Business Loan Calculator

Estimate the payment on a small business term loan from the loan amount, interest rate, term and payment frequency. Many business lenders collect weekly or every business day and deduct an origination fee up front, so the calculator shows the cash you actually receive, the APR including the fee and the monthly equivalent of frequent payments.

$
%
The yearly interest rate on the loan, not a factor rate.
Daily assumes about 252 business days a year (21 a month).
%
Usually deducted from the money you receive.
Monthly payment$2,124.7060 payments over 60 months
APR (includes the fee)
11.32%
Cash you receive
$97,000.00
Origination fee
$3,000.00
Total interest
$27,482.30
Total cost of borrowing
$30,482.30
Total of payments
$127,482.30
Amortization schedule
YearPaymentPrincipalInterestBalance
1$25,496.40$16,226.77$9,269.63$83,773.23
2$25,496.40$17,925.92$7,570.48$65,847.31
3$25,496.40$19,802.99$5,693.41$46,044.32
4$25,496.40$21,876.63$3,619.77$24,167.69
5$25,496.70$24,167.69$1,329.01$0.00

How the payment and APR are calculated

Payment = loan amount × r ÷ (1 − (1 + r)−n), where r = annual rate ÷ payments per year and n = payments per year × years

APR = the yearly rate at which your payments repay the cash you receive (loan amount − origination fee)

Payments per year are 12 (monthly), 26 (every two weeks), 52 (weekly) or about 252 (each business day). The payment is rounded to the cent and the last payment absorbs the rounding.

Example

A $100,000 business loan at 10% for 5 years with a 3% origination fee costs $2,124.70 a month. The fee is $3,000, so you receive $97,000. Interest totals $27,482.30, and with the fee the APR is 11.32%.

Paid weekly, the same loan is $489.11 a week (about $2,119.48 a month) with $27,168.82 of interest. Over 3 years the monthly payment is $3,226.72 and the APR rises to 12.11%. Over 12 months it is $8,791.59 a month, or $417.08 every business day, and the APR is 15.80% monthly or 16.21% daily, because the same $3,000 fee is spread over a shorter loan.

Comparing business loan offers

Compare offers by APR and total cost, not by the interest rate or payment alone. An up-front fee costs more the shorter the loan, and frequent payments start repaying principal sooner, which raises the APR slightly. Some short-term lenders quote a factor rate (for example 1.2 × the amount) instead of an interest rate; that is not an annual rate, so ask for the APR or compare the total of payments. For a government-guaranteed loan with terms up to 25 years, use the SBA 7(a) loan calculator, which adds the SBA guaranty fee. Financing equipment? The equipment lease vs. loan calculator compares leasing it with buying it on a loan.

Frequently asked questions

What is a typical business loan term?

Bank and online term loans usually run from 6 months to 10 years. Equipment and SBA loans can be longer, and short-term online loans are often 6 to 18 months with weekly or daily payments.

Why is the APR higher than the interest rate?

The origination fee is usually deducted from the loan, so you receive less than you repay interest on. The APR spreads that fee over the term; the shorter the loan, the more the fee adds to the APR.

Are daily or weekly payments cheaper?

At the same interest rate, more frequent payments reduce the balance a little sooner, so total interest is slightly lower. They are debited automatically, though, so make sure your cash flow can cover every withdrawal.

What is a factor rate?

A factor rate is a multiplier, such as 1.25, applied to the amount borrowed to get the total you repay. It is not an annual interest rate and can mean a high APR on a short loan, so convert offers to APR or compare the total of payments.

Sources

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PmtCalc provides estimates for education and planning only. Results are not an offer of credit, a loan approval, or financial, tax or legal advice. Actual terms depend on the lender and your situation. How we calculate and test these results.