Plan financing for your business by estimating the monthly payment and full cost of a fixed-rate business loan.
How the Business Loan Calculator works
placeholderExample calculation
placeholderTips for using the Business Loan Calculator
- Convert every offer to an APR before comparing. A merchant cash advance quoted as a 1.4 factor rate is not a 40% loan - swept up over six months it is an effective APR north of 70%. Never compare a factor rate to a bank APR as if they were the same number.
- Watch for fees stacked on top of the rate. SBA 7(a) loans carry a guarantee fee on the guaranteed portion, and many lenders add packaging or origination fees. Roll these into principal in the calculator so the payment reflects the true cost, not the headline rate.
- Match the loan term to the asset's life, not to the lowest payment. Finance a 7-year machine over 7 years, not 10 - paying interest after the equipment is worn out destroys your return on it.
- Treat business loan interest as a deductible business expense, not a personal write-off. Unlike a mortgage, there is no itemized personal deduction here; the interest reduces taxable business income, which lowers the real after-tax cost of borrowing. Confirm specifics with your accountant.
- Decode variable pricing as prime plus a spread. A loan priced at prime + 2.75% repriced every time the prime rate moves. Stress-test your payment 2-3 points higher than today's rate before you commit to a variable-rate term loan or line.
- Use a line of credit for recurring cash-flow gaps and a term loan for one-time purchases. Paying interest on a 10-year term loan for inventory you sell in 60 days is a structural mistake.
- Read the personal guarantee before you sign. Most small-business loans, including SBA loans, require any owner with a meaningful stake to personally guarantee repayment - meaning your personal assets are on the hook if the business cannot pay, LLC or not.
- Build business credit deliberately so you qualify for cheaper money next time. Get an EIN, open trade accounts under the business name, separate business and personal finances, and pay early - a stronger business credit profile shrinks the spread lenders add over prime.
- Avoid invoice-factoring math traps: a 2% discount fee per 30 days on receivables is roughly a 24%+ annualized cost, even though 2% sounds small. Annualize the per-period fee before deciding to factor.
- Make extra principal payments when allowed - but read for prepayment penalties first. Some SBA 7(a) loans with terms of 15 years or more carry a declining prepayment penalty in the early years.
SBA 7(a) vs SBA 504 vs a bank term loan: which structure fits
SBA 7(a) loans are flexible general-purpose loans, 504 loans are for fixed assets like real estate and heavy equipment, and a conventional bank term loan is faster but usually pricier for newer businesses. The right choice depends on what you are buying and how strong your business and personal credit are.
A 7(a) loan can fund working capital, inventory, refinancing, or a business acquisition, and is partially guaranteed by the SBA, which lets banks lend to businesses they would otherwise decline. A 504 loan pairs a bank loan with a Certified Development Company (CDC) loan specifically to buy or build long-lived fixed assets, often at a fixed rate on the CDC portion. A plain bank term loan has no government guarantee, so approval leans hard on your revenue, time in business, and credit.
| Feature | SBA 7(a) | SBA 504 | Bank term loan |
|---|---|---|---|
| Best for | Working capital, acquisition, refinance | Real estate, heavy equipment | General purpose |
| Typical term | Up to 10 yr (25 yr for real estate) | 10, 20, or 25 yr | 1-7 yr |
| Rate type | Often variable (prime + spread) | Often fixed (CDC portion) | Fixed or variable |
| Government guarantee | Yes (partial) | Yes (via CDC portion) | No |
| Speed | Slower (more paperwork) | Slower | Faster |
Whatever the label, the monthly math is identical - it is the amortization formula above. Use the loan affordability calculator to back into how much your cash flow can actually carry before you apply, then price the structure here.
Term loan vs line of credit vs equipment financing vs invoice factoring
Each product solves a different cash-flow problem, and using the wrong one is one of the costliest mistakes a small business makes. A term loan gives you a lump sum repaid on a fixed schedule. A line of credit lets you draw, repay, and redraw - you pay interest only on what is outstanding. Equipment financing uses the asset itself as collateral, so rates run lower. Invoice factoring sells your unpaid receivables at a discount for immediate cash.
