Business loan calculator (with amortization schedule)

How much will a business loan really cost your company, given the interest rate and fees?

Can your business’s monthly revenue support the repayment terms?

When you’re considering a business loan, you need to know how to calculate the actual cost of the loan and assess the repayment schedule to make sure the funding meets your needs and aligns with your finances.

In this article, we cover the essentials of business loans, including common types, alternative funding options, and what to expect in terms of interest and fees.

We’ll also provide a business loan calculator that can do the math for you, making it easy for you to compare different financing types and find the best option.

Here’s what we’ll cover:

Business loan calculator

Note: this calculator is for illustrative purposes only.

All banks, financial institutions and lenders will have their own methodology as to how interest is calculated.

This business loan calculator can help you evaluate financing options or identify your optimal loan terms.

Here are a few ways to use this tool:

• Determine your monthly payment given the loan amount, interest rate, fees, and term. Factor the payment into your budget to see how it will affect your cash flow.
• Calculate how much you’ll repay over the course of the loan, including total interest. Get a better sense of the real cost of borrowing money and make an informed decision about financing.
• Assess the total cost of the loan including principal, interest, and fees. Compare funding opportunities against each other to find the smartest option for your business.

How to use the business loan calculator

To use this free business loan calculator, input the following information:

• Interest rate: The percentage that the financial institution charges for lending the funds.
• Compound frequency: How often the lender calculates interest and adds it to the loan principal.
• Loan term: The number of years the borrower has to pay back the loan via regular payments.
• Payment frequency: How often the borrower is responsible for making a loan payment.
• Origination fee: The loan processing fee, which is typically deducted from the disbursement.
• Other fees: Late payment fees, prepayment fees, and other additional fees. (See the full list below.)

With this business loan calculator, payments and costs are easy to assess at a glance.

Based on your input, the tool displays the regular loan payment as well as the total payment amount, total interest, total interest and fees, total loan cost, and amortization schedule.

What is amortization?

Amortization is an accounting method that has two meanings.

Amortization of assets refers to writing down the cost of intangible assets spread over the predicted useful life of the asset.

It reflects the cost of an asset, such as software, over the period of time it’s expected to be used.

Amortization and depreciation are included in an income statement and are also shown on the balance sheet.

Amortization of loans (which is relevant here) systematically means reducing the value of a loan over a period of time.

Basically reducing debt through repayments.

An amortization table reflects the reduction of the debt by showing a schedule of the regular principal and interest payments and the decreasing loan balance.

You can use our business loan calculator with amortization schedules to track your repayment progress.

It breaks down your loan balance, payments, interest, and principal throughout the repayment term.

Types of business loans

As a business owner, you could be eligible for one or more different kinds of financing.

Use this list to consider loan options based on your borrowing needs and business type.

Term loan

A term loan is one of the most common financing options for businesses of any size.

The lender delivers the loan amount as a lump sum.

Then, you pay off the loan with interest over a set period of time.

Term loans are ideal for businesses that need fixed payments to maintain steady cash flow during the repayment period.

And since term loans tend to have comparatively low interest rates, this loan type is one of the most widely affordable options.

However, getting approval for a term loan may require collateral or a personal guarantee.

And qualifying for the lowest interest rates often requires a good credit score (e.g., around 700) and multiple years in business.

Equipment financing

Equipment financing is a type of loan for purchasing business equipment like manufacturing systems, commercial vehicles, or agricultural equipment.

The equipment itself serves as collateral.

Many lenders offer both equipment loans and equipment leases.

Loans require you to repay the principal plus interest.

Leases let you finance the equipment for a pre-set period before returning the equipment to the lender.

While this type of financing typically can be a good option for buying new equipment, it doesn’t work for other types of purchases.

For very large purchases, equipment financing may require a down payment.

Invoice factoring

Invoice factoring is a method of selling unpaid invoices to a lender for them to take the responsibility for collecting payment.

You get a lump sum that generally equals between 70% and 90% of the original invoice value.

