Business Loan Calculator
Calculate business loan payments including origination fees.
See your monthly payment, total interest, and effective cost of borrowing.
Business loan payments use the same amortization formula as any installment loan. However, business loan evaluation involves additional metrics: total interest cost, APR vs. factor rate, and the effective cost of capital.
Monthly Payment Formula:
M = P × [r(1+r)^n] / [(1+r)^n − 1]
- P = Loan principal
- r = Monthly interest rate (APR / 12)
- n = Loan term in months
Worked example — SBA 7(a) loan: Loan amount: $150,000 APR: 10.5% Term: 7 years (84 months) Monthly rate: 0.105 / 12 = 0.00875
M = 150,000 × [0.00875 × (1.00875)^84] / [(1.00875)^84 − 1] = 150,000 × [0.00875 × 2.076] / [2.076 − 1] = 150,000 × 0.01817 / 1.076 = $2,532/month
Total paid: $2,532 × 84 = $212,688 Total interest: $212,688 − $150,000 = $62,688
Factor rate vs. APR (merchant cash advances): Some short-term lenders use a “factor rate” instead of APR: Total Repayment = Loan Amount × Factor Rate
Example: $50,000 loan × 1.35 factor rate = $67,500 total repayment If repaid in 6 months, the effective APR ≈ 70%+ — far higher than it appears
Key business loan metrics:
- Debt Service Coverage Ratio (DSCR) = Net Operating Income / Annual Debt Service — lenders want 1.25+
- Loan-to-Value (LTV) for secured loans: typically 70–80% maximum
- Origination fees: 1–3% of loan, often deducted from disbursement
Always compare loans using APR, not just stated interest rate or factor rate.