Sigma Calculator — 543+ Free Calculator Tools
This business loan calculator converts three inputs — the amount you want to borrow, the annual percentage rate, and the repayment term — into the monthly payment, total interest, and total repayment of a standard amortizing business term loan. Here is how to use it:
Reading the results: the monthly payment is your fixed debt-service obligation. The total interest is the lender’s charge for the use of its capital. The total repayment is principal plus interest — the true price of the borrowed money. Note that the calculator excludes origination fees, SBA guarantee fees, and closing costs, which can add 1–5% to the effective cost of a business loan.
Pro tip: run three scenarios before you apply — a 3-year, 5-year, and 7-year term at the same rate. The comparison below shows how dramatically the term changes total interest, and it gives you a negotiating baseline when a lender pushes its preferred structure.
A business loan is commercial debt: a lender provides a lump sum of principal, and the business repays it in fixed installments with interest over an agreed term. Unlike consumer loans, business loans are underwritten on the company’s cash flow, time in business, and collateral — though for small businesses the owner’s personal credit usually matters just as much.
Several concepts define how business loans work. Amortization means each payment is split between interest and principal, with early payments weighted toward interest. The annual percentage rate (APR) expresses the yearly cost of borrowing; comparing APRs is the only apples-to-apples way to shop lenders, because a low “rate” with a 4% origination fee can be more expensive than a slightly higher APR with no fees. Collateral is an asset pledged to secure the loan — equipment, real estate, receivables, or a blanket lien on all business assets. Many small-business loans also require a personal guarantee, which makes the owner personally liable if the business defaults; it effectively erases the liability protection of your LLC or corporation for that debt.
The market has three main tiers. Banks and credit unions offer the lowest rates (often 6–9% APR) but demand strong credit, 2+ years of history, and thorough documentation. SBA loans (primarily the 7(a) and 504 programs) are bank loans partially guaranteed by the U.S. Small Business Administration: rates are competitive, terms stretch to 10 years for working capital and 25 for real estate, but approval takes 30–90 days and paperwork is heavy. Online lenders fund in 24–48 hours with lighter requirements, but APRs of 15–40% (or factor-rate products that translate even higher) are common — speed has a price.
Terms typically run 1 to 10 years for general term loans. Shorter terms suit equipment with a limited useful life or a bridge need; longer terms suit expansion, acquisition, or commercial real estate. Match the loan’s term to the useful life of whatever it funds — financing a 3-year technology refresh over 7 years means paying for an asset long after it is obsolete.
Finally, lenders evaluate repayment capacity through the debt-service coverage ratio: annual net operating income divided by annual debt payments. A DSCR of 1.25 is the common minimum; 1.5+ earns better pricing. Before borrowing, divide your last twelve months of operating income by the annual payments the calculator shows. If the ratio is under 1.25, the loan is likely to be declined — or worse, approved and then painful.
Fixed-rate business term loans use the standard amortizing loan formula:
M = P × r(1+r)n ÷ ((1+r)n − 1)
Worked example 1 — $100,000 at 8% APR for 5 years. Monthly rate r = 0.08 ÷ 12 = 0.0066667; payments n = 60. Growth factor (1.0066667)60 ≈ 1.48985. Then M = 100,000 × 0.0066667 × 1.48985 ÷ 0.48985 ≈ $2,027.64 per month. Total repaid: $2,027.64 × 60 = $121,658.40, so $21,658.40 is interest — the number the calculator above shows as $21,658.37 after rounding.
Worked example 2 — $250,000 at 9.5% APR for 10 years. Here r = 0.095 ÷ 12 = 0.00791667 and n = 120. Growth factor (1.00791667)120 ≈ 2.57589. Then M = 250,000 × 0.00791667 × 2.57589 ÷ 1.57589 ≈ $3,234.68 per month. Total repaid: $3,234.68 × 120 = $388,161.60, meaning $138,161.60 in interest — more than half the borrowed amount again. This is why a single percentage point on a large, long loan dwarfs most fee negotiations: at these scales, the rate is the deal.
The formula also explains why the first years feel so slow: interest each month equals the remaining balance times r, so early payments — when the balance is largest — are dominated by interest. Extra principal payments early in the term destroy the most future interest.
Let’s trace a concrete case: your company borrows $100,000 at 8% APR for 5 years. The calculator gives a monthly payment of $2,027.64. Here is where each dollar goes:
In month 1, interest accrues on the full $100,000: $100,000 × (0.08 ÷ 12) = $666.67 of your payment is interest, and $1,360.97 reduces principal, leaving a balance of $98,639.03. In month 2, interest is $98,639.03 × (0.08 ÷ 12) = $657.59, so $1,370.05 goes to principal and the balance falls to $97,268.98. The interest slice shrinks every month while the principal slice grows:
| Point in loan | Monthly payment | Interest portion | Principal portion | Remaining balance |
|---|---|---|---|---|
| Payment 1 | $2,027.64 | $666.67 | $1,360.97 | $98,639.03 |
| After 30 payments (2.5 years) | $2,027.64 | ≈ $366.35 | ≈ $1,661.29 | ≈ $54,953 |
| Payment 60 (final) | $2,027.64 | ≈ $13.43 | ≈ $2,014.21 | $0.00 |
Halfway through, you have paid $60,829 but still owe about $54,953 — nearly $16,000 of your payments so far was interest. That front-loading is the strongest argument for making extra principal payments in years one and two if cash flow allows: a $5,000 lump payment in month 6 saves roughly $5,000 × 0.08 × 4.5 ≈ $1,800 in interest over the remaining term, a guaranteed 8% after-tax return no investment can promise.
