Business Loan Calculator

Business loans are often the quickest way to get additional capital for essential business operations. Unlike other types of funding, you don't need to give up a stake in your business in exchange.

As the name implies, business and commercial loans are only granted to qualified businesses. They're supposed to be used purely for business purposes.

Business owners take out business loans for lots of different reasons. But the most common ones are:

• Buying new equipment/additional inventory

• Funding growth and expansion plans

• Dealing with cash flow problems

• Hiring more employees

Our business loan calculator helps you quickly and easily determine the best loan terms and repayment plans for your situation.

Loan repayments will negatively affect your cash flow. Carefully scrutinize all the details of a loan to make sure you can afford it. The loan should put you in a good position for long-term success.

Business loan calculators can provide additional details about a loan, such as:

• A breakdown of principal and interest payments

• Actual APR (Annual Percentage Rate)

• Total loan fees

• Total interest cost

• Total cost of the loan

Our business loan calculator quickly estimates how different loan terms and interest rates affect your monthly payments. This lets you compare loans from providers so you can pick out the best deals possible.

How to calculate business loan payments

Calculating your monthly loan payment really isn't so hard. But you’ll need to use a calculator, and arriving at the final number takes multiple steps.

Using our business loan calculator is much easier. But here’s what the monthly payment or amortization formula looks like:

Monthly Payment = P(i(1+1)n)/((1+i)n-1

Where:

• P = Principal Loan Amount

• i = Periodic Interest Rate (Annual Interest Rate ÷ 12)

• n = Total Number of Payments (Length of the Loan in Years x 12)

The calculation will take you at least a few minutes to complete. And it's prone to error if you’re doing it manually - even with the help of a calculator.

With a business loan calculator, you’ll see the actual monthly payments in just a few clicks. Also, it can show a complete loan amortization schedule.

Look closely at an amortization schedule or table. The monthly payments are a fixed value for the duration of the loan — at least for most loan types. But the portion applied to interest and principal payments changes after every payment period.

Interest payments are calculated by multiplying the interest rate by the outstanding loan balance.

Interest Payment = Outstanding Balance × Interest Rate

For every monthly payment, interest payments and any additional charges (such as late fees) get paid off first. Whatever is left goes towards paying off the principal.

Principal Payment = Monthly Payment - (Interest Payment + Additional Fees / Charges)

As the principal is paid off after every payment period and the outstanding balance decreases, the interest payments also become lower.

The portion of the monthly payment that goes to principal payments increases over time while interest payments decrease. In other words, these two values have an inverse relationship throughout the loan duration.

A loan repayment or amortization calculator can also show the beginning and ending balance of the loan after every payment period.

This is helpful if you’re paying off the loan much earlier to save on total interest costs by making extra principal payments periodically. It lets you strategically plan how much and how often you should make extra payments instead of just doing it randomly.

Types of business loans

Various types of business loans apply to different needs and circumstances.

Term loans

Short-term loans - Repaid within 1-3 years. These are ideal for immediate funding needs or working capital.

Medium- to long-term loans - Repayment terms can range from 3 to 25 years. These are suitable for significant investments like equipment or expansion.

Business line of credit

These provide flexible access to a predetermined amount of funds, similar to a credit card. You only pay interest on the amount you use, making it helpful for managing cash flow or unexpected expenses.

Equipment financing

These loans are for purchasing equipment. The equipment is the collateral, and the loan term typically matches the expected lifespan of the goods.

Invoice financing (factoring)

This allows businesses to borrow money against outstanding invoices. It’s an option for companies with cash flow challenges due to slow-paying customers.

Merchant cash advances (MCA)

Offers a lump sum payment in exchange for a percentage of future sales. Typically repaid daily or weekly, this is a quick but often expensive option for businesses with high credit card sales.

SBA loans (U.S. specific)

The Small Business Administration (SBA) guarantees these loans, offering favorable terms and lower interest rates. Some options include the SBA 7(a) loan, SBA 504 loan, and microloans.

Commercial real estate loans

Used to purchase, construct, or renovate commercial property. These are often long-term loans with repayment periods ranging from 5 to 25 years.

Working capital loans

Short-term loans to cover day-to-day operating expenses like payroll, rent, or inventory. These are often used to manage cash flow during seasonal fluctuations.

Microloans

Small loans (typically under $50,000) are designed for startups, small businesses, or entrepreneurs who may not qualify for traditional financing. They are often provided by non-profit organizations or government programs.

Franchise loans

These are specifically for individuals looking to purchase a franchise. They cover the cost of franchise fees, equipment, and other startup expenses.

Unsecured business loans

Loans that don’t require collateral. While quicker to obtain, they often have higher interest rates and stricter approval requirements.

Secured business loans

Require collateral, such as property, inventory, or equipment. These typically have lower interest rates but come with the risk of losing the collateral if you default.