goes beyond basic loan estimators by calculating the real Annual Percentage Rate (APR), which includes origination fees, documentation fees, and other upfront costs. This gives you a more accurate picture of the true cost of borrowing compared to the nominal interest rate alone.

Whether you're considering a term loan, SBA loan, equipment financing, or line of credit, this calculator helps you understand the financial commitment before you apply, enabling better cash flow planning and informed decision-making.

How to Use This Calculator

Enter your desired loan amount in dollars
Input the annual interest rate offered by your lender
Select how often interest compounds (typically monthly for most business loans)
Set your loan term in years and months
Choose your payment frequency (monthly is most common)
Add any origination fees (as percentage), documentation fees, and other upfront costs

Key Insights for Business Borrowers

Understanding your business loan goes beyond just knowing the monthly payment. Here are critical insights based on current lending practices:

Use APR, Not Just Interest Rate: The Annual Percentage Rate (APR) includes fees and gives you the true cost of borrowing. A loan with a 10% interest rate but 5% origination fee may have a real APR of 12-13%, making it more expensive than a 11% loan with no fees.
Compare Multiple Scenarios: Use this calculator to compare different loan offers side by side. A longer term means lower monthly payments but higher total interest paid. A shorter term saves on interest but requires higher monthly cash flow.
Plan for Cash Flow Impact: Your monthly payment must fit comfortably within your business's cash flow. Most lenders want to see a debt service coverage ratio (DSCR) of at least 1.25, meaning your business generates $1.25 for every $1 of debt payment.
Review the Amortization Schedule: The amortization table shows how each payment is split between principal and interest. Early payments are mostly interest, while later payments pay down more principal. This affects your tax deductions and equity buildup.
Different Loan Types Have Different Structures: Term loans use standard amortization. SBA loans may have blended rates and multi-part structures. Lines of credit charge interest only on drawn amounts. Equipment loans may have seasonal payment structures. Make sure you're using the right calculator settings for your loan type.

Remember: This calculator provides estimates based on the inputs you provide. Actual loan terms, fees, and payment amounts may vary based on your creditworthiness, business financials, collateral, and lender policies. Always consult with your lender and financial advisor before making final borrowing decisions.

Understanding Business Loan Types

Business loans come in many forms, each with different cost structures and use cases:

Term Loans: Fixed loan amount repaid over a set period (1-10 years typically) with regular payments. Best for one-time investments like equipment, expansion, or acquisition. Interest rates range from 6-30% depending on creditworthiness and collateral.
SBA Loans: Government-backed loans (SBA 7(a), 504, etc.) offer lower rates and longer terms but require more documentation and time to close. Rates are often variable and tied to prime rate plus a margin. May have blended structures with bank and CDC portions.
Equipment Financing: Secured by the equipment being purchased, these loans typically have lower rates (5-20%) and terms matching the equipment's useful life. The equipment serves as collateral, reducing lender risk.
Lines of Credit: Revolving credit that you draw from as needed and repay. Interest is charged only on the outstanding balance. Useful for managing cash flow gaps and seasonal fluctuations. Rates are typically variable.
Invoice Financing & Merchant Cash Advances: Short-term financing based on receivables or future sales. Often use factor rates instead of APR, making true cost comparison difficult. Can be very expensive (effective APRs of 40-200%) but provide fast access to capital.

When evaluating any business loan, consider not just the monthly payment but the total cost over the life of the loan, the impact on cash flow, tax implications, and whether the financing will generate sufficient return to justify the cost.

Key factors lenders evaluate include: credit score (personal and business), time in business, annual revenue, profitability, existing debt, collateral, and industry risk. Stronger financials typically qualify for better rates and terms.

Frequently Asked Questions

What's the difference between interest rate and APR?

The interest rate is the cost of borrowing the principal amount, expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate plus other costs like origination fees, documentation fees, and closing costs, giving you the true annual cost of the loan. Always compare APRs when evaluating loan offers, not just interest rates.

How do origination fees affect my loan cost?

Origination fees are typically charged as a percentage of the loan amount (commonly 1-5%) and are deducted from the loan proceeds upfront. This means you receive less than the stated loan amount but still pay interest on the full amount. For example, a $100,000 loan with a 5% origination fee gives you $95,000 but you repay based on $100,000, significantly increasing your effective APR.

Should I choose a shorter or longer loan term?

Shorter terms (1-3 years) mean higher monthly payments but lower total interest paid and faster equity buildup. Longer terms (5-10 years) reduce monthly payments, improving cash flow, but cost more in total interest. Choose based on your cash flow capacity and the expected return from the financed investment. If the investment generates strong returns quickly, a shorter term may be better. If cash flow is tight, a longer term provides breathing room.

What is a good debt service coverage ratio (DSCR)?

DSCR measures your ability to service debt from operating income. Most lenders require a minimum DSCR of 1.25, meaning your business generates $1.25 in cash flow for every $1 of debt payment. A DSCR of 1.5 or higher is considered strong and may qualify you for better rates. Below 1.0 means you don't generate enough cash to cover debt payments, which is a red flag for lenders.

Can I pay off my business loan early?

Many business loans allow early repayment, but some charge prepayment penalties (typically 1-5% of the remaining balance) to compensate the lender for lost interest income. Always check your loan agreement for prepayment terms. If you anticipate paying off early, negotiate for no prepayment penalty or a declining penalty schedule. SBA loans generally allow prepayment without penalty after a certain period.

How accurate is this calculator?

This calculator provides accurate estimates based on standard amortization formulas used by most lenders. However, actual loan terms may vary based on your specific situation, lender policies, and loan structure. Some loans have variable rates, interest-only periods, balloon payments, or other features not captured in basic calculations. Use this calculator for planning and comparison, but always get final terms in writing from your lender before committing.