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Small Business Loan Calculator

Loan

Calculate monthly payments, total interest, and effective APR for any small business loan including SBA 7(a), SBA 504, equipment loans, and conventional financing.

Loan Amount
$
Annual Interest Rate
%
Loan Term
yrs

Loan Type

Origination Fee
%

Principal vs interest, year by year

015.00K30.00K45.00K60.00KY1Y2Y3Y4Y5Y6Y7
Y7 · Principal 44.20KInterest 1.82K

Enter your loan details to see the payment breakdown.

Monthly Payment

$0/mo

Effective APR

0.00%

Stated Rate

7.50%

Total Interest Paid$0
Total Loan Cost$0

What is a Business Loan?

A Small Business Loan Calculator computes the full cost of a business financing arrangement: monthly payment, total interest paid, total loan cost (including origination fees), and the effective Annual Percentage Rate (APR) that reflects the true cost of borrowing after fees. It models five common business loan types — conventional bank loans, SBA 7(a), SBA 504, equipment loans, and lines of credit — with context on each program's typical use case and structure.

The critical insight this calculator surfaces is the gap between your stated interest rate and your effective APR. Origination fees — which most business loans carry — reduce the actual disbursement you receive while leaving the payment schedule unchanged. This increases the true cost above the stated rate. A lender quoting 7.5% with a 2% origination fee on a 5-year $100,000 loan is actually delivering an effective APR of about 8.4%. That gap compounds when fees are higher or terms are shorter.

Business financing is categorically different from personal lending. The stakes are higher, the loan sizes are larger, and the interplay between loan type, term, and purpose is more complex. SBA 7(a) loans provide government-backed access to capital for working capital or acquisitions; SBA 504 is structured for major fixed assets like commercial real estate or equipment over $1 million; equipment loans are asset-backed with the financed equipment as collateral; conventional bank loans offer the most flexibility but the strictest qualification standards.

Before applying for any business loan, understanding the true APR — not the headline rate — is essential for comparing offers. A lender offering 7% with a 3% origination fee may be more expensive than one offering 8% with no fee, depending on the term. This calculator does the math precisely so you can compare accurately.

How to use this Business Loan calculator

  1. Enter your Loan Amount — the total financing you need. Remember that origination fees are typically deducted from the disbursement, so if you need exactly $200,000 in hand with a 2% origination fee, you would need to borrow approximately $204,082 ($200,000 ÷ 0.98).

  2. Set the Annual Interest Rate — use the rate quoted by the lender, not the APR. If comparing multiple offers, enter each stated rate separately to see the APR comparison.

  3. Set the Loan Term — in years. Match the term to the asset's useful life and your cash flow capacity. SBA 7(a) working capital: up to 10 years. SBA 7(a) real estate: up to 25 years. Equipment: 3–7 years. Conventional: 1–10 years depending on purpose.

  4. Select the Loan Type — this provides context cards rather than changing the calculation. Conventional, SBA 7(a), SBA 504, Equipment, or Line of Credit. Each shows the typical use case and program constraints to help you match the right product to your need.

  5. Enter the Origination Fee Percentage — the fee your lender charges, expressed as a percentage of the loan amount. Check your loan estimate or term sheet. If you're unsure, 1.5% is a reasonable assumption for conventional business loans; use 2–3.75% for SBA loans.

  6. Compare Effective APR to Stated Rate — the gap tells you the cost of the fee. If the gap is large (over 1 percentage point), consider negotiating the fee down or finding a lender with a lower fee structure. An origination fee waiver on a 3-year $200,000 loan saves roughly 1.5 percentage points of effective APR.

Formula & Methodology

Monthly payment (standard amortization):

P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1)

Where: P = loan principal · r = monthly rate (annual rate ÷ 12) · n = term in months

Net disbursement:

Net Disbursement = Loan Amount − Origination Fee

Where: Origination Fee = Loan Amount × (Origination Fee % ÷ 100)

Effective APR (bisection search):

Find monthly rate m such that: Monthly Payment × (1 − (1+m)^−n) ÷ m = Net Disbursement

Effective APR = m × 12 × 100

Total loan cost:

Total Loan Cost = (Monthly Payment × n) + Origination Fee

Worked example:

Loan amount: $250,000 · Rate: 8.5% · Term: 7 years (84 months) · Origination fee: 2%

Monthly rate: 8.5% ÷ 12 = 0.7083%

Monthly payment: $250,000 × 0.007083 × (1.007083)^84 ÷ ((1.007083)^84 − 1) = $3,899/month

Total payments: $3,899 × 84 = $327,516

Total interest paid: $327,516 − $250,000 = $77,516

Origination fee: $250,000 × 2% = $5,000

Total loan cost: $327,516 + $5,000 = $332,516

Net disbursement: $250,000 − $5,000 = $245,000

Effective APR (bisection): monthly rate ≈ 0.765% → APR = 9.18% (stated rate was 8.5% — fee adds 0.68 pp)

Key assumptions: The calculator models fully amortizing term loans with level monthly payments. It does not model balloon payment structures, interest-only periods, variable-rate loans, or the revolving nature of lines of credit. For SBA loans, rate caps change with the prime rate — this calculator uses the rate you input as fixed. Business loan tax deductibility of interest is not factored into the cost display — after-tax APR would be lower for profitable businesses in higher tax brackets.