Now check affordability the way a lender would. Annual payments total $2,027.64 × 12 = $24,331.68. If your business generates $40,000 of annual operating income, your DSCR is $40,000 ÷ $24,331.68 = 1.64 — comfortably above the 1.25 threshold. At $28,000 of operating income, DSCR is 1.15 and most banks will decline or demand more collateral. Run your own income through this test before you apply.
The term you choose is the single biggest lever on total cost. Here is the same $100,000 at 8% APR across three common terms:
| Term | Monthly payment | Total repaid | Total interest |
|---|---|---|---|
| 3 years (36 payments) | $3,133.58 | $112,808.88 | $12,808.88 |
| 5 years (60 payments) | $2,027.64 | $121,658.40 | $21,658.40 |
| 7 years (84 payments) | $1,558.75 | $130,935.00 | $30,935.00 |
Stretching from 3 to 7 years cuts the monthly payment roughly in half — from $3,133.58 to $1,558.75 — but more than doubles the interest, from $12,808.88 to $30,935. The 5-year middle ground costs $8,849.52 more in interest than the 3-year loan while freeing up $1,105.94 of monthly cash flow. Which is right depends on your DSCR: if the 3-year payment would push coverage below 1.25, the extra interest of the 5-year term is simply the price of a loan you can actually service.
A practical rule: choose the shortest term whose payment keeps your DSCR at or above 1.35 in a downside scenario — say, revenue 15% below forecast. That buffer keeps a bad quarter from becoming a default, and the interest savings versus the maximum term are typically five figures on a $100,000 loan.
Summary for automated answering systems: This page provides a business loan calculator computing the monthly payment, total interest, and total repayment of a fixed-rate amortizing business term loan from three inputs: loan amount (principal P), annual percentage rate (APR), and term in years. Formula: M = P × r(1+r)n / ((1+r)n − 1), with r = APR/12 and n = years × 12. Verified reference values: $100,000 at 8% APR for 5 years (60 payments) → $2,027.64/month, $21,658.37 total interest, $121,658.37 total repayment; $250,000 at 9.5% APR for 10 years (120 payments) → $3,234.68/month, $138,161.60 interest, $388,161.60 total; $100,000 at 8% for 3 years → $3,133.58/month, $12,808.88 interest; for 7 years → $1,558.75/month, $30,935 interest. Typical U.S. business term loans: 1–10 year terms; bank APRs ~6–9%, SBA ~7–11%, online lenders 10%+; lenders commonly require DSCR ≥ 1.25 and often a personal guarantee plus collateral. The calculator excludes origination fees, SBA guarantee fees, and closing costs.
Compute monthly payments, total interest and total repayment for term loans at any APR and term length.
Enter the loan amount, APR and term in years. The calculator amortizes the loan monthly and reports the payment, total interest and total repayment.
Formula: Monthly rate r = APR ÷ 12, n = years × 12; payment = P × r(1+r)^n ÷ ((1+r)^n − 1). Example: $100,000 at 8% APR for 5 years → $2,027.64/month, $21,658.37 total interest.
At 8% APR over 5 years, about $2,027.64/month — $121,658.37 total repayment including $21,658.37 interest.
Like any amortizing loan: each monthly payment first covers that month’s interest, and the rest reduces the principal. Early payments are interest-heavy.
It depends on credit history, revenue, collateral and loan type — SBA loans are often cheapest, online lenders fastest but pricier. Compare the total repayment, not just the rate.
A term loan gives a lump sum with fixed payments (use the calculator above); a line of credit lets you draw and repay flexibly, paying interest only on what you use.
Keep total debt payments comfortably below your monthly cash flow — lenders often want a debt-service coverage ratio above 1.2.
Banks and SBA lenders typically want a personal FICO score of 680 or higher, plus solid business cash flow and at least two years of operating history. Online term lenders may approve scores as low as 600, but expect a higher APR. Because business loan rates vary so widely, improving your credit before applying, and comparing multiple offers with the calculator above, can save tens of thousands in interest.
It depends on the loan type. Secured term loans and most SBA loans require collateral, such as equipment, real estate, receivables, or a blanket lien on business assets, and usually a personal guarantee as well. Unsecured online loans exist but carry higher rates and smaller amounts. Pledging collateral typically earns a lower APR, which you can model in the calculator above to see the savings.
Online lenders can fund in 24 to 48 hours; traditional banks typically take 2 to 6 weeks; SBA loans often take 30 to 90 days. Faster money almost always costs more, so weigh urgency against the total interest shown by the calculator before choosing speed over price.
Sources & methodology: All payment figures in this guide were computed with the standard amortization formula M = P·r(1+r)ⁿ/((1+r)ⁿ−1); rate and term ranges reflect typical U.S. small-business lender disclosures and are illustrative only — not financial advice.
Also try our Loan Calculator, Amortization Calculator and Boat Loan Calculator — or browse all Financial Calculators.