Business Loan Calculator

Before taking on business financing, you need to know the full cost — not just the monthly payment. This calculator shows your payment schedule, total interest cost, and effective APR for any business loan or line of credit.

How to Use This Calculator

1. Enter the loan amount.
2. Enter the annual interest rate (or APR including fees).
3. Enter the loan term in months.
4. Enter any origination fees (to calculate true APR).
5. Click Calculate to see monthly payment, total cost, and effective APR.

Types of Business Loans

• SBA loans: Government-backed, low rates (Prime + 2.25%–4.75%), up to 25 years. Best terms available — but slow approval (2–3 months).
• Term loans: Fixed amount, fixed schedule, 1–10 years. For equipment, expansion, or working capital.
• Business lines of credit: Revolving credit, use as needed, pay interest only on drawn amount.
• Equipment financing: Equipment serves as collateral, often 100% financing, 2–7 year terms.
• Invoice factoring: Sell unpaid invoices for immediate cash (fees of 1%–5% per month — extremely high effective rate).

Example Calculation

SBA 7(a) loan: $250,000 | Rate: 10.5% | Term: 10 years (120 months) | Origination fee: $5,000

• Monthly payment: ≈ $3,367
• Total paid: $404,040 | Interest: $154,040
• Effective APR with fees: ≈ 10.92%

Common Mistakes to Avoid

• Borrowing for lifestyle expenses, not investment — Business debt should generate returns exceeding its cost. A loan at 10% makes sense for an investment returning 25%+; not for general overhead.
• Signing a merchant cash advance (MCA) — MCAs have effective APRs of 40%–350%. They are almost never a good deal. Explore all alternatives first.
• Not comparing business vs. personal loan for small amounts — For under $50,000, a personal loan at a lower rate may be cheaper than most business loan products.
• Ignoring prepayment penalties — Some business loans (especially SBA) have prepayment penalties in the first few years. Factor this into your plan.

Frequently Asked Questions

What credit score do I need for a business loan?

SBA loans: typically 680+ personal credit, 2+ years in business, $100k+ annual revenue. Online lenders: as low as 550 with 6 months in business — but at much higher rates.

How is business loan APR different from interest rate?

APR includes the interest rate plus fees (origination, closing, packaging fees). Always compare APR — a "low rate" with high fees may be more expensive than a "higher rate" with no fees.

Should I use business debt or equity to finance growth?

Debt preserves ownership but requires consistent repayment regardless of performance. Equity (investors) shares risk but dilutes ownership. Most businesses use a mix; debt is generally preferred if cash flow supports repayment reliably.

Conclusion

Business financing is a powerful growth tool — when used strategically. Always calculate the total cost, compare multiple lenders, and ensure the borrowed capital generates returns that exceed the interest cost.

Related: Personal Loan Calculator | Loan Calculator | ROI Calculator | Payback Period Calculator