HesapHanem

Business Loan Calculator

Estimate the monthly payment and full cost of financing your business.

How it is calculated

The monthly payment uses the amortisation formula: r = rate / 100 / 12, n = years × 12, payment = P × r × (1 + r)n / ((1 + r)n − 1), with P the loan amount in dollars. At a 0% rate it is P / n. Interest is payment × n − P. The origination fee is treated as a separate upfront cost: it is added on top, so total cost = interest + fees and total paid = all instalments + fees. The fee does not reduce the amount borrowed and is not folded into the rate, so this is not an APR. Loan amount and term must be above zero, rate and fee not negative.

Worked example

Loan 100000 at 9% for 5 years with a 2000 fee. r = 9 / 100 / 12 = 0.0075 and n = 60. (1.0075)60 is about 1.5657, so payment = 100000 × 0.0075 × 1.5657 / 0.5657 = $2,075.84 a month. The 60 instalments add up to $124,550.13, so interest is $24,550.13. Adding the 2000 fee gives a total financing cost of $26,550.13 and $126,550.13 paid overall.

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Common mistakes

  • Entering the term in months. The field is in years, so a 36-month loan is 3.
  • Expecting the fee to be taken out of the loan proceeds. Here it is added on top of the payments, so if your lender deducts it from the disbursement, you receive less than the amount you entered.
  • Treating the interest rate as an APR. Because the fee is shown separately, the real annual cost is higher than the nominal rate you typed.
  • Typing a percentage fee (for example 2) instead of a dollar amount. The fee field is money, so 2% of 100000 is 2000.
  • Leaving out the fee and then comparing two lenders on interest alone.

About this calculator

A business loan calculator applies the standard amortized-loan payment formula to a principal amount, interest rate and term, then layers on origination fees — an upfront charge lenders deduct from the disbursed amount or add to the balance, commonly 1-6% of the loan for term loans and SBA loans.

Small business owners use this before signing financing to compare the true, all-in cost of different loan offers, since two loans with the same headline interest rate can have very different total costs once origination fees, and in some cases the difference between stated interest rate and the effective APR, are accounted for — a distinction lenders are not always required to surface prominently.

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