How a business term loan payment is calculated
A fixed-rate term loan is repaid in equal installments. Each period the lender charges interest on the balance you still owe, at one twelfth of the annual rate for monthly payments (one fifty-second for weekly), and the payment is set so the balance reaches zero at the end of the term. As the balance falls, more of each payment goes to principal and less to interest.
Choose how often you pay. Biweekly or weekly payments reduce the balance a little faster than monthly payments, so total interest is slightly lower for the same rate and term. The calculator uses a whole number of payments, so a term that does not divide evenly is rounded to the nearest payment.
Interest rate, origination fee and APR
The interest rate is the yearly cost of the money. The APR adds the lender's fees to that cost and spreads them over the term, so it is the better number for comparing offers. Lenders in the US usually quote an APR as the nominal annualised rate, which is how this page shows it.
Origination fees are usually deducted from the loan, so you receive less than you borrow. A common published example is a $50,000 loan at 8% with a 3% origination fee: over 12 months the payment is $4,349.42 and the APR is 13.77%; stretched over 36 months the payment falls to $1,566.82 and the APR to 10.08%, but total interest rises to $6,405.46.
Worked example: $100,000 over seven years
Borrow $100,000 at 9.5% a year over seven years, paid monthly, with a 2% origination fee of $2,000 deducted from the loan. You receive $98,000. The payment is $1,634.40 for 84 months, so you repay $137,289.45 in total, of which $37,289.45 is interest.
With the fee, the total cost of the loan is $39,289.45, which is 39.29% of the amount borrowed. Because the fee reduces the cash you receive, the APR is 10.15%, higher than the 9.5% interest rate. After 12 months you still owe $89,435.07, having paid $9,047.84 in interest in the first year.
Interest-only start, biweekly payments and extra payments
An interest-only period lowers the early payments but leaves the balance unchanged, so the later payments are larger. On $250,000 at 8.5% over 10 years with the first 12 months interest-only and a 1.5% origination fee, you pay $1,770.83 a month in year one and then $3,319.84 a month, and total interest is $129,792.52.
Paying every two weeks cuts interest a little: $50,000 at 8% over two years with no fee is 52 biweekly payments of $1,041.99 and $4,183.34 of interest. Extra payments help more. Adding $300 to every payment on the $100,000 example clears the loan in 67 months, 17 months early, and saves $8,162.52 of interest.
Paying off early and prepayment charges
Some lenders charge a fee for paying a loan off early, usually a percentage of the balance, and the APR does not include it. Enter the month you plan to pay off and the charge to see the cost. On the $100,000 example, paying off after 36 months leaves a balance of $65,055.50 plus a 3% charge of $1,951.66, and the total cost of the loan to that point is $27,845.50.
What this estimate leaves out
This is a planning estimate for a fixed-rate loan. It does not check eligibility, collateral, a personal guarantee or lender underwriting, and it does not model a variable rate, SBA guarantee fees, merchant cash advances or lines of credit. Lenders may compound interest daily or round payments differently, so the figures in your loan agreement are the ones that count.
To work out an APR from an offer, use the business loan APR calculator .
To plan an early payoff, use the business loan payoff calculator .
Use the right country page
This page stays in US dollars and uses US terms: origination fee, APR as the nominal annualised rate and prepayment charge. The country choices above the inputs open separate local pages. Choosing United Kingdom opens the UK business loan calculator, which uses arrangement fees, flat-rate quotes and APR as the effective annual rate. The inputs reset and amounts are not converted.
Inputs for the business loan calculator
Loan amount
How much you want to borrow, before any fee is taken from it.
Interest rate
The yearly rate on the loan, before fees. The APR with fees is shown in the results.
Term
The loan term in years or in whole months.
Payments
Monthly, every two weeks or weekly.
Interest-only period at the start
Months at the start when you pay only interest. Enter zero for none.
Origination fee
A percentage of the loan amount, and whether it is deducted, added or paid separately.
Fee with each payment
A fixed servicing fee charged with every payment.
Closing and other fees
Fixed costs paid in cash at the start.
Extra paid with each payment
An extra amount added to every payment after any interest-only period.
Settle the loan after
Months until you pay off the whole balance. Enter zero to run to the end of the term.
Prepayment charge
A percentage of the balance you pay off early. Enter zero if none.
CALCULATOR QUESTIONS
US business loan calculator questions
How do you calculate a business loan payment?
Charge interest each period on the balance at the periodic rate and set a level payment so the balance reaches zero at the end. $100,000 at 9.5% over seven years is $1,634.40 a month.
What is the difference between the interest rate and the APR?
The APR adds fees to the interest rate. A 2% origination fee deducted from a $100,000 loan lifts a 9.5% rate to a 10.15% APR.
Is the origination fee deducted from the loan?
Often yes, so you receive less than you borrow. Choose deducted, added or paid separately to match your offer.
How much can extra payments save?
On a seven-year $100,000 loan at 9.5%, an extra $300 a month saves $8,162.52 of interest and clears the loan 17 months early.
Does the APR include a prepayment penalty?
No. The APR covers interest and fees, so check any prepayment charge separately and use the pay-off-early inputs.
Can I use this for an SBA loan?
Only for a fixed-rate estimate. Many SBA loans have variable rates and their own fee schedules, so use your lender's actual terms.
What happens when I change country?
The United Kingdom option opens the separate UK business loan calculator, in pounds, with arrangement fees and flat-rate quotes. Your inputs are reset rather than converted.