Micro Loan Calculator
Calculate total repayment on micro loans with daily or weekly interest rates.
See total interest cost, APR equivalent, and the true cost of short-term lending.
Micro-loan repayment follows the same amortized loan math as any installment loan, but applied to very small principal amounts — typically $500 to $50,000 — targeted at entrepreneurs, small businesses, and underserved borrowers who cannot access traditional bank credit.
Standard amortized payment formula: M = P × [r(1+r)^n] ÷ [(1+r)^n − 1]
Where:
- M = monthly payment
- P = loan principal (amount borrowed)
- r = monthly interest rate = annual rate ÷ 12 ÷ 100
- n = total monthly payments = loan term in months
Total repayment: Total Paid = M × n
Total interest cost: Total Interest = Total Paid − P
Flat fee micro-loan formula (common in developing markets): Some micro-lenders use “flat rate” instead of amortized: Total Interest = P × Flat Rate × Term in Years Monthly Payment = (P + Total Interest) ÷ n
Note: A flat rate of 10% is equivalent to approximately 18–20% effective APR — always compare on an APR basis.
What each variable means:
- Amortized vs. flat rate: amortized loans reduce principal each payment, so interest costs decrease over time; flat rate loans charge interest on the original principal throughout, which is significantly more expensive
- Micro-finance institutions (MFIs): organizations like Kiva, Grameen Bank, Accion; often charge 15–35% APR due to high administrative costs per small loan
- Use case: working capital, equipment purchase, inventory; returns must exceed borrowing cost
- Loan officer fees: many MFIs charge 1–3% origination fee on top of interest
Reference: micro-loan APR by provider type:
- US SBA Microloan Program: 8–13% APR
- CDFI lenders (US): 10–25% APR
- Kiva (crowdfunded, US): 0% (subsidized by donors)
- International MFIs: 15–60% APR (covers high operational costs in remote areas)
Worked example: $8,000 micro-loan at 15% APR, 36-month term (amortized).
- Monthly rate r = 15 ÷ 12 ÷ 100 = 0.01250
- (1.01250)^36 = 1.5639
- M = 8,000 × [0.01250 × 1.5639] ÷ [1.5639 − 1]
- M = 8,000 × 0.019549 ÷ 0.5639 = 8,000 × 0.03467 = $277.37/month
- Total paid = $277.37 × 36 = $9,985.32
- Total interest = $9,985.32 − $8,000 = $1,985.32
For a business generating $500/month net profit on the funded activity, this loan pays for itself in under 4 months — a sound investment with a 4:1 return on borrowing cost.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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