Frequently Asked Questions

A Small Business Loan Calculator computes your monthly payment, total interest paid, total loan cost, and effective APR for a business financing arrangement. Unlike a basic loan payment calculator, it accounts for origination fees — which most business loans carry — to show you the difference between your stated interest rate and the true annual cost of the loan (APR). This gives you a more accurate picture of what you're actually paying to borrow money for your business.
The interest rate is the periodic cost of borrowing expressed as a percentage — it determines your monthly payment and total interest dollars paid. APR (Annual Percentage Rate) includes both the interest rate and the amortized cost of fees (origination, closing, processing fees) over the loan term, giving you the true all-in cost. A loan with a 7.5% rate and a 2% origination fee on a 5-year term has an APR of approximately 8.4% — nearly a full percentage point higher. When comparing loan offers, always compare APRs, not interest rates.
An SBA 7(a) loan is the most common Small Business Administration loan program — a government-guaranteed loan made by private lenders (banks, credit unions) with the SBA backing 75–85% of the principal. The guarantee reduces lender risk and allows access to financing for businesses that might not qualify for conventional loans. Maximum loan amount is $5 million. Terms run up to 10 years for working capital and 25 years for real estate. Interest rates are typically prime rate + 2.25–4.75%, making them competitive with conventional business loans.
Business loan origination fees typically range from 0.5% to 5% of the loan amount, depending on loan type and lender. Conventional bank loans tend to charge 0.5–2%. SBA 7(a) loans have a government-mandated guarantee fee structure based on loan size: 2% for loans up to $150K, up to 3.75% for loans over $700K. Equipment loans typically charge 1–2%. Online and alternative lenders often charge 2–5%. The origination fee is deducted from the disbursement — you receive the loan amount minus the fee — but pay interest on the full principal.
A business term loan is a lump-sum disbursement repaid over a fixed schedule — like a mortgage for your business. A business line of credit is revolving: you borrow up to your limit, repay, and borrow again as needed — more like a business credit card. Term loans are best for specific capital needs (equipment, expansion, acquisition). Lines of credit are better for managing cash flow gaps, seasonal inventory needs, or covering payroll during slow periods. The Small Business Loan Calculator models term loan repayment — for revolving credit, your effective APR depends on how frequently you draw and repay.
SBA loans are generally available to existing businesses with at least 2 years of operating history, as lenders want to see revenue and cash flow. True startups (less than 2 years old) have limited SBA options — the SBA Microloan program (up to $50,000, typically through nonprofit lenders) and some SBA 7(a) lenders who work with startups using robust collateral or a strong personal guarantee. Most startup financing comes from personal savings, SBA Microloans, equipment financing (asset-backed), business credit cards, or angel/venture capital depending on the industry.
Effective APR is calculated using the Internal Rate of Return (IRR) of the loan's cashflows. You receive the net disbursement (loan amount minus origination fee upfront), then make a series of fixed monthly payments. The monthly interest rate that makes the present value of all payments equal to the net disbursement is the loan's monthly IRR — multiply by 12 to get the APR. A $100,000 loan with a 1.5% origination fee, 8% stated rate, and 5-year term produces a net disbursement of $98,500 and an effective APR of approximately 8.7%.
Requirements vary significantly by loan type. SBA 7(a) loans typically require a personal credit score of 650+ (many lenders prefer 680+), 2+ years in business, and strong financial statements. Conventional bank business loans generally require 680–720+ personal credit and 3+ years of business history. Equipment loans are more lenient (600–640+) because the equipment serves as collateral. Online business lenders (Kabbage, OnDeck, Fundbox) often approve at 500–600+ but charge significantly higher rates to compensate for the risk — these rates can reach 40–60% APR and should be modeled carefully with this calculator.
Shorter terms produce higher monthly payments but significantly lower total interest paid and effective APR. A $200,000 business loan at 8.5% costs $4,100/month over 5 years (total interest: $48,000) but only $2,240/month over 10 years (total interest: $68,800) — a $20,800 difference in interest. Choose the shortest term your cash flow can support while maintaining 3–6 months of operating expenses as a reserve. Matching the loan term to the useful life of the asset being financed is also sound practice: equipment with a 7-year life warrants no more than a 7-year term.
If you're a sole proprietor or personally guarantee the business loan (which SBA requires), the monthly business loan payment may be counted in your personal debt-to-income ratio when you apply for personal credit — including a home mortgage. A $3,000/month business loan payment on a $120,000 personal income raises your DTI by 2.5 percentage points, potentially pushing you above the 43% mortgage qualification threshold. Use the [Debt-to-Income Ratio Calculator](/debt-to-income-calculator/) to model the impact of a business loan on your personal credit profile before signing.
An equipment loan is a type of secured business financing where the equipment being purchased serves as collateral — if you default, the lender repossesses the equipment. This collateralization means lower rates (typically 4–10%) and easier qualification than unsecured lending. Terms match the equipment's useful life (3–7 years for most machinery). SBA 504 loans are a hybrid: a government-guaranteed structure specifically for major fixed assets (equipment over $1M, real estate), with two-part financing (bank + SBA debenture) and rates tied to 10-year Treasury notes plus a spread.
Yes — interest paid on a legitimate business loan is fully tax-deductible as a business expense under IRS rules, reducing your taxable business income dollar for dollar. This applies to SBA loans, conventional business loans, equipment loans, and business lines of credit. The principal repayment is not deductible — only the interest component. For a business in the 25% effective tax bracket paying $12,000/year in loan interest, the after-tax cost is $9,000 ($12,000 × 0.75). Factor this when comparing the after-tax cost of debt financing against alternative financing sources.
Also known as
business loan calculatorSBA loan calculatorsmall business loan calculatorcommercial loan calculatorSBA 7a calculatorequipment loan calculator