When the customer pays the invoice, the lender forwards you the remaining amount less the factoring company’s fee.

Because invoice factoring doesn’t require a credit check, it doesn’t negatively affect your credit score.

Plus, it gives you access to funds faster than many traditional loans, which can help improve and manage cash flow.

However, this financing option can get expensive quickly.

Lenders typically charge fees by applying a factor rate to the invoice value.

Basically, increasing the cost when your customers take more time to pay.

Invoice financing

Invoice financing also uses unpaid invoices as leverage.

But instead of purchasing invoices, lenders use them as collateral, providing a cash advance of up to 90% of the original value.

Customers pay the invoice directly to you, and you’re responsible for repaying the principal and fees to the lender.

Like invoice factoring, invoice financing can give you quick access to funds. It’s helpful for addressing cash flow gaps.

However, invoice financing can be pricey, as lenders generally charge both interest and credit management fees.

The creditworthiness of your customers is a key factor in determining the terms of the loan.

Credit card

A credit card gives you access to a revolving line of credit.

You can use it as needed to borrow funds, pay back the balance, and draw on the line of credit again.

You only pay interest on the amount you borrow.

Credit cards give business owners a quick and convenient way to access funds for purchases or cash advances.

They’re ideal for purchasing equipment or inventory, and some offer rewards or cash back on purchases.

If you repay the full balance each month, a credit card can be an inexpensive way to borrow funds.

But if you don’t, interest adds up and credit cards are far less affordable.

Plus, the annual percentage rate (APR) can increase over time, causing you to pay more for financing.

Line of credit

A line of credit allows your business to draw from a pool of funds that has a pre-set limit.

Similar to a credit card, you can borrow from the line of credit, repay it, and withdraw funds again as needed.

You owe interest on the funds you borrow rather than on the full line of credit.

A range of lenders—traditional banks, online banks, and alternative lenders—offer lines of credit.

Because they’re unsecured (i.e., they don’t require collateral) lines of credit are often easier to obtain than term loans.

However, lines of credit can be more expensive than other loan options.

Many charge fees for maintenance or withdrawals, which add to the cost of the loan.

Merchant cash advances

A merchant cash advance lets businesses use future sales as leverage.

You can get a cash advance based on the amount of debit and credit card sales you typically generate in a month.

Merchant cash advances give you access to capital quickly, and they don’t require collateral.

They can be a reasonable option during a cash flow emergency.

However, merchant cash advances can be costly. Lenders charge a factor rate, which they set as an upfront flat rate.

Many also charge high origination fees for the convenience of a cash advance.

Commercial real estate loan

A commercial real estate loan is a term loan designed specifically for commercial space.

You purchase or lease real estate and then repay the loan and interest over a pre-set time period.

Commercial real estate lenders typically offer comparatively low interest rates. Many also have lengthy repayment terms.

Similar to a mortgage, a commercial real estate loan takes time for the application process.

Many lenders require a detailed loan application and a property inspection, making this option less ideal for quick funding.

Microloan

Microloans are similar to term loans in that they give you access to a lump sum that you repay with interest.

But as the name suggests, microloans are for smaller amounts, generally up to $50,000.

The Small Business Administration (SBA) can help qualifying small businesses get microloans under certain conditions.

Otherwise, online banks and alternative lenders service these types of loans.

They’re ideal for startups and small businesses seeking working capital.

However, microloans tend to have higher interest rates than term loans.

You can use a startup business loan calculator like the tool above to estimate your monthly payments and compare options.

Small Business Administration (SBA) loans

The SBA partners with traditional lenders to allow small business access to business loans for working capital and fixed assets.

These SBA-backed loans make financing easier for both startups and established businesses to access.

• 7(a) loans: As the SBA’s main business loan offering, the 7(a) loan program allows small business owners to borrow up to $5 million for anything from working capital to refinancing debt to purchasing equipment.
• 504 loans: Designed for major fixed assets, the 504 loan program lets small businesses borrow up to $5 million to purchase real estate, land, or machinery with up to 25-year repayment terms.

