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.