May 26, 2021

Business Loan Calculator

Read more about Business

How much will your business loan payments be? Before applying, use this business loan calculator to see interest, total amount paid and amortization.

A business loan can open a lot of doors for your business. Think new equipment, day-to-day operation costs, and expansion.

But will you be able to make the payments?

With this business loan calculator, you'll know:

  1. How much your monthly payment will be
  2. How much you'll pay in total interest
  3. How much of your monthly payments go to interest vs. principal

Business Loan Calculator

Find out everything you need to know about business loans in this guide. Plus, review what fees you can expect to pay and popular business financing options to choose from.

How to Calculate a Business Loan

Before you apply for business loans, it helps to know what you're getting into. The calculator above breaks down your payment schedule and how much total interest you'll pay.

Here's how it works:

  1. First, enter your desired Loan Amount that you want to borrow.

  2. Next, add the Annual Interest Rate that the lender will charge on the loan.

    If you've shopped around with specific lenders, enter the rate you've been quoted. If you haven't started your search yet, enter between 3%-7%.

  3. Then, enter the Term of the loan in years. This is how long you'll be paying off the loan.

  4. Finally, you have the option to enter any Extra Payments. This is money that you can pay on top of the minimum payment.

    Try leaving this blank at first. That way, you can see how much your minimum payment ends up being and decide whether you'll be able to pay more.

Hit "Calculate" to see your Monthly Payment amount and the Total Months you'll be making the payment.

You'll also see your Total Payment amount displayed in a pie chart. This tells you how much of your payment total went toward the principal vs. the interest.

For more detail, check out the amortization table below the pie chart. This breaks down how each monthly payment is split between principal and interest.

Not liking the numbers you're seeing? Consider going back and adding extra payments. This not only shortens your payment schedule, but it also reduces the amount of interest paid each month. The less interest you pay = the more you pay on principal = the faster the loan is paid off.

Business Loan Fees

Like most loans, business loans come with several fees that you should be prepared for. Here's what you should know:

Fees Charged at the Beginning of the Loan

  • Origination fee: Lenders charge this for processing your loan application and to pay for any costs associated with verifying your info (like a background check). It is usually a percentage of the loan (1%-6%)

  • Packaging fee: Similar to an origination fee. SBA lenders and lending platforms will usually charge a packaging fee instead of an origination fee.

  • Referral fee: Loan "marketplaces" may charge this for referring your loan application to lenders.

  • SBA loan guarantee fee: The SBA charges this fee because they guarantee lenders that 70%-80% of the loan will be paid back, even if you default on the loan. This is between 2% and 4%.[1]

  • Underwriting fee: Lenders charge this to pay for the time and labor associated with underwriting your loan application.

Fees Charged Over the Life of the Loan

  • Service or processing fee: Lenders charge this to cover the cost of processing your payments and managing the loan. It can be charged monthly as a percentage of your monthly payment or yearly as a percentage of the total loan amount.

  • Non-sufficient funds fee: Charged if your loan payment doesn't go through. It's usually a flat fee, $15 - $40.

  • Late payment fee: Charged if your payment is made past the due date (or grace period). It can be a flat fee ($10 - $35) or a percentage of your outstanding balance (2%-5%).

  • Wire transfer fee: Lenders charge this if you make a payment via wire transfer. It's usually a flat fee, $10 - $25.

  • Prepayment fee: Some lenders charge this if you pay your loan off early because they lose out on your interest payments. Check any loan contract for mention of prepayment fees.

Hidden fees can pile up fast. Don't let your checking account be part of the problem. Find out which small business-friendly bank account is best for your business.

4 Main Types of Business Loans

The four business loans below represent the majority of financing that small businesses get. Review the details to see which works best for your business.

SBA Loan
An SBA loan is backed by the Small Business Administration, an agency of the U.S. Government.

Borrowers apply for an SBA loan with private lenders and are usually secured, meaning they require collateral. The three main types of SBA loans are:

  • 7(a) Loans: SBA's primary loan program; loan amounts are usually between $350K to $5M.
  • Microloans: Small loans, between $10K and $50K; these loans are ideal for startups who need a modest boost.
  • CDC/504 Loan: Long-term, fixed-rate financing for major fixed assets (i.e., equipment or real estate).

Business Line of Credit
Like a credit card, a business line of credit only requires you to pay interest on the amount of money you borrow, not your entire credit limit.

You use up and repay the borrowed money as needed. Business credit lines range from $1K to $250K and do not require collateral. They are offered by banks or online lenders.

Term Loan
Term loans are paid back in regular installments, also called terms. They are offered by banks and online lenders for amounts ranging from $25K to $500K in terms of 1-5 years.

These are generally easy to qualify for, as long as your business has decent credit and generates revenue.

A good credit score can open a lot of doors for a business. Find out how to build your business credit in our guide here.

Working Capital Loan
These are short-term business loans meant to finance day-to-day business operations, as opposed to major fixed assets like equipment or real estate.

Working capital loans are usually offered by big national banks and require an excellent credit history.

Average Interest Rate for a Business Loan
  • SBA Loan: 5%-11%
  • Business Line of Credit: 5%-20%
  • Traditional Bank Loan: 2%-13%
  • Online Lender Loan: 10%-99%
  • Working Capital Loan: 7%-99%

Bottom Line

Before applying for business loans, you'll want to be sure you can make the payments. Utilize a calculator like the one above to ensure that a loan fits into your business finances.

As always, a good business credit score and organized finances will increase your chances of being approved for a good, lower-interest loan. And don't be afraid to shop around for the best rates.

References

  1. ^ "Understanding SBA 7(a) Loan Fees": U.S. Small Business Administration, 2021.

Write to Holly Z at holly.zorbas@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Read Next:

Burn Rate Calculator

Burn Rate Calculator

Personal Loan Calculator

Personal Loan Calculator

How to Build Business Credit

How to Build Business Credit

Best Bank for Small Business

Best Bank for Small Business

Best Free Checking Accounts for Small Businesses

Free Business Checking

How to Get a Business Credit Card

How to Apply for a Business Credit Card


Business Credit Cards

Best Business Checking Account

Best Business Checking Account

Business Checking Account Promotions

Business Account Promotions

Professional Email Address

Professional Email Address

Sales Tax Calculator

Sales Tax Calculator

Profit Increase Calculator

Profit Increase Calculator

Business Startup Calculator

Business Startup Calculator

Leave a comment about Business Loan Calculator?



What are the Benefits of Credit Cards for Small Business?

With increasing demand from businesses, credit cards have become the "it" product for small business financing. The use of credit cards topped the list of financing sources for small businesses, according to a 2008 survey by the National Small ...

About CreditDonkey
CreditDonkey is a credit card comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.

About Us | Reviews | Deals | Tips | Privacy | Do Not Sell My Info | Terms | Contact Us
(888) 483-4925 | 680 East Colorado Blvd, 2nd Floor | Pasadena, CA 91101
© 2021 CreditDonkey Inc. All Rights Reserved.