What a working capital loan is and what this calculator covers
A working capital loan is short-term business financing for payroll, inventory, taxes or a gap while customers pay. Terms run from a few months to a few years. Some lenders charge an interest rate on the balance, and some charge a single fixed fee on the advance.
This calculator repays the amount in equal monthly or weekly installments. It does not model a payment that moves with your sales, a line of credit or a merchant cash advance with a factor rate, and it does not check eligibility.
Worked example: $25,000 over 12 months
Borrow $25,000 at a 12% interest rate over 12 months, paid monthly, with a 2% origination fee of $500 deducted from the loan. You receive $24,500. The payment is $2,221.22 for 12 months, so you repay $26,654.64 in total, of which $1,654.64 is interest.
With the fee, the total cost of borrowing is $2,154.64, which is 8.62% of the amount and an average of $179.55 a month. Because the fee reduces the cash you receive, the APR is 15.85%, above the 12% rate. On a US page the APR is the nominal annualised rate, which is how lenders usually quote it.
Interest rate or fixed fee
An interest rate is charged on the balance you still owe. A fixed fee is a single charge on the advance, such as 8% of the amount, and some advances are repaid from a share of your sales instead of fixed installments. Because a fixed fee does not depend on the term, it has no standard APR. This page treats the fee as a flat charge repaid in equal installments, so the APR is an estimate for the term you enter.
An 8% fixed fee on $25,000 is $2,000.00. Repaid weekly over nine months (39 weeks) it is $692.31 a week and the APR is 20.30%. A 12% fee on $10,000 with a 1% origination fee paid separately and a six-month term costs $1,300.00, which is an APR of 43.72%. The faster you repay a fixed fee, the higher the implied annual rate.
Origination fees and closing costs
An origination fee can be deducted from the loan, added to it or paid separately in cash. Add closing or other fixed costs separately. On $40,000 with a 3% fee of $1,200 added to the loan, $250 of closing costs, a 10.5% interest rate and 18 months, you owe $41,200.00 at the start and need $250.00 in cash. The payment is $2,483.85 and the total cost of borrowing is $4,959.25, an APR of 15.22%.
Interest-only months to ease cash flow
Some lenders allow interest-only payments at the start. The balance does not fall during those months, so the later payments are larger. On $60,000 at 14% over 12 months with the first two months interest-only and a 1.5% fee deducted, you pay $700.00 a month at first and then $6,391.70. Total interest is $5,316.97, the total cost is $6,216.97 and the APR is 16.53%. Interest-only months are not modelled for fixed-fee quotes.
Finding the interest rate from a quoted payment
A lender sometimes quotes only the payment. Choose Quoted repayment (find the rate) under how the lender prices it, then enter the amount, the term and the payment, and the calculator finds the yearly interest rate that gives it. Take $25,000 over 12 months with a 2% origination fee deducted and a quoted payment of $2,250 a month. The implied interest rate is 14.45%, you pay $27,000 in total, the interest is $2,000, the origination fee is $500 and the APR with fees, as the nominal annualised rate, is 18.33%. The same $25,000 at a 12% rate costs $2,221.22 a month, so the quote is about 2.45 points dearer.
The payment must be more than the amount spread over the term, or the rate would be negative, and it cannot be more than a 100% yearly rate would need.
What this estimate leaves out
This is a planning estimate for a fixed agreement. It does not model a payment tied to your sales, a variable rate, daily interest, a personal guarantee, collateral or lender underwriting. Lenders may round payments or calculate interest differently, so the figures in your agreement are the ones that count.
For extra payments and early payoff, use the business loan calculator .
To work out an APR from an offer, use the business loan APR calculator .
Use the right country page
This page stays in US dollars and uses US terms: working capital loan, origination fee and APR as the nominal annualised rate. The country choices above the inputs open separate local pages. Choosing United Kingdom opens the cash flow 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 working capital loan calculator
Loan or advance amount
The cash the business needs, before any fee is taken from it.
How the lender prices it
A nominal interest rate, a fixed fee on the advance or a quoted payment, as in your offer.
Rate or fee
The yearly interest rate, or the fixed fee as a percentage of the advance.
Regular repayment you were quoted
Used when you choose Quoted repayment. The payment on the advance, before other fees; the calculator finds the nominal yearly rate that gives it.
Term
The number of months you take to repay, from 1 to 60.
Repayments
Monthly or weekly. Weekly payments suit short advances.
Interest-only months at the start
Months when you pay only interest. Enter zero for none.
Origination fee
A percentage of the amount, and whether it is deducted, added or paid separately.
Closing and other fees
Fixed costs paid in cash at the start.
CALCULATOR QUESTIONS
US working capital loan calculator questions
How do you calculate a working capital loan payment?
Charge interest each period on the balance and set a level payment so it reaches zero at the end. $25,000 at 12% over 12 months is $2,221.22 a month.
How do I find the interest rate on a working capital loan?
Choose Quoted repayment, enter the amount, term and the payment you were quoted, and the calculator finds the nominal yearly rate. $25,000 over 12 months paid at $2,250 a month implies 14.45%.
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 $25,000 lifts a 12% rate to a 15.85% APR.
Does a fixed-fee advance have an APR?
There is no standard APR because the fee does not depend on the term. The calculator treats the fee as a flat charge repaid in equal installments, so an 8% fee repaid weekly over nine months is an estimated 20.30%.
Can I pay weekly?
Yes. Choose weekly payments and the calculator uses a whole number of weeks for the term. Weekly payments reduce the balance a little faster than monthly ones.
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.
What happens when I change country?
The United Kingdom option opens the separate cash flow loan calculator, in pounds, with arrangement fees and flat-rate quotes. Your inputs are reset rather than converted.