- Term loan - best for one-time investments: an acquisition, a buildout, a large inventory buy you will hold a while. This calculator prices it directly.
- Line of credit - best for seasonal gaps and recurring shortfalls. Interest accrues on the drawn balance only, so disciplined draw-and-repay use can cost far less than a term loan for the same dollars.
- Equipment financing - best for machinery, vehicles, and tech, since the gear secures the loan and lowers your rate; the term should track the equipment's useful life.
- Invoice factoring - fastest cash from receivables, but the per-period discount fee, annualized, is expensive; treat it as a short bridge, not a funding strategy.
Merchant cash advances sit in their own category - priced on a factor rate rather than an APR - and are covered in the next section.
Factor rates and merchant cash advances: why they are so expensive
A merchant cash advance does not charge interest - it charges a factor rate, a flat multiplier on the advance, and that multiplier hides an effective APR that often exceeds 70%. If you take a $50,000 advance at a 1.4 factor rate, you repay $50,000 x 1.4 = $70,000, a $20,000 cost, regardless of how fast you pay it back.
The trap is the timeline. That $20,000 cost is 40% of the advance, but if the funder collects it through daily debits over roughly six months, you are paying 40% in half a year - an effective annual rate well over 70%. The faster the payback, the higher the true APR, because the dollar cost is fixed even as the time shrinks. There is no early-payoff discount.
| Factor rate | $50,000 advance repays | Dollar cost | Cost as % of advance |
|---|---|---|---|
| 1.2 | $60,000 | $10,000 | 20% |
| 1.3 | $65,000 | $15,000 | 30% |
| 1.4 | $70,000 | $20,000 | 40% |
| 1.5 | $75,000 | $25,000 | 50% |
Before accepting any advance, divide the dollar cost by the advance, then annualize it over the real payback window. Compare that to a term-loan APR in this calculator. Almost always, a slower SBA or bank loan is dramatically cheaper.
Common mistakes business borrowers make
The most expensive business-loan errors come from comparing the wrong numbers and ignoring fees.
- Comparing a factor rate to an APR. A 1.3 factor rate is not 30% APR - annualized over a short payback it is often double that. Always convert to APR first.
- Ignoring origination, packaging, and guarantee fees. A 10% rate with a 4% fee financed in is not a 10% deal. Add fees to principal before you price the payment.
- Treating a variable rate as fixed. Prime + 2.75% rises every time prime rises. Budget for higher payments, not just today's.
- Mismatching term to purpose. Financing short-life inventory on a multi-year term, or stretching equipment past its useful life, both bleed interest.
- Overlooking the personal guarantee. Signing one puts your personal assets at risk even behind an LLC; many owners do not read it.
- Borrowing the maximum offered instead of what cash flow supports. Check your coverage with the DTI calculator and confirm the borrowed money clears your hurdle with the ROI calculator before deciding how much to take.
How to do it by hand or in Excel
You can reproduce this calculator with one spreadsheet function. In Excel or Google Sheets, the payment formula is:
=PMT(rate/12, years*12, -loan_amount)
For Example 1 - $150,000 at 11.5% over 10 years - type =PMT(0.115/12, 120, -150000) and you get $2,108.93. The loan amount is entered as a negative because it is cash you receive; PMT then returns a positive payment.
To break a single payment into principal and interest, use =IPMT(rate/12, period, nper, -loan_amount) for the interest portion of any given month and =PPMT(...) for the principal portion - useful for proving how much interest you can deduct as a business expense in a given tax year. To find total interest over the whole loan, compute =PMT(...)*nper + loan_amount (the payment times the number of payments, plus the original negative principal, leaves the interest).
By hand, convert the rate to monthly (APR / 12), raise (1 + i) to the n-th power, and plug into Monthly payment = P x [ i(1 + i)n ] / [ (1 + i)n - 1 ]. The general loan calculator uses the exact same engine if you want a quick cross-check.
