Business Loan Calculator
Calculate monthly payments and total cost for a business loan. See how loan amount, rate, and term affect your financing costs.
A $50,000 business loan at 9% over five years costs $1,038 a month and $12,275 in total interest — and the same loan at 13% costs $100 more every month and $5,984 more in interest.
Calculator
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How This Calculator Works
Business loan payments use the standard amortisation formula:
M = P × r × (1+r)^n / ((1+r)^n - 1)
Where P is the loan amount, r is the monthly rate, and n is the number of monthly payments.
Factors That Affect Business Loan Costs
Your actual rate depends on your business credit score, time in business, annual revenue, industry, and the type of loan. SBA loans typically have lower rates (6-9%) while merchant cash advances can exceed 40% APR.
Worked example
Using the defaults — a $50,000 loan at 9% over 5 years:
Monthly rate r = 9% ÷ 12 = 0.0075, n = 60 payments.
Compute the payment. (1.0075)^60 = 1.5657. The payment is $50,000 × 0.0075 × 1.5657 ÷ 0.5657 = $1,038 a month.
Total the repayment. $1,038 × 60 = $62,275. Interest paid is $62,275 − $50,000 = $12,275, or 24.6% of the principal over five years.
Price the rate you were offered. The same loan at 13% — typical of an online lender rather than a bank — costs $1,138 a month and $18,259 in interest. Four percentage points costs $100 a month and $5,984 over the term.
Check the payment against free cash flow. Lenders commonly cap monthly debt service at 80% to 90% of free cash flow. A $1,038 payment therefore implies roughly $1,150 to $1,300 of monthly free cash flow, or about $14,000 to $16,000 a year, before the loan is considered serviceable.
Enter 50000, 9 and 5 above to reproduce the $1,038 payment. The rate you are actually offered depends on business credit, time in business, revenue, industry and whether the loan is secured.
What the rate and the term actually cost
The same $50,000 at four rate levels and three terms. Rate differences cost more over five years than borrowers typically expect.
| Term | Rate | Monthly payment | Total interest | Total repaid |
|---|---|---|---|---|
| 5 years (default) | 9% | $1,038 | $12,275 | $62,275 |
| 5 years | 6% (SBA range) | $967 | $7,998 | $57,998 |
| 5 years | 13% (online lender) | $1,138 | $18,259 | $68,259 |
| 3 years | 9% | $1,590 | $7,240 | $57,240 |
| 7 years | 9% | $804 | $17,574 | $67,574 |
A shorter term raises the payment and lowers the interest; a longer term does the opposite. The gap between 6% and 13% on the same five-year loan is $171 a month and $10,261 of interest — which is why shopping the rate matters more than shopping the term.
Common mistakes with this calculation
- Comparing rate to rate across different products. A merchant cash advance quoted as a "factor rate" of 1.3 is not a 30% interest rate; annualised it is frequently above 40%. Compare APR to APR, and if a lender will not quote an APR, treat that as information about the product.
- Ignoring the personal guarantee. Most small business loans under $500,000 require a personal guarantee, which puts personal assets behind a business obligation. A business failure can therefore reach into your personal balance sheet. Understand exactly what you are signing.
- Borrowing for working capital without a cash-flow model. A loan used to cover a permanent operating deficit accelerates the failure rather than preventing it. Borrow to fund growth with a measurable return, or to bridge a known seasonal gap — not to plug a structural shortfall.
- Overlooking the fees and covenants. Origination fees, closing costs, annual maintenance fees and prepayment penalties all add to the cost. Financial covenants — minimum ratios, reporting requirements — can also constrain how you run the business. Read the facility agreement, not just the payment schedule.
When this calculator does not apply
- It assumes a fixed rate and a fixed payment schedule. Many business loans, credit lines and merchant advances do not work that way.
- It takes no account of origination fees, closing costs, guarantee fees or annual maintenance charges.
- It excludes tax treatment. Business loan interest is generally deductible, which reduces the effective cost.
- It does not model revenue-linked repayment structures, where the payment flexes with monthly card receipts.
- It ignores covenant requirements on financial ratios, which can affect what you are permitted to spend the money on.
Frequently Asked Questions
What is a typical business loan rate?
SBA loans range from 6-9%, traditional bank loans 6-13%, and online lenders 9-40%+ APR. Your rate depends on business credit, revenue, and time in business.
How much can I borrow for a business loan?
Loan amounts typically range from $5,000 to $5 million. Lenders usually cap monthly payments at 80-90% of your monthly free cash flow.
Sources & Methodology
This calculator uses standard financial formulas. See our methodology page for the full formula derivation.
- Small Business Lending and Loan Programs US Small Business Administration
- Truth in Lending Act — Regulation Z Consumer Financial Protection Bureau
- Small Business Credit Survey Federal Reserve Banks
- Small Business Financial Management US Small Business Administration
- Small Business Facts SBA Office of Advocacy
Last reviewed .
Key takeaways
- $50,000 at 9% over five years is $1,038 a month and $12,275 of interest.
- The same loan at 13% costs $100 more a month and $5,984 more over the term.
- A $1,038 payment implies roughly $1,150 to $1,300 of monthly free cash flow by typical underwriting standards.
- Compare APR to APR. A factor rate is not an interest rate.
- Most small business loans carry a personal guarantee. The risk extends beyond the business.