To be eligible for these loans, your business must meet the SBA’s definition of small.

Your business must be for-profit, but it can’t be one of the SBA’s ineligible business types.

Because the SBA doesn’t fund these loans, you have to apply for them via a participating lender.

You can use the SBA’s Lender Match portal to explore options and then compare terms using our small business loan calculator.

Are there other sources of funding for a business?

If loans aren’t suitable for your business, you have several other ways to secure funding.

Some of the most common options include overdrafts, venture capital, crowdfunding, and personal loans.

Overdraft

An overdraft happens when your business bank account has insufficient funds to cover a transaction, but the bank allows your business to continue withdrawing funds even when the available amount is below zero.

Some banks offer overdraft protection, meaning they automatically pay overdrafts.

You repay the overdrawn amount plus fees and interest.

Similar to a line of credit, overdrafts can serve as an instant source of funding.

They often have comparatively lower interest rates, making them a good alternative to lines of credit and business credit cards.

Personal loan

A personal loan is financing that you apply for as an individual rather than as a business.

It can be a smart option for startups and new businesses that have no borrowing history, which is a requirement for many lenders.

However, personal loans often have lower maximum amounts, so they only work in limited situations.

And if your business is unable to repay the loan, your personal credit suffers.

Venture capital

Venture capital (VC) is private equity that funds startups with potential for above-average growth.

VC firms are backed by limited partners (LPs), and when they invest in your business, they gain an ownership stake in return.

Most startup businesses raise venture capital in a series of funding rounds.

Each round aligns with the company’s stage of growth.

While venture capital can contribute to incredible business growth, raising this kind of funding is a complex and often slow process.

It also dilutes your ownership, and it can take away some level of control over the business.

Crowdfunding

Crowdfunding allows a large number of individuals to contribute money toward your business’s financing needs.

Instead of repaying contributors, your business might consider giving a product or service to each individual.

This funding option allows businesses of all sizes to raise funds while using the power of social media to generate interest in the business’s growth.

Most crowdfunding websites charge a percentage of the amount raised.

What business loan fees will I have to pay?

Each loan type has its own set of fees.

Input them into our commercial business loan calculator above to get an accurate assessment of the loan’s actual cost.

Term loans

Term loans generally include an origination fee, which covers the loan paperwork and application.

The lender usually subtracts the fee from the amount you receive.

Conventional banks charge between 0.5% to 1%, while online lenders charge between 1% and 9%.

SBA loans

SBA loans usually include an SBA guarantee fee, which the lender passes on from the SBA.

The lender can either subtract it from the disbursement or include it in the cost of the loan.

The fee ranges from 0.25% to 3.75% of the SBA-guaranteed part of the loan.

Microloans

Microloans backed by the SBA typically have a guarantee fee on a portion of the loan.

Microloans from other lenders may have origination fees.

Commercial real estate loans

Commercial real estate loans from traditional banks include an origination fee between 0.5% and 1%, while SBA loans include an SBA guarantee fee between 0.25% and 3.75% on the SBA-backed part of the loan.

Real estate loans also have closing costs as well as appraisal and inspection fees, which vary by location.

Lines of credit

Lines of credit often incur an origination fee when you first open them.

Lenders may also charge an annual fee, a maintenance fee to keep the line of credit open, and a draw fee when you make a withdrawal.

Some also charge prepayment fees for paying off the line of credit early.

Business credit cards

Business credit cards generally have annual fees that can cost hundreds of dollars a year. Most card issuers also charge late payment fees, cash advance fees, and balance transfer fees.

Equipment financing

Equipment financing includes an origination fee. Some lenders also charge prepayment penalties, adding to the cost of paying off the loan early.

Invoice financing

Invoice financing usually has a credit management fee of 0.25% to 0.5%, which is billed on a monthly basis. Lenders may also charge an origination fee.

Invoice factoring

Invoice factoring includes a factor rate, which acts as a service fee. It’s typically between 0.5% and 3% of the invoice value.