Is this a good business loan rate? Benchmarks to judge an offer
A fair small-business rate depends heavily on the product, your time in business, revenue, and credit - but you can sanity-check any offer against a few reference ranges. Secured, government-backed, and asset-based loans price lowest; unsecured short-term and cash-advance products price highest.
| Product | Rough rate range | What pushes it down |
|---|---|---|
| SBA 504 (fixed-asset) | Lower end | Real-estate collateral, strong credit |
| Equipment financing | Low to mid | The equipment secures the loan |
| SBA 7(a) | Low to mid (prime + spread) | Government guarantee |
| Bank term loan | Mid | 2+ years in business, solid revenue |
| Online/short-term loan | High | Speed and weak credit raise it |
| Merchant cash advance | Very high (70%+ effective APR) | Almost nothing - avoid if possible |
Rates move with the prime rate, so exact numbers shift over time. The reliable rule: the more collateral you pledge and the stronger your business credit, the tighter the spread you are quoted. If two offers look close, the one with lower fees and no prepayment penalty usually wins - check the math against a balloon loan calculator if either offer has a lump-sum payoff at the end.
The personal guarantee, business credit, and tax treatment
Three things separate a business loan from a consumer loan: a personal guarantee usually backs it, building business credit lowers your future rates, and the interest is generally a deductible business expense rather than a personal write-off.
A personal guarantee means that if the business defaults, the lender can pursue your personal assets - even when the borrower is an LLC or corporation. Almost all SBA loans and most bank loans to small businesses require one from any owner with a meaningful stake. Know exactly what you are signing before you commit.
Business credit is built deliberately: get an EIN, open accounts and trade lines in the business name, separate business and personal finances, and pay on time or early. A stronger business credit profile is what eventually shrinks the spread lenders add over prime - the gap between prime + 4% and prime + 2% on a large balance is real money over a multi-year term.
On taxes, business loan interest is generally deductible as an ordinary business expense, which reduces your taxable business income. That is different from most consumer loans, where interest is not deductible at all. Because the deduction lowers your effective cost of borrowing, factor it in when you compare debt to paying cash - but confirm the specifics with your accountant, since limits and rules change.
Business loan quick-reference: monthly payment and total interest by amount, rate, and term
Use this table to compare typical small-business financing scenarios at a glance. Each row recomputes the fixed monthly payment with standard amortization and shows total interest over the full term; fees such as origination, packaging, and SBA guarantee charges are separate and not included. Remember business loan interest is generally a deductible expense, lowering your after-tax cost.
| Loan amount | Rate | Term | Monthly payment | Total interest | Typical use |
|---|---|---|---|---|---|
| $50,000 | 13% | 5 yr | $1,137.65 | $18,259 | Term loan / working capital |
| $75,000 | 10% | 7 yr | $1,245.09 | $29,587 | General term loan |
| $100,000 | 10.25% (prime+2.75) | 5 yr | $2,137.03 | $28,222 | Variable-rate term loan |
| $120,000 | 11% | 7 yr | $2,054.69 | $52,594 | Expansion (personal guarantee) |
| $150,000 | 8.5% | 6 yr | $2,666.76 | $42,007 | Equipment financing |
| $250,000 | 11.5% | 10 yr | $3,514.89 | $171,786 | SBA 7(a) |
| $300,000 | 6.5% | 25 yr | $2,025.62 | $307,686 | SBA 504 (real estate) |
| $500,000 | 6.5% | 25 yr | $3,376.04 | $512,811 | SBA 504 (property) |
| $50,000 MCA | 1.4 factor | flat | n/a (daily sweeps) | $20,000 flat cost | Merchant cash advance (avoid) |
The merchant cash advance row shows why factor rates are expensive: a 1.4 factor on $50,000 means repaying $70,000 regardless of how fast you pay, so the effective annualized cost often exceeds 70%.
