⏰ Estimated read time: 7 minutes
Before committing to a small-business loan, it’s a good idea to calculate the overall cost you’ll be paying.
Use NerdWallet’s business loan calculator below by entering your loan amount, repayment term and annual percentage rate. This will give you an estimate of your total monthly payments, interest costs and total amount of principal and interest you’ll pay over the life of the loan. Play around with the numbers to see how different repayment scenarios change your results.
Estimate payments to understand the cost of a business loan
Over the course of the loan, expect to pay
$0.00/mo
Payment breakdown
Total principal
$0.00
Total interest
$0.00
Total principal & interest
$0.00
Get personalized small-business loan rates to compare
with Fundera by NerdWallet
1. Enter your information
- Loan amount. This is the amount of money you plan to borrow.
- Repayment term. This is how long you have to repay your loan. Make sure you enter your repayment term in months.
- APR. Annual percentage rate (APR) represents the total cost of borrowing money. It includes interest rate and fees, over the life of your loan. If your lender gives an interest rate or factor rate, you can calculate your APR by adding in fees to your total loan amount, or by multiplying the factor rate by your total loan amount.
Factor rates are expressed as a decimal, as opposed to a percentage. Multiply the factor rate by your loan amount to determine the total amount you’ll owe your lender.
If you have a $50,000 loan with a 1.2 factor rate, for example, you’ll owe a total of $60,000 ($50,000 x 1.2), meaning the total interest you pay would be $10,000. To get the annualized rate, divide the amount of interest by the original loan amount, multiply it by 365 days and then divide that number by the number of days in your loan term. In this example assuming a six-month term, the APR would come out to about 40%.
For more details on converting a factor rate into an APR, follow the steps in our guide.
2. Calculate your results
Once you hit “calculate,” the tool will automatically generate results. Feel free to adjust the numbers to explore different loan scenarios.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Understanding your results
After hitting “calculate” on our business loan calculator, you’ll see your:
- Monthly payment. The fixed amount you’ll repay each month. It includes principal, interest and fees.
- Total interest paid. The total amount a lender is charging you for a loan. If you repay the loan early, you might be able to save on interest — provided your lender doesn’t charge prepayment penalties.
- Total payments. The sum of all payments made on the loan, including the amount you borrowed, plus interest and fees.
- Amortization schedule. This shows how much of your monthly (or annual) payments will go toward your principal and how much will go toward interest. As you continue to repay your loan over time, your monthly payment will remain the same, but your interest payments will get smaller and more of your payment will go toward your principal.
Explore more business loan calculators
Looking for a specific type of loan? Check out our other small business loan calculators.
Use this calculator to estimate the total costs of an SBA loan.
Use this calculator to estimate the total costs of a business line of credit.
Use this MCA calculator to determine the total cost of your merchant cash advance, including fees and interest.
Use this equipment loan calculator to estimate monthly payments and total cost of financing on an equipment loan.
Use our tool to estimate total costs, balloon payments and compare different commercial mortgage offers.
Small-business loans are available from banks, credit unions and online lenders. Terms, rates and qualifications vary by lender. Here are some of the most common types of business loans:
- SBA loans. The United States Small Business Administration works with banks and other financial institutions to provide small-business loans that have low interest rates and long repayment terms. However, SBA loans are slow to fund and can be difficult to qualify for.
- Term loans. Term loans typically range from three to 18 months for a short-term loan and up to 10 years or longer for a long-term loan. These loans can be used for a variety of purposes, including working capital.
- Lines of credit. A business line of credit provides flexible access to cash. You get approved for a specific amount of credit and can draw from your line as needed. You only make payments and pay interest on the money you use.
- Equipment financing. Equipment financing is used to purchase equipment. Lenders often finance up to 100% of the value of the equipment. These loans are self-collateralizing, meaning the equipment itself serves as collateral for the loan.
- Commercial real estate loan. A commercial real estate loan is used to buy, build, refinance or renovate a commercial property, like a warehouse, office building or retail store. Standard commercial real estate loans work a lot like a personal mortgage, but tend to have shorter repayment terms and higher upfront costs.
If you can’t meet traditional business loan requirements, consider these options instead:
- If you have poor personal credit and lack collateral, invoice factoring and invoice financing both involve the use of unpaid customer invoices to access capital. With factoring, you sell the invoices to a factoring company that then collects the money from your customers. With invoice financing, the unpaid invoices serve as collateral on a cash advance. You still collect payment on the invoices from your customers, and then you pay back the loan.
- If your business is newer, personal loans are a good option if your business can’t qualify for traditional financing. Lenders consider your personal credit score and income instead of your business history.
- If you want a revolving source of capital, business credit cards can be easier to get than a small-business loan. Business credit cards tend to have relatively low credit limits, but you can earn rewards for your spending, such as cash back or travel points.
- If you don’t need a lot of money, business grants provide free money to startups and operating businesses — either by giving you a lump sum, or reimbursing you for certain expenses. They can be difficult to research and apply for, and grant amounts typically aren’t as high as loans, but it can be worth it if you’re able to get free money for your business, even in small amounts.
Frequently asked questions
A business loan term can be as short as three months and as long as 25 years or more. To qualify for a long-term business loan, you’ll likely need to have an established business with strong finances.
Online lenders typically charge business loan rates from 6% to 99% APR. You’ll likely find the lowest rates from bank or SBA loans. Bank loans, on average, range from 6.42% to 12.41%, and variable SBA loans range from
10.75
% to 14.25
%.Some business loans have monthly payments — although others will require weekly or daily payments. Bank and SBA loans are typically repaid on a monthly basis, whereas short-term online products (e.g. lines of credit, merchant cash advances) are more likely to be repaid daily or weekly.