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Business Loan Calculator

Calculate monthly payments and total costs for business loans.

Compare SBA loans, term loans, and equipment financing.

Free business loan calculator.

Calculator

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Results

Monthly Payment
$0.00
Total of All Payments
$0.00
Total Interest Paid
$0.00
Origination Fee Amount
$0.00
Total Cost (Payments + Fees)
$0.00
Effective APR (Including Fees)
0.00%

Loan Cost Breakdown

Principal (Borrowed)$250000.00
Total Interest$0.00
Origination Fee$0.00

Business Loan Types

SBA 7(a): General-purpose small business loans, up to $5M, 10-25 year terms, competitive rates (currently 9-12%).

SBA 504: Real estate and equipment financing, up to $5.5M, 20-25 year terms.

Term Loans: Traditional bank loans, fixed or variable rates, 1-10 year terms, typically 7-15% rates.

Equipment Financing: Secured by equipment, 3-7 year terms, rates similar to SBA.

Lines of Credit: Revolving credit, interest-only payments, 8-20% rates.

Choose based on purpose, amount needed, and qualification requirements.

Current Business Loan Rates (2025)

SBA 7(a) loans: Prime Rate (7.25%) + 2.25-4.75% spread = 9.5-12% typical.

SBA 504 loans: Fixed rates around 6-8% for real estate portion.

Conventional term loans: 7-15% depending on creditworthiness and collateral.

Equipment financing: 8-12% typical.

Business lines of credit: 10-20% variable rates.

Rates vary based on: Credit score (higher = better rate), time in business (2+ years = better rate), revenue (higher = better rate), collateral offered, loan amount and term.

How Loan Term Affects Cost

Longer term = Lower monthly payment BUT more total interest.

Example: $250K at 10% for 5 years = $5,312/month, $68,748 total interest.

Same loan for 10 years = $3,303/month, $146,359 total interest (over 2× more!).

For 15 years = $2,686/month, $233,563 total interest (over 3× more!).

Choose longer term if: Cash flow is tight, need lower monthly payment.

Choose shorter term if: Can afford higher payment, want to minimize interest, build equity faster.

Most business loans: 5-10 years for working capital, 10-25 years for real estate.

Understanding APR vs Interest Rate

Interest Rate: The rate charged on the principal balance only.

APR (Annual Percentage Rate): Includes interest + fees (origination, guarantee fees, closing costs) = true cost of borrowing.

Example: $250K loan at 10% interest with 3.75% origination fee.

Simple interest rate: 10%.

Effective APR: ~10.4% (accounting for $9,375 fee).

SBA loans: Typically have 3.75% guarantee fee (for loans $150K-$500K), raising effective APR.

Always compare APR when shopping loans, not just interest rate.

SBA Loan Advantages

Lower down payment: 10% typical vs 20-30% conventional.

Longer terms: Up to 25 years vs 5-10 years conventional = lower monthly payment.

Better rates: Often 2-4% lower than conventional business loans.

Higher approval rates: SBA guarantee reduces lender risk = easier to qualify.

Flexible use: Can use for working capital, equipment, real estate, acquisitions.

Disadvantages: Slower approval (45-90 days vs 2-4 weeks), more paperwork, guarantee fees add 2.5-3.75% to loan cost, stricter requirements (2+ years in business, good credit).

Origination Fees and Closing Costs

Origination fee: One-time fee for processing loan, typically 0.5-5% of loan amount.

SBA guarantee fee: 2% for loans <$150K, 3% for $150K-$700K, 3.5% for $700K-$1M, 3.75% for $1M+.

Closing costs: Title insurance, appraisal, legal fees, environmental reports = $5K-$25K typical.

Packaging fee: Some lenders charge $500-$2,500 to prepare SBA application.

Total upfront costs: Often 3-8% of loan amount.

Example: $250K loan = $7,500-$20,000 in fees.

Can these be financed?