Related on this site
General loan payment calculator · Break-even calculator · Debt-to-income ratio calculator · ROI calculator · Balloon loan calculator · Loan affordability calculator
For a related deep dive, see U.S. Small Business Administration loans.
Business Loan Calculator — frequently asked questions
- Are fees included?
- No — origination, packaging and guarantee fees are charged separately by lenders.
- Fixed or variable?
- This assumes a fixed rate. Variable-rate loans change with the market index.
- Are SBA loans cheaper?
- SBA-backed loans often have lower rates and longer terms but more paperwork and fees.
- Fixed or variable rate?
- This assumes fixed. Variable rates can start lower but rise with the market.
- How much does a $250,000 SBA 7(a) loan cost at 11.5% over 10 years?
- A <strong>$250,000</strong> SBA 7(a) loan at <strong>11.5%</strong> over 10 years runs about <strong>$3,514.89 a month</strong> and roughly <strong>$171,786</strong> in total interest. SBA 7(a) pricing is usually variable as prime plus a spread, so the rate can move and change that payment. The SBA guarantee fee is charged separately on the guaranteed portion and is not in this payment. Run your own figures in the <a href="/business-loan-calculator/">business loan calculator</a>.
- What is the monthly payment on a $50,000 business term loan at 13% for 5 years?
- A <strong>$50,000</strong> term loan at <strong>13%</strong> over 5 years costs about <strong>$1,137.65 a month</strong>, with total interest near <strong>$18,259</strong> and total repaid of roughly $68,259. Online and short-term lenders price higher than banks because they fund faster with less paperwork. The interest is generally a deductible business expense, which lowers the after-tax cost.
- Is an SBA 504 loan worth it for a $500,000 property at 6.5% over 25 years?
- Yes - for owner-occupied real estate an SBA 504 is usually worth it because the long term and low rate keep the monthly outlay low. A <strong>$500,000</strong> 504 loan at <strong>6.5%</strong> over 25 years is about <strong>$3,376.04 a month</strong>. Total interest reaches roughly <strong>$512,811</strong> over the full term, but the small monthly payment protects cash flow. 504 loans are for fixed assets, not working capital.
- How much does a $150,000 equipment loan at 8.5% over 6 years cost?
- A <strong>$150,000</strong> equipment loan at <strong>8.5%</strong> over 6 years costs about <strong>$2,666.76 a month</strong> and roughly <strong>$42,007</strong> in total interest. Equipment financing is often cheaper than a general term loan because the equipment itself is collateral, lowering lender risk. Match the loan term to the useful life of the machine so you are not paying for gear after it wears out.
- How do I calculate a business loan payment in Excel?
- Use Excel's <strong>PMT</strong> function: <code>=PMT(rate/12, years*12, -amount)</code>. For an <strong>$80,000</strong> loan at <strong>12.5%</strong> over 6 years, enter <code>=PMT(0.125/12, 72, -80000)</code>, which returns about <strong>$1,584.89</strong> a month. Keep the principal negative so the result shows positive. For total interest, multiply the payment by 72 and subtract $80,000, giving roughly $34,112.
- How much will a merchant cash advance with a 1.4 factor rate cost on $50,000?
- A <strong>$50,000</strong> merchant cash advance at a <strong>1.4 factor rate</strong> means you repay <strong>$70,000</strong> total - a flat <strong>$20,000</strong> cost. Factor rates are not interest rates and do not drop if you pay early, so an MCA swept up in a few months can carry an effective annualized cost well above 70%. Treat MCAs as last-resort financing and compare against a <a href="/loan-calculator/">term loan</a>.
- What does prime plus 2.75% mean on a business loan, and what would I pay on $100,000?
- Prime plus 2.75% means your rate equals the current prime rate plus a <strong>2.75</strong> percentage-point spread set by the lender. If prime is 7.5%, your rate is <strong>10.25%</strong>. A <strong>$100,000</strong> loan at 10.25% over 5 years costs about <strong>$2,137.03 a month</strong> and roughly <strong>$28,222</strong> in interest. Because prime floats, your payment can rise or fall when the index changes.
