Business Loan Calculator

Business loan calculator at a glance#

What is the monthly payment on a $100,000 business loan?#

At an example rate of 9%, a $100,000 business loan costs $1,266.76 a month over 10 years or $2,075.84 a month over 5 years. At 7% the payments are $1,161.08 and $1,980.12, and at 11% they're $1,377.50 and $2,174.24. Enter the rate and term you've been offered above for your own figure.

How do you calculate business loan repayments?#

A fixed-rate business term loan is repaid in equal payments that each cover that period's interest and part of the principal. The payment comes from the standard amortization formula, which the loan calculator works through step by step. This calculator runs that formula for the amount, rate and term you enter, adds the lender's fees, and returns the payment, the total interest, interest plus fees, a real rate that counts the fees, and a full amortization schedule. This gives an estimate, not financial advice.

How much does a business loan really cost?#

More than the interest. Take $100,000 at an example rate of 9% for 10 years with a 3% origination fee and a $1,000 documentation fee. You pay $52,010.93 of interest plus $4,000 of fees, $56,010.93 in all, and the fees lift the real rate from 9% to 9.964%.

How business loans are repaid#

A term loan is paid back on a schedule. For its 7(a) program, the U.S. Small Business Administration says the most common way to repay a term loan is with monthly payments of principal and interest from the business's cash flow. On a fixed-rate loan those payments stay the same. On a variable-rate loan the lender may require a different payment when the rate changes. This calculator assumes a fixed rate, so for a variable-rate loan treat its answer as a starting estimate.

What you enter and what you get#

The calculator takes:

• Loan amount, interest rate and term in years and months
• Compound: how often interest compounds, monthly by default
• Pay back: how often you make a payment, from every day to every year
• Origination fee as a percentage of the loan, plus a documentation fee and other fees in dollars

It returns the payment for each period, the total of all loan payments, the interest, interest plus fees, the real rate (APR), a chart of interest, principal and fees, and an amortization schedule with each payment's interest, principal and remaining balance.

A worked example with fees#

Here's the example from above, $100,000 at an example rate of 9% for 10 years with monthly payments:

1. Origination fee: 3% of $100,000 = $3,000
2. Documentation fee: $1,000, so fees total $4,000
3. Monthly payment: $1,266.76 for 120 months
4. Total of the 120 loan payments: $152,010.93
5. Interest: $152,010.93 − $100,000 = $52,010.93
6. Interest plus fees: $52,010.93 + $4,000 = $56,010.93
7. Real rate (APR): 9.964%

The payment is figured on the full $100,000. In month 1, $750.00 of it is interest ($100,000 × 0.09 ÷ 12) and $516.76 reduces the balance. The fees don't change the payment because the calculator treats them as paid when the loan closes, either out of pocket or out of the loan proceeds, rather than added to the balance.

That's what the real rate measures. If $4,000 of fees come out of a $100,000 loan, the business really receives $96,000 but repays $1,266.76 a month for 120 months. The rate that turns $96,000 into those payments is 9.964%, the figure the calculator labels Real Rate (APR). It lets you compare a low-rate loan with heavy fees against a higher-rate loan with none.

Fees weigh more on a shorter loan#

Run the same $100,000 at 9% with the same $4,000 of fees over 5 years instead of 10. The payment rises to $2,075.84 and the interest falls to $24,550.13, less than half. But the real rate climbs to 10.761%, because the fees are spread over fewer years. A fee that looks small next to a long loan matters more on a short one, which is why comparing real rates beats comparing interest rates. The APR calculator shows the same effect for consumer loans.

Weekly, quarterly and other payment schedules#

The Pay back setting changes how often you pay. Keeping the example's monthly compounding, weekly payments come to $291.49 a week over 520 payments, with $51,574.36 of interest. Quarterly payments are $3,828.85 over 40 payments, with $53,153.86 of interest. More frequent payments shave a little interest because the balance comes down sooner.

When the payment schedule and the compounding schedule differ, the calculator converts the annual rate into the matching rate for each payment period before it runs the formula. Set both to the terms in your loan agreement for the closest estimate.

SBA 7(a) loans#

SBA 7(a) loans are made by lenders and partly guaranteed by the SBA. The SBA's lender guidance sets out a few terms that affect what you'd enter here:

• Most 7(a) loans have a maximum loan amount of $5 million.
• The maturity is ten years or less, unless the loan finances or refinances real estate or equipment with a useful life of more than ten years. These loans can run up to 25 years, including extensions.
• Rates are negotiated between you and the lender, can be fixed or variable, and are subject to SBA maximums tied to a base rate.
• On loans with a maturity of 15 years or more, voluntarily prepaying 25% or more of the outstanding balance within three years of the first disbursement triggers a fee of 5% of the amount prepaid in year one, 3% in year two and 1% in year three.
• The SBA charges the lender an upfront guaranty fee, which the lender may pass on to the borrower.

That last fee belongs in the calculator's fee fields if your lender passes it on, so the real rate reflects it.

Business loans and the APR#

On most consumer car and personal loans, the federal Truth in Lending Act makes the lender disclose an APR. Regulation Z, the rule that carries out that act, doesn't apply to credit extended primarily for a business, commercial or agricultural purpose. So a business loan offer may quote only an interest rate and a list of fees. The calculator's real rate turns those into one number you can line up against other offers. To see how a loan you already have compares with a new one, use the refinance calculator.

Sources#

• U.S. Small Business Administration, 7(a) loans
• U.S. Small Business Administration, 7(a) loan program: terms, conditions and eligibility
• Consumer Financial Protection Bureau, Regulation Z, 12 CFR 1026.3 Exempt transactions

Frequently asked questions#

Can the calculator tell me how much I can borrow?#

No. It works forward from the amount you enter and doesn't estimate what a lender will approve. Try a few amounts and keep the one whose payment your cash flow can cover. For SBA 7(a) loans, the maximum for most is $5 million (SBA Express loans top out at $500,000).

What is the monthly payment on a $50,000 business loan?#

At an example rate of 9%, a $50,000 business loan is $1,037.92 a month over 5 years, with $12,275.07 of interest, or $633.38 a month over 10 years, with $26,005.46 of interest.

What does Interest + Fee mean in the results?#

It's the total interest plus every fee you entered. In the example that's $52,010.93 of interest plus $4,000 of fees, $56,010.93. It's the full cost of borrowing on top of repaying the principal.

Why is the real rate higher than the interest rate?#

Because fees reduce the money you actually get without reducing the payments. The real rate finds the rate that matches what you receive to what you repay. With no fees it equals the interest rate, 9% in the example.

Does it work for SBA loans?#

Yes, for the payment on a fixed-rate SBA loan. Enter the amount, rate, term and any fees your lender charges. For a variable-rate loan, the SBA notes the lender may change the payment when the rate changes, so the calculator's figure is an estimate for the current rate.

Can I calculate weekly or daily payments?#

Yes. Set Pay back to every day, week, 2 weeks, half month, month, quarter, 6 months or year. The calculator works out the payment, the number of payments and the interest for that schedule.