Some lenders roll fees into loan (you pay interest on them).

Budget accordingly - you won't receive full loan amount!

Debt Service Coverage Ratio (DSCR)

DSCR = Net Operating Income / Annual Debt Service.

Lenders typically require DSCR ≥ 1.25 (income 25% higher than debt payments).

Example: $250K loan at 10%, 10 years = $3,303/month = $39,636/year debt service.

Required annual NOI: $39,636 × 1.25 = $49,545 minimum.

If business earns $100K/year NOI: DSCR = $100K / $39,636 = 2.52 (excellent!).

If business earns $40K/year NOI: DSCR = $40K / $39,636 = 1.01 (likely denied).

Calculate DSCR before applying to know if you qualify.

How to Get the Best Business Loan Rate

Improve credit score: 720+ gets best rates (2-3% better than 650).

Increase time in business: 2+ years = better rates than startups.

Show strong revenue: $500K+ annual revenue improves rates.

Offer collateral: Real estate or equipment backing = 1-2% better rate.

Increase down payment: 20-30% down vs 10% can reduce rate 0.5-1%.

Shop multiple lenders: Rates vary 2-5% between lenders for same borrower.

Consider SBA loans: Often 2-4% lower than conventional.

Improve debt-to-income: Pay down existing debt before applying.

Have solid business plan: Shows lender you'll succeed and repay.

Sources & References

SBA - Small Business Loans
https://www.sba.gov/funding-programs/loans
Federal Reserve - Small Business Credit Survey
https://www.fedsmallbusiness.org/

Business Loan Types and Payment Calculations

Business loans provide capital for starting, operating, or expanding a company. Unlike personal loans, business loans are evaluated based on business creditworthiness, revenue, time in business, and industry risk. Understanding different loan types and their payment structures helps businesses choose appropriate financing and manage cash flow effectively.

Term loans are the most straightforward business financing. You receive a lump sum and repay with fixed monthly payments over a set period (1-10 years). Interest rates range from 6-30% depending on creditworthiness, with stronger businesses qualifying for lower rates. Term loans work well for specific investments like equipment, expansion, or large inventory purchases where ROI exceeds the cost of capital.

SBA loans, guaranteed by the Small Business Administration, offer favorable terms: lower interest rates, longer repayment periods, and lower down payments. The SBA 7(a) loan program provides up to $5 million with terms extending to 25 years for real estate. However, SBA loans require extensive documentation, longer approval times (30-90 days), and personal guarantees from owners with 20%+ equity.

Business lines of credit provide revolving credit similar to credit cards but with higher limits and lower rates. You draw funds as needed and pay interest only on the outstanding balance. Lines of credit work well for managing seasonal cash flow, covering unexpected expenses, or taking advantage of time-sensitive opportunities. Credit limits typically range from $10,000 to $1 million based on revenue and credit profile.

Calculating business loan affordability requires analyzing debt service coverage ratio (DSCR): annual net operating income divided by annual debt payments. Most lenders require DSCR of 1.25x or higher, meaning income should exceed debt payments by at least 25%. A business with $150,000 annual income can afford approximately $120,000 in annual debt payments, or $10,000 monthly.

Frequently Asked Questions

Common questions about the Business Loan Calculator

A business loan calculator helps you estimate your monthly payments for a loan. You can input the loan amount, interest rate, and term length to see how much you might pay.
Learn More

Small Business Lending Data

Current business loan interest rates, approval rates, and lending volume by loan type and borrower characteristics.
→Source: Federal Reserve Small Business Lending Survey(2024)

SBA Loan Programs

Comprehensive information on SBA 7(a), 504, and microloans including eligibility requirements, terms, and application process.
→Source: U.S. Small Business Administration(2024)

Debt Service Coverage Ratio

Standard formula for calculating DSCR and determining business loan affordability used by commercial lenders.
→Source: Commercial Lending Standards - OCC(2024)