Business Loan Calculator

Business loan calculator at a glance#

A business loan calculator works out the monthly payment on a business or small business loan from the amount you borrow, the annual interest rate, and the term in months. It uses the amortization formula M = P x [r(1 + r)^n] / [(1 + r)^n - 1], where P is the principal, r is the annual rate divided by 12, and n is the number of monthly payments.

For a $50,000 business loan at 8% over 5 years, r is 0.08 / 12 (about 0.006667) and n is 60 months, so the monthly payment is about $1,013.82. Over the full term you pay $60,829.18, which is $10,829.18 in interest on top of the $50,000 you borrowed.

The table uses the same $50,000 loan at 8% across common terms. A longer term lowers the monthly payment but raises the total interest you pay, so a 10 year term costs $606.64 a month but more than $22,000 in interest. Business loans also carry fees that the rate alone does not show: origination fees, packaging or underwriting fees, and sometimes a prepayment penalty. Add any fees rolled into the loan to P, since they raise the amount you finance.

Enter your loan amount, interest rate, and term in the calculator above for the exact monthly payment and total interest. Your real cost depends on the lender, your business credit, and the APR, so treat these figures as a fixed-rate estimate.

Fees on top of the rate#

The interest rate is not the whole cost of a business loan. Lenders often charge an origination or packaging fee, typically 1% to 6% of the loan, plus documentation or underwriting fees and sometimes a prepayment penalty. These are usually added to the principal, so include them in the loan amount you enter to see their effect on the payment and total cost. The APR captures these fees in one rate, which makes it the fairer figure for comparing lenders.

Choosing a term#

A shorter term means higher monthly payments but less total interest, while a longer term lowers the payment and raises the total interest. Match the term to your cash flow: pick a payment your revenue covers comfortably, but avoid stretching the loan longer than you need, since each extra year adds interest. The calculator above shows the payment and total interest for any term so you can weigh the two.

Where to borrow#

Banks often offer the lowest rates and larger amounts but apply stricter criteria and slower approval. Credit unions can be more personal and competitive on rate, though membership is required. Online lenders are usually faster and more flexible on credit, at the cost of higher rates. SBA loans, backed by the Small Business Administration, offer lower down payments and longer terms and can fund equipment, working capital, and expansion. Your credit, the amount you need, and how fast you need it point to which fits.

Frequently asked questions#

What fees come with a business loan?#

Common fees include origination, documentation, and underwriting charges, often 1% to 6% of the loan, plus possible prepayment penalties or late fees. Most are added to the principal, so factor them into the amount you finance.

How does my business credit score affect my options?#

Lenders use it to gauge risk, so a higher score earns lower rates and better terms. It matters most for bank and SBA loans; startups without a business credit history may be judged on the owner's personal credit too.

What is the difference between personal and business credit scores?#

A personal credit score reflects your own creditworthiness; a business credit score reflects the company's. Lenders may check both for small business loans, especially for newer businesses without an established business credit record.

How do I choose the right loan term?#

Base it on cash flow. A shorter term costs more per month but less in total interest; a longer term lowers the payment but raises total interest. Choose the shortest term whose payment your revenue covers comfortably.

Can SBA loans be used for equipment?#

Yes. SBA loans cover equipment, working capital, and expansion, and their lower down payments and longer terms make them a common choice for equipment purchases.

How do online lenders differ from banks?#

Online lenders are usually faster, more flexible on credit, and quicker to approve, while banks tend to offer lower rates and larger amounts with stricter criteria and slower processing.

What factors set my interest rate?#

Your personal and business credit, the loan term and amount, and your business's financial health, alongside prevailing market rates and the type of loan you apply for.