Business Loan Calculator

This calculator helps you analyze the cost of a business term loan, including the effect of origination fees on your true annual percentage rate.

1. Enter the loan amount. Small business loans typically range from $10,000 to $500,000 for term loans. SBA 7(a) loans go up to $5 million.
2. Enter the interest rate. Business loan rates in 2024 range from about 6% (SBA loans) to 30%+ (online alternative lenders).
3. Enter the term in months. Common terms are 24, 36, 60, and 84 months. Equipment loans may go to 120 months.
4. Enter the origination fee. Most business lenders charge 1-5% of the loan amount as an upfront fee.

The effective APR accounts for the origination fee, giving you the true cost of borrowing for comparison across lenders.

Monthly payment:

M = P × [r(1+r)^n] / [(1+r)^n - 1]

Where P = loan amount, r = monthly rate (annual / 12), n = term in months.

Effective APR with origination fee:

The effective APR is the discount rate at which the present value of all payments equals the net loan proceeds (loan amount minus origination fee). Because you receive less money than you repay, the effective rate is higher than the stated rate.

Example: $100,000 loan at 8% for 60 months. Payment = $2,027.64/month. With a 1% origination fee ($1,000), net proceeds = $99,000. Effective APR = 8.45%.

Annual debt service = Monthly payment × 12. Lenders often assess the debt service coverage ratio (DSCR): Annual NOI / Annual Debt Service. Most lenders require DSCR above 1.25.