How do I calculate a business loan payment?

Most business loans are amortizing term loans. To calculate the payment, convert the annual interest rate to a periodic rate (for example, monthly), then apply the annuity formula: Payment = P × r / (1 − (1 + r)^(−n)), where P is the amount financed, r is the periodic interest rate, and n is the total number of payments. This calculator does it for you and also accounts for fees and balloon payments.

What is the difference between interest rate and APR on a business loan?

The nominal interest rate is the percentage charged on the outstanding principal. APR (Annual Percentage Rate) includes both interest and mandatory upfront fees, expressed as a yearly rate. Two loans with the same interest rate can have very different APRs if one has higher origination or documentation fees. This calculator estimates APR by spreading upfront fees over the life of the loan.

Can I use this calculator for SBA or equipment loans?

Yes. SBA and equipment loans are usually fixed-rate, fully amortizing term loans. Enter the loan amount, interest rate, term, and any fees. If your loan has a balloon payment or interest-only period, enable those options in the advanced settings to model them accurately.

How do fees affect the real cost of a business loan?

Upfront fees such as origination, documentation, or packaging fees reduce the net cash you receive but do not reduce the amount you repay. That means your effective cost of borrowing is higher than the stated rate. This calculator shows both the gross loan amount and the net amount received, and estimates the APR that includes those fees.

What is a balloon payment and how do I model it?

A balloon payment is a large lump-sum payment due at the end of the loan term. During the term you may pay only interest or a smaller amortizing payment, then pay off the remaining principal at maturity. In the advanced options, you can set a balloon percentage or a target balloon amount. The calculator will adjust the periodic payment and show the final balloon in the amortization schedule.

Business Loan Calculator: Payment, Total Interest & Amortization

How this business loan calculator works

This tool models a typical small business term loan: you borrow a lump sum, repay it over time with fixed payments, and may pay upfront fees. It can also handle interest-only periods and balloon payments that many commercial and SBA-style loans use.

Core payment formula

For a fully amortizing loan with fixed payments, the periodic payment is calculated using the standard annuity formula:

Let:

P = amount financed (loan principal)
r = periodic interest rate (annual rate ÷ payments per year)
n = total number of payments

Then the payment per period is:

$ \text{Payment} = P \times \dfrac{r}{1 - (1 + r)^{-n}} $

If the interest rate is 0%, the payment is simply P ÷ n.

Interest-only and balloon structures

Interest-only period – for the first few months you pay only interest: Payment = P × r. After that, the remaining term is amortized using the formula above.
Balloon payment – the calculator reduces the amortizing portion so that a specified amount of principal is left to be paid as a lump sum at the end.

Fees and effective APR

Upfront fees do not reduce the amount you owe, but they reduce the cash you actually receive. The calculator:

Computes total upfront fees (percentage-based + flat fees).
Shows your net proceeds (loan amount minus fees).
Estimates an effective APR by finding the interest rate that equates the net proceeds with all future payments (and any balloon).

How to interpret the results

Key outputs

Periodic payment – what you pay each period (month, week, etc.).
Total interest – the cost of borrowing before fees.
Total of payments – principal + interest (excluding upfront fees).
Upfront fees & net proceeds – how much you pay at closing and how much cash actually hits your account.
Estimated APR – a single rate that includes both interest and fees, useful for comparing offers.

Using the amortization schedule

The amortization table shows, for each payment:

How much goes to interest vs. principal.
The remaining balance after each payment.
Any balloon payment at the end of the term.

This is helpful for planning early payoff, refinancing, or understanding how quickly you build equity in equipment or property.

Example: Comparing two business loan offers

Suppose you need a $100,000 loan for working capital, repaid over 5 years with monthly payments.

Offer A: 8.5% interest, 3% origination fee, $500 documentation fee.
Offer B: 9.0% interest, no fees.

At first glance, Offer A has the lower rate, but the fees are significant. Enter both offers into the calculator:

Offer A will show a higher effective APR once fees are included.
Offer B may have a slightly higher monthly payment but a lower total cost over the life of the loan.

Looking at total interest + fees and the effective APR gives you a clearer picture than the nominal rate alone.

Frequently asked questions

Can I use this for a line of credit?

You can approximate a line of credit if you know the average balance you expect to carry and for how long. However, because lines of credit are revolving and balances change frequently, this calculator is most accurate for fixed-term loans.

What term should I choose for a business loan?

Shorter terms mean higher payments but lower total interest; longer terms reduce the payment but increase total cost. Many businesses match the term to the useful life of the asset being financed (for example, 3–5 years for equipment, 10–25 years for real estate).

How accurate is the APR estimate?

The APR calculation assumes:

All fees are paid upfront at closing.
Payments are made on schedule.
The interest rate is fixed for the entire term.

If your loan has variable rates, additional ongoing fees, or irregular payment schedules, the real APR may differ.

Business Loan Calculator

Loan details

Fees (optional)

Results

Principal vs. interest

Amortization schedule