# Business Loan Calculator

Calculate business loan payments, total interest, and true borrowing cost. Compare term lengths and rates for SBA and traditional business loans.

## What this calculates

Estimate your monthly business loan payment and total borrowing cost. Enter the loan amount, interest rate, term, and fees to compare financing options for your business.

## Inputs

- **Loan Amount** ($) — min 0 — The total amount you want to borrow.
- **Annual Interest Rate** (%) — min 0, max 30 — The annual interest rate on the business loan.
- **Loan Term** — options: 1 year, 2 years, 3 years, 5 years, 7 years, 10 years, 15 years, 20 years, 25 years (SBA) — Length of the repayment period.
- **Origination/SBA Fee** (%) — min 0, max 10 — Upfront loan fee as a percentage of the loan amount.

## Outputs

- **Monthly Payment** — formatted as currency — Your monthly loan payment.
- **Total Interest Paid** — formatted as currency — Total interest over the life of the loan.
- **Total Cost of Loan** — formatted as currency — Total payments plus origination fees.
- **Origination Fee** — formatted as currency — Upfront fee amount.
- **Effective Interest Rate (with fees)** — formatted as percentage — True cost of borrowing including fees.

## Details

Business loans provide capital for starting, operating, or expanding a business. The most common types include SBA loans (backed by the Small Business Administration), traditional bank term loans, online lender loans, and lines of credit.

Monthly payments are calculated using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1]. The effective cost of borrowing should include origination fees, SBA guarantee fees, and closing costs, which can add 1-5% to the total cost.

SBA loans typically offer the best rates and longest terms (up to 25 years for real estate), but have stringent application requirements. Online lenders offer faster funding and easier approval but at higher rates. The key is to compare the total cost of borrowing, not just the monthly payment, as shorter-term loans at slightly higher rates may cost less overall than longer-term loans at lower rates.

## Frequently Asked Questions

**Q: What are typical business loan interest rates?**

A: Business loan rates vary widely. SBA loans: 5.5-8% (variable, tied to prime rate). Traditional bank term loans: 5-10%. Online lenders: 8-30%+ depending on creditworthiness. Business lines of credit: 7-25%. Equipment financing: 4-20%. Rates depend on the borrower's credit score, time in business, revenue, industry, and collateral. Strong applicants with established businesses get the best rates.

**Q: What is an SBA loan?**

A: SBA loans are partially guaranteed by the Small Business Administration, reducing lender risk and enabling better terms for borrowers. The most popular programs are SBA 7(a) loans (up to $5 million for general business purposes) and SBA 504 loans (for major fixed assets like real estate and equipment). SBA loans offer lower rates, longer terms, and lower down payments than conventional loans. However, they require more documentation and take longer to process (30-90 days).

**Q: How do origination fees affect the true cost of a loan?**

A: Origination fees are upfront charges that increase your total borrowing cost without increasing the loan amount. A 2% origination fee on a $100,000 loan means you receive $98,000 but repay $100,000 plus interest. This increases the effective interest rate. SBA loans may have additional guarantee fees of 2-3.75%. Always calculate the effective annual rate including all fees to accurately compare loan options.

**Q: What term length should I choose?**

A: Match the loan term to the useful life of what you are financing. Equipment: 3-7 years. Working capital: 1-3 years. Commercial real estate: 10-25 years. Shorter terms have higher monthly payments but lower total interest. Longer terms reduce monthly cash flow burden but increase total cost. For a $100,000 loan at 8%, a 5-year term costs about $21,000 in interest while a 10-year term costs about $45,500. Choose the shortest term your cash flow can support.

**Q: What do I need to qualify for a business loan?**

A: Requirements vary by lender but typically include: minimum credit score (650+ for banks, 550+ for online lenders), at least 1-2 years in business, minimum annual revenue ($100,000-$250,000), a business plan for startups, financial statements (P&L, balance sheet, tax returns), and possibly collateral. SBA loans have additional requirements including demonstrating inability to get credit elsewhere. Strong personal financials help when the business is young.

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Source: https://vastcalc.com/calculators/finance/business-loan
Category: Finance
Last updated: 2026-04-21