Business Loan Calculator
Estimate payments for business financing.
Loan Details
Monthly Payment
$1,050.09
Total Cost Breakdown
Loan Payoff Schedule
Full Repayment Schedule
Business Loan Calculator: Estimate Payments & Total Interest
Everything you need to know
About the Business Loan Calculator
Securing financing is one of the most critical decisions a business owner makes. Whether you're launching a startup, expanding operations, purchasing equipment, or managing cash flow, understanding the true cost of borrowing is essential. Our business loan calculator provides a complete picture of your loan:
- Monthly payment: Exact principal + interest amount
- Total interest paid: Lifetime cost of borrowing
- Total repayment: Principal + interest over the full term
- Amortization schedule: Year-by-year breakdown of payments
- APR comparison: See how interest rates affect total cost
How Business Loan Payments Are Calculated
Business loans typically use amortizing installment loans with fixed monthly payments:
Monthly Payment Formula
M = P [r(1+r)^n] / [(1+r)^n - 1]
Where:
- M = Monthly payment
- P = Principal loan amount
- r = Monthly interest rate (annual rate ÷ 12)
- n = Total number of payments (years × 12)
Example Calculation
Loan: $100,000 at 8% annual interest for 5 years
- P = $100,000
- r = 0.08 ÷ 12 = 0.006667
- n = 5 × 12 = 60
M = 100,000 × [0.006667(1.006667)^60] / [(1.006667)^60 - 1] M = 100,000 × [0.006667 × 1.490] / [1.490 - 1] M = 100,000 × 0.009933 / 0.490 M = $2,027.64 per month
Total paid: $2,027.64 × 60 = $121,658.40 Total interest: $121,658.40 - $100,000 = $21,658.40
Types of Business Loans
| Loan Type | Best For | Typical Rates | Terms |
|---|---|---|---|
| SBA 7(a) | General business purposes | 7.5% - 13% | Up to 25 years |
| SBA 504 | Real estate & equipment | 5.5% - 7% | 10-25 years |
| Term Loan | Expansion, working capital | 6% - 30% | 1-10 years |
| Equipment Loan | Machinery, vehicles | 5% - 20% | 1-7 years |
| Line of Credit | Cash flow gaps | 7% - 25% | Revolving |
| Invoice Financing | Unpaid invoices | 1% - 5% monthly | Until invoice paid |
| Merchant Cash Advance | Quick funding | 20% - 250% APR | 3-18 months |
| Microloan | Startups, small needs | 8% - 22% | Up to 7 years |
Understanding APR vs. Interest Rate
| Term | What It Means | Why It Matters |
|---|---|---|
| Interest Rate | Cost of borrowing the principal | Base cost of the loan |
| APR | Annual Percentage Rate including fees | True total cost including origination fees, closing costs |
| Factor Rate | Common in MCAs (e.g., 1.2x) | Multiply by loan amount for total repayment |
| Effective APR | Actual annual cost with compounding | Better for comparing short-term loans |
Example: $50,000 loan at 10% interest with 3% origination fee
- Interest rate: 10%
- Origination fee: $1,500
- Actual received: $48,500
- APR is higher than 10% because you pay fees on $50,000 but only receive $48,500
Amortization Breakdown
Each payment is split between principal and interest. Early in the loan, most of the payment goes to interest.
Year 1 of $100,000 / 8% / 5-year loan:
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $2,027.64 | $1,360.97 | $666.67 | $98,639.03 |
| 6 | $2,027.64 | $1,396.23 | $631.41 | $91,938.27 |
| 12 | $2,027.64 | $1,438.03 | $589.61 | $82,658.11 |
| 24 | $2,027.64 | $1,524.61 | $503.03 | $63,643.71 |
| 36 | $2,027.64 | $1,616.60 | $411.04 | $43,417.93 |
| 48 | $2,027.64 | $1,714.22 | $313.42 | $22,059.15 |
| 60 | $2,027.64 | $2,014.21 | $13.43 | $0.00 |
Key insight: In year 1, you pay $7,936 in interest. In year 5, you pay only $1,722 in interest.
Frequently Asked Questions
What credit score do I need for a business loan?
- SBA loans: 680+
- Bank term loans: 650+
- Online lenders: 500-600+
- Higher scores = better rates and terms
How much can I borrow for my business?
Typically 10-30% of annual revenue for term loans. SBA loans can go up to $5 million. New businesses may qualify for less.
Should I choose a longer or shorter loan term?
- Shorter term: Higher monthly payments, less total interest, faster payoff
- Longer term: Lower monthly payments, more total interest, better cash flow
- Choose based on your business's cash flow and growth projections
What's the difference between a term loan and a line of credit?
- Term loan: Lump sum upfront, fixed payments, best for one-time purchases
- Line of credit: Borrow as needed, pay interest only on what you use, best for cash flow management
Are business loan interest payments tax deductible?
Generally yes. Interest paid on business loans is usually a deductible business expense. Consult a tax professional for your specific situation.