Business Loan Calculator
Calculate monthly payments and total cost for a business or SBA loan.
What this calculator does
This business loan calculator turns a loan amount, interest rate, and term into the numbers that determine whether the borrowing is workable: the monthly payment, the total interest across the term, and the total cost of the loan. It also produces an amortization schedule showing how each payment splits between principal and interest.
The monthly payment answers whether you can service the debt. The total interest answers whether you should. Those are different questions, and a loan can comfortably pass the first while failing the second — which is the specific failure mode this calculator exists to make visible.
When to use it
Use it before you apply, not after you are approved. Working backward from a payment your cash flow can absorb tells you the loan size to request, which is a stronger negotiating position than accepting whatever the lender offers and hoping it fits.
It is also the right tool for comparing structurally different offers — an SBA loan at a lower rate over ten years against a conventional loan at a higher rate over five. The monthly payments may look similar while the total costs diverge by tens of thousands. And it is the tool for deciding not to borrow, by showing what the interest actually buys.
Understanding the inputs
Loan amount is the principal advanced. If origination or guarantee fees are being financed into the loan rather than paid up front, include them here — they accrue interest like any other principal.
Enter the annual interest rate as quoted. For a variable-rate SBA loan tied to prime, model the current rate and then run a scenario two points higher to see the payment you would face if rates move against you. Term is the repayment period in years; SBA 7(a) allows up to 10 years for working capital and 25 for real estate, while conventional term loans typically run three to seven.
How is this calculated?
Monthly Payment = P[r(1+r)^n]/[(1+r)^n-1]. Total Interest = (Monthly × n) − Principal.
A worked example
A business borrows $250,000 at 11 percent over 10 years. The monthly payment works out at roughly $3,444, total repayments come to about $413,000, and total interest is around $163,000 — nearly two-thirds of the amount borrowed, spread over a decade.
Compress the same loan into 5 years and the monthly payment rises to about $5,436, but total interest falls to roughly $76,000. The shorter term costs an extra $1,990 a month and saves around $87,000. Whether that trade is available depends entirely on whether the business can cover the higher payment in its weakest quarter, not its best one.
Limitations and assumptions
This models a fixed-rate, fully amortizing loan with level payments. It does not handle variable rates, interest-only periods, balloon payments, or the seasonal payment structures some lenders offer. If your offer includes any of those, the schedule here will diverge from your actual obligations.
It also excludes origination fees, SBA guarantee fees, appraisal and legal costs, and any prepayment penalty — which together often add one to three percent of the loan. Use this to compare scenarios and stress-test affordability, then rely on the lender's amortization schedule and fee disclosure for the binding numbers.
Common Questions
- What rates should I expect on a business loan?
- SBA 7(a) loans are priced at prime plus a capped spread, which has recently put variable rates in the low double digits. Conventional bank term loans for established businesses can be lower, while online lenders and merchant cash advances run considerably higher. Rate depends far more on time in business and cash flow than on the lender's advertised range.
- How is an SBA loan different from a regular bank loan?
- The SBA guarantees a portion of the loan, which lets banks lend to borrowers they would otherwise decline. That means longer terms — up to 10 years for working capital and 25 for real estate — and lower down payments, in exchange for more paperwork, a guarantee fee, and a slower approval process.
- Should I take a longer term to lower the payment?
- Only if the shorter payment genuinely does not fit your cash flow. A longer term reduces the monthly figure but increases total interest substantially, and it keeps a lien on your business for years longer. Run both terms above and compare the total interest column before deciding on affordability grounds alone.
- What does a lender look at besides the numbers?
- Debt service coverage ratio is usually the gate — most commercial lenders want net operating income at least 1.20 to 1.25 times annual debt service. Beyond that, expect scrutiny of personal credit, time in business, industry risk, collateral, and in nearly all small business cases a personal guarantee from the owners.
- Is a personal guarantee negotiable?
- Rarely for small businesses, and never for SBA loans, which require a guarantee from anyone owning 20 percent or more. What is sometimes negotiable is scope — a limited or capped guarantee, or one that falls away once the business hits agreed performance thresholds. Ask, but do not count on it.
- What fees are not in this calculation?
- Origination or packaging fees, SBA guarantee fees, appraisal and environmental reports on real estate, legal costs, and UCC filing fees. Together these can add one to three percent of the loan amount. Ask for the total cost of credit rather than just the rate when comparing offers.
- Can I pay a business loan off early?
- Often yes, but check for prepayment penalties. SBA loans with terms of 15 years or more carry a declining penalty in the first three years. Many conventional term loans allow prepayment freely, while short-term online products sometimes charge a fixed total repayment amount regardless of when you settle.
- Is it better to finance equipment separately?
- Frequently yes. Equipment finance is secured against the asset itself, which usually means a lower rate and less collateral pressure elsewhere in the business. Using a general working-capital loan to buy equipment ties up borrowing capacity you may want later for inventory or payroll.
- How much should my total debt service be?
- A common guideline is that total annual debt service should not exceed 70 to 80 percent of net operating income, giving a coverage ratio of 1.25 or better. Beyond that, a single slow quarter starts putting the loan at risk rather than merely making things uncomfortable.