Business Loan Calculator: Monthly Repayment & Total Cost
Estimate the monthly repayment on a business loan and see how much interest it adds to the cost of financing equipment, expansion, or working capital.
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year amortization schedule
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Monthly payment | Total interest | Total of payments |
|---|---|---|---|
| $150k · 8.5% · 10-year | $1,859.79 | $73,174.24 | $223,174.24 |
| $75k · 9.2% · 5-year | $1,564.17 | $18,850.00 | $93,850.00 |
| $300k · 7.5% · 15-year | $2,781.04 | $200,586.67 | $500,586.67 |
| $50k · 11.0% · 3-year | $1,636.94 | $8,929.69 | $58,929.69 |
How This Calculator Works
Enter how much your business needs to borrow, the annual rate offered by the lender, and the repayment term in years. The calculator converts the rate to a monthly figure, counts the total repayments, and applies the fixed-rate amortization formula to find a level monthly payment. It then rebuilds the schedule so you can see the interest cost year by year against the principal you are clearing.
The Formula
Fixed-Rate Amortization
P = loan amount, r = monthly rate (APR ÷ 12), n = number of monthly payments
Worked Example
Suppose a company borrows $150,000 at 8.5% to buy equipment, repaid over 10 years. The monthly rate is about 0.708% across 120 payments, producing a repayment near $1,860. Total interest comes to roughly $73,000 — a real cost that should be weighed against the return the equipment is expected to generate.
Key Insight
A business loan only makes sense when the financed asset earns more than it costs. Compare the total interest shown here against the additional profit the loan will fund before you sign.
SBA vs conventional vs alternative business loans: pricing trade-offs
Business loan landscape splits roughly into three tiers. SBA (Small Business Administration) loans: government-backed, generally cheapest rates (10-12% APR in 2026), longest terms (10-25 years), but slow approval (60-90 days), heavy documentation, and personal guarantee almost always required. SBA 7(a) loans up to $5M; 504 loans for real estate up to $5.5M.
Conventional bank loans: 8-12% APR, 5-10 year terms typical, established business required (2+ years operating history), strong financials. Faster than SBA (30-45 days) but still slow. Major banks (Chase, Bank of America, Wells Fargo) plus community banks both compete here.
Alternative lenders (OnDeck, Kabbage, BlueVine, Funding Circle, Lendio): 15-50%+ effective APR, 6-24 month terms, faster funding (sometimes 24-48 hours). Useful for short-term cash flow needs, but the rate premium is substantial. Daily/weekly automated debit repayments common — easy to overcommit cash flow. Use only for short-term needs you'll actually pay off in 6-12 months.
Personal guarantee: the most important question to ask
Most small business loans require the owner's personal guarantee — meaning if the business defaults, the LENDER CAN COME AFTER YOUR PERSONAL ASSETS (home, savings, retirement accounts in some cases). The corporate veil that protects you from operational liability does NOT protect you from personally guaranteed debt.
Worked example: a small business owner with $200k home equity, $150k 401k, $50k savings personally guarantees a $300k SBA loan. Business fails year 3, still owes $200k. The lender (or SBA after default) can pursue the $200k from the owner's personal assets. The 401k is protected federally; the home and savings are at risk.
Reducing personal guarantee exposure: (1) negotiate a LIMITED guarantee (capped at $X amount or % of business assets) instead of unlimited. (2) Avoid using your home as collateral specifically (the lender will pursue it but it's not formal collateral). (3) For larger established businesses ($10M+ revenue), 'springing' guarantees that only activate on certain triggers (bankruptcy filing, fraud) are negotiable. (4) Equipment-only financing avoids personal guarantee for specific machinery/vehicles. Read the personal guarantee section of any business loan with extreme care.
DSCR: how lenders qualify you (and how to improve it)
Debt Service Coverage Ratio (DSCR) is the central metric for business loan approval. DSCR = Annual Net Operating Income / Annual Debt Service (principal + interest payments). Lenders typically require DSCR ≥ 1.25× — meaning your business income must be at least 125% of your annual loan payments.
