Business Loan Calculator

What this calculator is for

Before you take on a business loan, there is one number you really want to know: what it costs you every month. That figure decides whether the loan sits comfortably inside your cash flow or quietly strangles it. This calculator gives you that number, along with the total interest you will pay over the life of the loan.

You tell it how much you want to borrow, the annual interest rate, and how many years you have to pay it back. It gives you the monthly payment and the total interest. That is the honest starting point for any borrowing decision: can the business afford this, month in and month out, for the whole term?

The three things that set your payment

Your monthly payment is decided by three inputs, and it helps to know how each one pulls.

The loan amount is the obvious one: borrow more, pay more. The interest rate is the price the lender charges for the money, and it scales the whole thing up. The term, how many years you take to repay, is the one people underestimate. A longer term shrinks the monthly payment, which feels good, but it stretches the interest out over more years, so you pay more in total. A shorter term does the reverse: a heavier monthly bill, but far less interest by the end.

Under the hood the calculator uses the standard loan payment formula, the same maths that runs behind a mortgage or a car loan. It works out the monthly interest rate, spreads the loan across all the monthly payments in your term, and finds the fixed payment that clears the balance exactly on the last month.

A worked example: borrowing $100,000

Say your business borrows 100,000 at 8% for 5 years. Run it through and the monthly payment comes to $2,027.64.

Over the full five years that adds up to about $121,658 paid in total, of which $21,658 is interest. So the price of borrowing that 100,000 for five years, at that rate, is roughly 21,658 on top. Knowing that before you sign is the difference between a planned cost and an unpleasant surprise.

Try nudging the term. Stretch the same loan to a longer repayment and the monthly payment drops, which eases the pressure now, but the total interest climbs. That trade, breathing room today against more interest overall, is the central decision in almost every business loan.

The rate is not the whole cost

Here is something worth carrying into any loan conversation. The interest rate you are quoted is rarely the full story of what a business loan costs, because many carry fees on top: origination fees, packaging fees, and so on. Two loans with the same rate can cost very different amounts once the fees are in.

The number that folds those fees in and lets you compare loans fairly is the APR, the annual percentage rate. Lenders in the US are required to disclose it precisely so you can line up one offer against another, and the CFPB's own advice is blunt: compare APR to APR, not rate to rate. If your offer comes with fees, our APR calculator will show you the true annual cost. And watch out for short-term business financing quoted as a "factor rate," a small-looking number like 1.2 that translates into a much higher APR than it appears. If you want to test how quickly the loan clears with extra payments, the loan payoff calculator is built for that.

How to use it

• Loan Amount. How much you want to borrow, in dollars.
• Annual Interest Rate. The yearly rate as a percentage, so enter 8, not 0.08.
• Repayment Period. How many years you have to pay it back, from 1 to 25.
• Purpose of Loan. Pick the reason that fits your situation. This is here to frame the loan for your own records; the payment maths is driven by the amount, rate, and term above.

Press Calculate for your monthly payment and total interest. Press Reset to clear the fields.

Questions people ask

How much will the loan cost me in total?

Add the monthly payment across every month of the term to get the total paid, and subtract the amount you borrowed to get the total interest. In the example above, a 100,000 loan at 8% over 5 years costs about 121,658 in total, roughly 21,658 of it interest.

Should I choose a longer or shorter term?

A longer term lowers your monthly payment but raises the total interest, because you borrow the money for more years. A shorter term costs more each month but less overall. Pick the shortest term whose monthly payment your cash flow can comfortably carry.

Is the interest rate the same as the APR?

Not if the loan has fees. The interest rate is just the cost of the borrowed money, while the APR folds in fees to show the true annual cost. When comparing loan offers, compare APRs, since a low rate with high fees can cost more than a higher rate with none.

References

Background on business loan programs and terms follows the U.S. Small Business Administration. The point that the interest rate and the APR are not the same, and that fees make the APR the number to compare, follows the U.S. Consumer Financial Protection Bureau.

1. U.S. Small Business Administration. Loans. sba.gov
2. Consumer Financial Protection Bureau. What is the difference between a loan interest rate and the APR? consumerfinance.gov