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Business Loan Calculator

Enter a loan amount, interest rate and term to see the monthly payment, total interest and total cost of financing it.

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Monthly payment
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Total interest paid
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The formula behind the monthly payment

This calculator uses the standard loan amortization formula: monthly payment equals the principal multiplied by the monthly interest rate, divided by one minus (1 plus the monthly rate) raised to the power of negative the number of months. The monthly rate is simply the annual rate divided by 12. If the rate is 0%, the payment is just the principal divided by the number of months, since there is no interest to amortize.

What actually moves your payment

Three things determine the monthly payment: the amount financed, the interest rate, and the term. A larger down payment reduces the amount financed directly, which lowers both the monthly payment and the total interest paid over the life of the loan. Stretching the term across more months lowers the monthly payment but increases total interest paid, since you are borrowing the money for longer, so a lower monthly number is not automatically the cheaper loan overall.

Interest rate versus APR

This calculator uses the interest rate you enter directly, compounded monthly. Many lenders quote an APR, annual percentage rate, which can include fees and other costs beyond the base interest rate, making it slightly higher than the stated interest rate alone. For a rough estimate use the interest rate, but for an exact comparison between loan offers, use each lender's disclosed APR and full amortization schedule, since fees are not modeled here.

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FAQ

Business Loan Calculator: questions, answered

How is the monthly payment calculated?
Using the standard amortization formula: payment equals principal times the monthly interest rate, divided by 1 minus (1 plus the monthly rate) to the power of negative the number of months. The monthly rate is the annual rate divided by 12.
Does this include fees like an origination fee?
No. This calculator models principal and interest only. Many business loans include an origination fee or other closing costs, which would add to your actual out of pocket cost beyond what is shown here.
What does the down payment field actually do?
It reduces the amount you are financing before the interest calculation runs. A $100,000 loan amount with a $20,000 down payment finances $80,000, and the payment and interest are calculated on that $80,000.
Why does a longer term lower my payment but cost more overall?
A longer term spreads the same principal across more monthly payments, which lowers each individual payment. But interest keeps accruing on the outstanding balance for longer, so the total interest paid over the full term is higher even though each payment is smaller.
Is this calculator specific to business loans?
The math is the same amortization formula used for any fixed rate installment loan, business or personal. It works correctly for an equipment loan, a term loan, an SBA loan, or any other loan with a fixed rate and a fixed number of monthly payments.

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