Worked example: applying for $500k loan with $7,500/month payment ($90k/year). Required NOI: 1.25 × $90,000 = $112,500/year. If your business shows $100k in NOI, you fail DSCR — lender will offer smaller loan ($100k/$1.25 = $80k annual debt service capacity → loan ~$440k) or decline.
Improving DSCR before applying: (1) Don't take large owner draws in the 2-3 years before applying — they reduce reported NOI. (2) Defer discretionary spending temporarily to boost recent-year profit. (3) Negotiate longer loan term to reduce annual payments (a $500k loan over 10 years has lower annual payment than over 7). (4) Larger down payment reduces loan amount, improves ratio. (5) Time the application after strong financial quarters. Real estate loans use slightly different DSCR (focused on NOI from the property), with 1.25-1.35× typical.
Business loan typical rates and terms by lender type (2026)
Approximate ranges for established businesses with good credit. Personal guarantee assumed for amounts under $1M. Newer businesses or those with weaker financials pay 2-5 percentage points more.
| Loan type | APR range | Typical term | Time to fund |
|---|---|---|---|
| SBA 7(a) — working capital | 10.5-13% | 7-10 years | 60-90 days |
| SBA 504 — real estate/equipment | Fixed 6-7% | 20-25 years | 60-90 days |
| Conventional bank loan | 8-12% | 5-10 years | 30-45 days |
| Equipment financing | 8-14% | 3-7 years (equipment life) | 10-20 days |
| Business line of credit | 9-15% (variable) | Revolving | 10-30 days |
| Alternative lender (OnDeck etc.) | 20-50%+ effective | 6-24 months | 1-3 days |
SBA loans are the gold standard for small business borrowing if you can wait through the approval. Alternative lenders are the cheap (in time) but expensive (in interest) backup. Avoid Merchant Cash Advances (MCA) — they're not technically loans (no APR cap) and effective rates can exceed 100%.
Frequently Asked Questions
What interest rate do business loans charge?
Rates vary widely by lender and risk. Bank and SBA loans tend to be cheaper, while online and short-term lenders charge more. Use a rate from a real quote, since business loan pricing depends heavily on revenue, time in business, and credit profile.
Is the interest on a business loan tax deductible?
In most cases the interest paid on a loan used for legitimate business purposes is a deductible expense, which lowers its effective cost. Confirm the treatment with an accountant, as the rules depend on how the funds are used.
Should I choose a shorter or longer repayment term?
A shorter term raises the monthly payment but cuts total interest and clears the debt faster, freeing future cash flow. A longer term protects monthly cash flow but costs more overall. Match the term to the useful life of what you are financing.
Does this calculator include fees and closing costs?
No. It covers principal and interest only. Origination fees, packaging fees, and SBA guarantee fees are charged separately and should be added in to judge the true cost of borrowing.
What is a personal guarantee on a business loan?
Many business loans require the owner to personally guarantee repayment, meaning personal assets are at risk if the business cannot pay. It does not change the math here, but it is a key factor when deciding how much to borrow.
Can a business loan be repaid early?
Often yes, though some lenders apply a prepayment penalty. Where early repayment is allowed without penalty, paying ahead reduces total interest just as it does on any amortizing loan.
References & Authoritative Sources
- U.S. Small Business Administration — SBA loan programs and 7(a) loan guide · consulted May 31, 2026 · Federal agency — official SBA loan program details, eligibility, lender network
- Federal Reserve Senior Loan Officer Opinion Survey (SLOOS) — Bank business lending standards and rates · consulted May 31, 2026 · Authoritative source — quarterly survey of bank lending standards and pricing trends
- CFPB — Business Lending Rules (Section 1071) — Small business lending data collection rules · consulted May 31, 2026 · Federal regulation — disclosure requirements for small business lending
Related Calculators
Data Sources & Benchmarks
This calculator draws on 3 independent, dated sources. The starting values for interest rate are taken from the benchmarks below and refresh whenever the snapshots are updated.
Methodology & Review
Repayments use the standard fixed-rate amortization formula on the loan principal. Origination, packaging, and SBA guarantee fees are excluded and must be added separately. Figures are checked against published lender amortization tables.
Updated