Business Loan Calculator

How the Business Loan Calculator works

A standard business term loan works like most other installment loans: you borrow a fixed amount and repay it in equal monthly payments over the loan term, with each payment covering interest first and the remainder reducing principal.

Beyond the monthly payment, lenders and business owners often think in terms of annual debt service — the total principal and interest paid each year — since it's easier to compare against annual revenue or cash flow projections.

Payment = (P × r) / (1 − (1 + r)^−n)

Before taking on a business loan, model a few different rate and term scenarios to see how they affect both your monthly cash flow and your total borrowing cost — a longer term lowers the payment but usually increases total interest paid.

A worked example

A $75,000 term loan at 9% over 7 years has a monthly payment of $1,206.68. Total interest is $26,361.19, bringing the total repaid to $101,361.19.

Term	Monthly payment	Total interest
3 years	$2,384.96	$10,859
5 years	$1,556.90	$18,414
7 years	$1,206.68	$26,361

Judge the payment against the loan's purpose: if $75,000 of equipment adds more than $1,207 a month in profit or saved cost, the 7-year loan pays for itself.

How to read your results

The payment is principal and interest on a standard amortizing term loan. Real business financing may add an origination or SBA guarantee fee, require a personal guarantee, or carry a variable rate — read the term sheet alongside this estimate.

When to use this calculator

Use it when evaluating equipment financing, a working-capital term loan, or an SBA 7(a) loan, and when building the debt-service line of a cash-flow forecast. Lenders look for a debt-service-coverage ratio comfortably above 1.25×.

Common mistakes to avoid

Matching a long loan to a short-lived asset. Don't still be paying in year 7 for something replaced in year 3.
Ignoring seasonality. A flat monthly payment can strain a business with lumpy revenue; ask about seasonal or interest-only periods.
Overlooking fees and covenants. Origination fees, prepayment penalties, and financial covenants change the true cost.
Confusing APR with factor rate. Merchant cash advances quote a factor rate that often translates to a very high APR.

Frequently asked questions

What interest rates are typical for business loans?

Rates vary widely based on the lender, loan type, and your business's creditworthiness — typically ranging from around 6% for well-qualified borrowers with bank or SBA loans to well into the double digits for online or short-term lenders.

Fixed vs. variable rate — which is better?

A fixed rate keeps your payment predictable for budgeting, while a variable rate may start lower but can rise over time with market rates. If cash flow stability matters most to your business, a fixed rate is usually the safer choice.

Does this work for SBA loans?

Yes, for estimating the standard payment on the amortizing portion of an SBA loan. Keep in mind that SBA loans often include additional guarantee fees and closing costs that this calculator doesn't factor in.

What is 'debt service' and why does it matter?

Debt service is the total amount of principal and interest you must pay on your debt over a given period — commonly measured annually. Lenders look at your debt service relative to your business income (your debt service coverage ratio) to judge whether you can comfortably afford the loan.

Written and reviewed by the LoanPayoff.io editorial team, which covers consumer lending and debt repayment. Our calculators use the standard amortization and interest formulas published in finance textbooks and used by lenders to build repayment schedules. Last reviewed: August 2026.