This fee often increases after the first 30 days.

Merchant cash advances

Merchant cash advances also have factor rates, which average between 1.1% and 1.5%.

These lenders often charge a flat origination fee to open the account, too.

Sources cross-referenced from MCA, Lending Tree, FundThrough, Swoop, and NerdWallet.

What are the typical terms for a business loan?

Business loan repayment terms can last anywhere from a few months to a few decades.

While borrowers can often negotiate them to some extent, each financing type has its own standard term lengths.

Typical repayment terms for business loans include:

Loan type	Repayment terms
Term loan	From three to 10 years
SBA loan	Up to 10 years (working capital loans) and up to 25 years (real estate loans)
Microloan	From three to six years
Commercial real estate loan	Up to 25 years
Line of credit	From six months to two years
Equipment financing	From one to 10 years
Invoice financing	From 30 to 90 days
Invoice factoring	From 30 to 90 days
Merchant cash advance	From 12 to 24 months

Terms for business credit cards are a little different.

Most have a 28- to 31-day billing cycle.

After the lender issues the billing statement, you have 15 to 21 days to make a minimum payment.

What business loan interest rate should I expect to pay?

Business loan interest rates depend on several factors including loan type, length of time in business, and business credit score or history.

They can also vary over time.

As a guide, average business loan interest rates are:

Loan type	Interest rate
Term loan	6.45% to 12.45%
SBA loan	10.5% to 14% (variable rate) and 12.5% to 15.5% (fixed rate)
Microloan	8% to 13%
Commercial real estate loan	5% to 10%
Line of credit	8% to 60%
Business credit card	19.59% to 27.99%
Equipment financing	6.49% to 31.3%
Invoice financing	1.5% to 3% over the prime rate

Sources cross-referenced between NerdWallet, Bankrate, Investopedia and Federal Reserve Bank of Kansas City Small Business Lending Survey December 2024.

How much do business loans offer?

The amount you can borrow depends on the type of financing you choose.

In some cases, the type of lender can also affect the total loan amount.

Here’s a breakdown of the amounts you may be eligible to borrow:

Loan type	Loan amount
Term loan	Up to -$10 million. A more usual range is between $250,000 and $500,000
SBA loan	Up to $5 million
Microloan	Up to $50,000 from SBA
Line of credit	Up to $1 million
Equipment financing	80-90% of the value of the equipment
Invoice financing/factoring	70-90% of invoice value
Merchant cash advance	50-250% of your monthly sales

Sources: Bankrate, SBA loans, SBA microloans, SBA 504 loans, LendingTree and NerdWallet.

Can I fund my LLC with my own money as a loan?

Yes, you can use your own money as a loan to fund your LLC.

Unlike other financing options, making a personal loan to your business doesn’t require an eligibility check or fees.

Plus, you can set your own interest rates.

If you pursue this financing option, you must treat it like a loan by creating a written agreement with a repayment schedule and an interest rate.

Then, you have to pay off the loan (i.e., repay yourself) according to the terms.

If the loan isn’t documented or repaid according to the repayment schedule, the money provided will be treated as an owner contribution and increase your equity in the LLC.

It’s worth noting that a loan from a non-owner that isn’t repaid would be considered income with taxes due.

It’s also important to note that loaning money to your own business isn’t a risk-free endeavor.

If your business is unable to repay the loan on time or at all, your personal finances will be negatively affected.

Final thoughts

With a well-rounded understanding of the available options, you can make an informed choice about the best loan type for your business.

Use our business loan calculator to assess payment and loan costs, compare different offers, and choose the financing that best fits your needs and goals.

To simplify on-time loan repayment, Sage offers accounting software that makes it easier to handle expenses, automate billing, and improve cash flow control.

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This article was verified by a US-based Certified Public Accountant (CPA).

Financial information can change frequently and we recommend you always seek advice from a qualified CPA, tax professional, or financial advisor before applying for a loan or funding.

Rates and loan fees listed in this article were correct at the time of publishing but can change on a regular basis.

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