About the Business Loan Calculator
A business loan calculator estimates monthly payments and total cost including the origination fee, which on commercial lending is often substantial. Business borrowing is priced on the strength of the business rather than solely on personal credit.
The formula
M = P · [ r(1 + r)ⁿ ] / [ (1 + r)ⁿ − 1 ], plus origination feeThe origination fee is a percentage of the loan, typically 1 to 5 percent, charged upfront or deducted from proceeds. It significantly raises the effective cost on shorter terms.
How to use this calculator
- 1Enter your Loan Amount ($). The field starts at
150000, which you can overwrite. - 2Enter your Annual Interest Rate (%). The field starts at
8.5, which you can overwrite. - 3Enter your Loan Term (Years). The field starts at
5, which you can overwrite. - 4Enter your Origination Fee (%). The field starts at
1, which you can overwrite. - 5Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Loan Amount ($) | 150000 |
| Annual Interest Rate (%) | 8.5 |
| Loan Term (Years) | 5 |
| Origination Fee (%) | 1 |
Result
Monthly Payment: $3077.48
Origination Fee: $1500.00
Total Interest: $34,648.782
Total Cost of Loan: $186,148.782
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
Origination fees affect short-term business loans far more than long-term ones, because the fee is spread across fewer payments. A 1 percent fee on a five-year loan adds a few tenths of a point to the effective rate; the same fee on a one-year loan adds a full point or more.
Business lending covers a wide spectrum. SBA-guaranteed loans in the US offer the lowest rates and longest terms but demand extensive documentation and take months. Online lenders fund in days at considerably higher cost. Merchant cash advances, which take a share of daily card receipts, can carry effective annual rates above 50 percent and are best treated as a last resort.
Things worth knowing
- SBA loans offer the best terms available to most small businesses, at the cost of a long application process.
- Most lenders require a personal guarantee, which puts your own assets at risk regardless of business structure.
- Compare total cost of capital rather than rate — fees and factor rates vary enormously between products.
- Merchant cash advances quote factor rates, not APRs. Convert before comparing.
- A business line of credit suits fluctuating working capital better than a term loan.
Frequently asked questions
What rate can a small business expect?+
SBA loans run roughly 7 to 12 percent, traditional bank term loans 6 to 15, and online lenders 15 to 45 or more. The spread reflects speed of funding and credit risk.
What is an origination fee on a business loan?+
An upfront charge of typically 1 to 5 percent of the loan. On a short-term loan it materially raises the effective cost, since it is spread across few payments.
Do I need a personal guarantee?+
Almost always for a small business. It makes you personally liable if the business defaults, regardless of whether the business is a limited company or LLC.
What is a merchant cash advance?+
An advance repaid from a percentage of daily card sales, quoted as a factor rate rather than an APR. Effective annual costs frequently exceed 50 percent, so it is expensive capital.