- Term loan vs business line of credit - which is cheaper for $30,000?
- A term loan is usually cheaper if you need all $30,000 at once and repay over a fixed schedule; a line of credit is cheaper if you borrow in pieces and repay fast. A <strong>$30,000</strong> term loan at <strong>14%</strong> over 3 years is about <strong>$1,025.33 a month</strong> and roughly <strong>$6,912</strong> in interest. A line only charges interest on the drawn balance, so light, short-term use can cost far less.
- Is the interest on a business loan tax deductible?
- Yes - interest on a loan used for legitimate business purposes is generally a deductible business expense, unlike most consumer loan interest. On <strong>$15,000</strong> of annual business loan interest, the deduction is worth about <strong>$3,150</strong> at a 21% rate or roughly <strong>$3,600</strong> at 24%. The deduction lowers your after-tax cost but does not reduce the cash payment itself. Confirm eligibility with your accountant.
- What is the SBA guarantee fee on a $400,000 7(a) loan?
- The SBA charges a guarantee fee on the guaranteed portion, not the whole loan; for a <strong>$400,000</strong> 7(a) loan with a 75% guaranty, that portion is <strong>$300,000</strong>. At a 3% fee tier that is about <strong>$9,000</strong>, charged separately from your monthly payment. This fee is on top of any lender packaging or origination charges, so build it into your true cost when comparing offers.
- SBA 504 vs SBA 7(a) for $300,000 - which costs less?
- For long-term real estate or equipment, a 504 usually costs less per month; for working capital or mixed uses, the 7(a) is more flexible. A <strong>$300,000</strong> 504 at <strong>6.5%</strong> over 25 years is about <strong>$2,025.62 a month</strong> ($307,686 total interest). The same amount as a 7(a) at <strong>11%</strong> over 10 years is about <strong>$4,132.50 a month</strong> but only $195,900 total interest, because the shorter term pays off faster.
- How much more would my payment be if a variable business loan rate rose 2 points on $200,000?
- About <strong>$206.67 more a month</strong>. A <strong>$200,000</strong> loan over 7 years costs roughly <strong>$3,217.82 a month at 9%</strong>; if the variable rate climbs to <strong>11%</strong>, the payment jumps to about <strong>$3,424.49</strong>. That is why variable, prime-linked pricing carries risk: a starting rate that looks low can erode your cash flow if the index rises. Stress-test rate increases before signing.
- Does a personal guarantee mean I am personally liable for my business loan?
- Yes - a personal guarantee makes you personally responsible for repaying the loan if the business cannot, even if the business is an LLC or corporation. Most small-business and SBA loans require one, so a default can put your personal assets at risk. It does not change the monthly payment but raises the stakes; on a <strong>$120,000</strong> loan at <strong>11%</strong> over 7 years (about <strong>$2,054.69</strong> a month), you guarantee every dollar.
- How does a business loan help build business credit?
- A business loan builds business credit when the lender reports your on-time payments to commercial bureaus under your EIN rather than your Social Security number. Consistent payments on, say, a <strong>$60,000</strong> equipment loan at <strong>7.9%</strong> over 5 years (about <strong>$1,213.71</strong> a month) establish a track record that can unlock larger limits and lower rates later. Confirm the lender reports to business bureaus before assuming it counts.
- Is a $40,000 short-term business loan at 15% a good deal?
- It depends on use; at <strong>15%</strong> a <strong>$40,000</strong> loan over 4 years costs about <strong>$1,113.23 a month</strong> and roughly <strong>$13,435</strong> in interest. That is acceptable for revenue-generating needs you cannot fund cheaper, but pricey for routine expenses. It is still far better than a merchant cash advance, where a 1.35 factor on $40,000 would cost a flat $14,000 with no early-payoff savings. Compare options in the <a href="/business-loan-calculator/">calculator</a>.
Guides & articles
- The Personal Guarantee on a Business Loan: What You Are Really Signing
- How to Compare Business Loan Offers: APR, Factor Rates, and True Cost
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