Business Loan Calculator
Calculate commercial loan payments and compare financing options
Common Business Loan Types
Term Loan
Fixed amount with regular payments over set period. Good for major purchases.
SBA Loan
Government-backed with lower rates. Longer approval process, excellent terms.
Line of Credit
Flexible borrowing up to limit. Pay interest only on used amount.
Equipment Loan
Equipment serves as collateral. Often 100% financing available.
How to Use This Business Loan Calculator
- Choose your calculation: Payment, Affordability, or Compare Loans
- For Payment: Enter loan amount, interest rate, term, and any origination fees
- For Affordability: Input monthly revenue, expenses, and target debt service ratio
- For Comparison: Enter details for two loan offers side-by-side
- Select payment frequency (monthly, bi-weekly, weekly, or quarterly)
- Click Calculate to see payment amounts, total costs, and effective APR
Example: A $250,000 business loan at 8% for 5 years with 2% origination fee: Monthly payment is $5,068. Total interest is $54,088. With the $5,000 fee, total cost is $59,088 and effective APR is 8.9%. If monthly cash flow is $15,000, DSCR would be a healthy 3x.
Tip: Use the Affordability calculator first to determine how much you can comfortably borrow before shopping for loans.
Why Use a Business Loan Calculator?
A business loan calculator helps you evaluate financing options, understand true costs, and ensure loan payments won't strain cash flow.
- Calculate monthly payments to ensure they fit your cash flow
- Determine maximum loan amount based on your debt service capacity
- Compare term loan offers from multiple lenders
- Understand the impact of origination fees on effective APR
- Plan for equipment financing or expansion capital
- Evaluate SBA loan terms against conventional options
Understanding Your Results
Business loan viability depends on both total cost and cash flow impact. Evaluate results against your financial capacity.
| Result | Meaning | Action |
|---|---|---|
| DSCR > 1.5 | Strong debt coverage | Comfortable position; most lenders will approve readily |
| DSCR 1.25-1.5 | Adequate coverage | Acceptable to most lenders; monitor cash flow closely |
| DSCR 1.0-1.25 | Tight coverage | Risky territory; seek smaller loan or improve cash flow first |
| DSCR < 1.0 | Insufficient coverage | Cash flow can't support this debt; reduce amount or reconsider |
Meaning: Strong debt coverage
Action: Comfortable position; most lenders will approve readily
Meaning: Adequate coverage
Action: Acceptable to most lenders; monitor cash flow closely
Meaning: Tight coverage
Action: Risky territory; seek smaller loan or improve cash flow first
Meaning: Insufficient coverage
Action: Cash flow can't support this debt; reduce amount or reconsider
Note: DSCR (Debt Service Coverage Ratio) = Net Operating Income / Total Debt Payments. Most lenders require minimum 1.25x DSCR.
About Business Loan Calculator
Formula
PMT = P × [r(1+r)^n] / [(1+r)^n - 1] Where PMT is the periodic payment, P is principal, r is the periodic interest rate, and n is number of payments. Effective APR accounts for fees: APR ≈ (Total Interest + Fees) / Principal / Years × 100%.
Current Standards: 2026 typical business loan rates: SBA loans 7-10%, bank term loans 7-12%, online lenders 10-30%, equipment financing 6-15%. Rates depend on credit, time in business, revenue, and collateral.
Frequently Asked Questions
What's a good DSCR for a business loan?
Most lenders want DSCR of at least 1.25x, meaning you earn $1.25 for every $1 of debt payment. Conservative lenders and larger loans may require 1.35-1.5x. Higher DSCR indicates lower risk and may qualify you for better rates. Calculate your DSCR before applying to know your position.
How do I compare loan offers with different fees?
Compare using effective APR, which accounts for all fees. A loan at 7% with 3% fees often costs more than 8% with no fees, especially for shorter terms. Also compare total cost over the loan life. Our Compare Loans calculator shows both metrics side-by-side.
Should I choose SBA loans or conventional?
SBA loans offer lower rates, longer terms, and lower down payments, but require extensive documentation and take 30-90 days to close. Conventional bank loans are faster (1-2 weeks) but may have higher rates and shorter terms. Online lenders are fastest (days) but most expensive. Match the loan type to your timeline and tolerance for paperwork.
What's the difference between term loans and lines of credit?
Term loans provide a lump sum with fixed payments over a set period - best for one-time purchases or projects. Lines of credit let you draw and repay repeatedly up to a limit - best for ongoing working capital or unpredictable needs. Term loans have predictable costs; lines provide flexibility but require discipline.
How much can my business afford to borrow?
Calculate your monthly net operating income (revenue minus operating expenses, before debt payments). Apply a conservative DSCR (1.25-1.5). If NOI is $15,000 and target DSCR is 1.25, maximum debt payment is $12,000/month. Work backward from that payment to find max loan amount at your expected rate and term.