Business Loan Calculator

What this business loan calculator does

Financing is a tool for growth, but only if you understand its true cost. This calculator models a standard business term loan — a lump sum repaid in fixed monthly installments — and returns your payment, the total interest over the life of the loan, and a full amortization schedule splitting each payment into principal and interest. Seeing those numbers before you sign helps you judge whether the financing will pay for itself, and how it will sit against your monthly cash flow.

The same dollar amount can be priced and structured in very different ways depending on the product, the lender, and your business's standing. The sections below explain the main loan types, how lenders decide what to offer you, and one pricing trap — the factor rate — that catches many small-business owners off guard.

How to use this calculator

Enter the loan amount (the principal you are borrowing), the APR your lender quoted, and the term in years. The result is a fixed monthly payment, total interest, and a downloadable schedule. An optional extra-payment field lets you test paying the loan down faster. Use it to compare offers side by side, since two loans with similar payments can carry very different total costs once the term and rate differ.

How the payment is calculated

A term loan is fully amortizing, so the payment comes from the standard formula M = P · r / (1 − (1 + r)^−n), where P is the amount borrowed, r is the monthly rate (APR ÷ 12), and n is the number of monthly payments. Each month interest is charged on the outstanding balance and paid first, with the remainder reducing principal. Early payments lean heavily toward interest and later ones toward principal, which is why retiring a loan early — or choosing a shorter term — saves a disproportionate amount of interest.

Term loan vs line of credit vs SBA loans

Three products cover most small-business borrowing, and each suits a different need. A term loan gives you a lump sum up front and a fixed repayment schedule — ideal for a one-time investment like equipment or a buildout. A business line of credit is revolving: you draw what you need up to a limit, pay interest only on what you use, and reuse it as you repay — built for fluctuating working-capital needs rather than a single purchase. SBA-type loans are term loans partially guaranteed by a government agency, which lets lenders offer longer terms and competitive rates to businesses that might not qualify for conventional financing, in exchange for more paperwork and a slower process.

Secured vs unsecured, and how lenders assess you

A secured loan is backed by collateral — equipment, inventory, receivables, or real estate — that the lender can claim if you default, which usually means a lower rate. An unsecured loan has no specific collateral but almost always requires a personal guarantee, meaning you are personally on the hook even though the business borrowed. When deciding what to offer, lenders typically weigh your business's revenue and cash flow, your time in business (longer track records are less risky), and both business and personal credit. Strengthening any of these before you apply tends to improve the rate and the term you are offered.

A worked example

Suppose you borrow $100,000 at a hypothetical 9% APR. On a five-year term the payment is about $2,076 and total interest comes to roughly $24,560. On a three-year term the payment rises to about $3,180, but total interest drops to around $14,470. The shorter term costs more each month yet saves over $10,000 — money that stays in the business.

Factor rate vs APR — the merchant cash advance trap

Some fast-funding products, especially merchant cash advances, quote a factor rate rather than an APR. A factor rate is a multiplier — borrow $50,000 at a factor rate of 1.3 and you repay $65,000 regardless of how quickly you pay it back. That can look modest, but because the repayment period is often only a few months and the fee does not shrink as you pay down the balance, the effective APR can run into the high double or even triple digits. The shorter the repayment window, the more punishing the true rate. Whenever a lender quotes a factor rate, convert the total cost into an APR before comparing it with a term loan, or you risk vastly underestimating what the money costs.

Tips and common mistakes

• Always compare on APR. Factor rates, fees and short terms hide the real cost — APR makes offers comparable.
• Don't over-borrow. You pay interest on every dollar, so size the loan to the need.
• Mind the personal guarantee. An unsecured business loan can still reach your personal assets.
• Match term to asset life. Long terms on short-lived purchases trap you in payments past the payoff.
• Read for prepayment penalties. Some loans charge to pay off early; confirm before counting on it.