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Business Loan Calculator
Fees, interest-only periods and balloon payments make small-business borrowing hard to price. This business loan calculator shows the true APR with every fee folded in, handles those structures, and converts a merchant cash advance factor rate into a real APR.
See how this works on three ways to fund a business — 3 real examples
True APR (all fees included)
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What the loan costs you
One payment, month by month — note-rate principal & interest
- Interest—
- Principal—
This bar sums to the monthly payment in the tile above, but splits it at thenote rate — not the true APR in the headline. Origination, documentation and other fees are charged upfront, deducted from the cash you receive, so they never sit inside a payment. That gap between what you got and what you repay is what lifts the APR above the note rate; it is not visible in any single payment.
Loan balance over time
Amortization scheduleMonth-by-month breakdown
How we solve for your true business-loan APR
Every mode uses closed-form loan math — no lookup tables or rounding tricks:
M = P · r(1 + r)n / ((1 + r)n − 1)
net = P − fees solve i: net = M · (1 − (1 + i)−n) / i
APR = i × 12 (r = rate / 12, n = years × 12)
Amortizing: the payment M is the level payment on the full note amount P. Origination, documentation and other fees are treated as prepaid finance charges, so the cash you actually receive is net = P − fees. The true APR is the rate i that makes your payment stream worth exactly that net amount — solved numerically, then annualized. With no fees the APR equals the note rate exactly.
Interest-only / balloon: in interest-only mode the payment is P × r and the full principal is the balloon. In amortizing-balloon mode the payment is sized on the longer amortization term but the loan is called at the balloon date, so the balloon equals the remaining balance P(1 + r)k − M((1 + r)k − 1)/r after k months.
Merchant cash advance: a factor rate is a multiplier, not a rate. Total repayment is advance × factor, split into equal monthly amounts; the equivalent APR is the monthly rate that equates that stream to the advance, times 12. Real advances are collected through daily ACH holds, so this even-monthly estimate slightly understates the true daily APR. SBA program references on this page are educational only — no eligibility, guaranty-fee or program-rule math is performed.
The term loan, the balloon, and the advance
Three structures lenders actually offer. Each hides its cost in a different place — a fee, a lump sum, or a multiplier.
The term loan: $100,000 over five years
true APR10.93%
- $100,000 over five years at 9.5% means 60 payments of $2,100.19.
- Fees of $3,250 come off the top, so $96,750 actually arrives.
- Repaying the full note out of that smaller sum lifts the true APR to 10.93%.
The quoted 9.5% prices the note; the 10.93% prices the deal.
Load this example (opens in a new tab)The balloon: 20-year payment, 5-year loan
due at year five$89,265
- Sizing the payment on a 20-year schedule keeps the monthly at $932.13.
- Sixty payments total about $55,928, and $45,193 of that is interest.
- After five years the balance has fallen only to $89,265 — and it all comes due at once.
Small payments are the loan's advertisement; the balloon is its bill.
Load this example (opens in a new tab)The advance: $50,000 at a 1.30 factor
equivalent APR51.44%
- A $50,000 advance at a 1.30 factor repays $65,000 — a fixed $15,000 cost.
- The "30%" reading is wrong because the balance shrinks every month while the cost stays fixed.
- Twelve payments of $5,416.67 work out to a 51.44% equivalent APR.
A factor rate is a multiplier wearing a percent's clothing — convert it before comparing.
Load this example (opens in a new tab)Illustrations only, not financial advice. Your own rate, taxes and insurance will differ — check with a qualified financial advisor before acting on any of this.
Business borrowing costs, in plain English
- The rate is not the cost. Upfront fees shrink the cash you receive but not what you repay, so the true APR is always higher than the quoted note rate — here about 10.9% vs 9.5% on the default loan.
- Balloons trade small payments for a big bill. Sizing a payment on 20 years but calling the loan at 5 keeps the monthly low near $932, yet leaves roughly $89,300 due at once. Plan how you will refinance or repay it.
- Factor rates hide their APR. A 1.30 factor sounds like 30%, but repaid over 12 months it is about 51% APR. Always convert before comparing an advance to a term loan.
- Match term to purpose. Finance equipment over its useful life and working capital over months — a longer term lowers the payment but piles on interest.
- SBA loans are a national program, not a product here. This tool models the math of an SBA-style loan; it gives no eligibility or program advice.
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Frequently asked questions
How are business loan payments calculated?
A fully-amortizing business loan uses the standard level-payment formula M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly rate (annual rate ÷ 12) and n is the number of monthly payments. On a $100,000 loan at 9.5% over 5 years that is about $2,100 a month. This small business loan calculator then adds every fee back in to show the true cost.
How do origination and documentation fees affect my true APR?
Fees are usually deducted upfront, so you receive less cash than the note amount but still repay the full balance. Our business loan APR calculator treats origination, documentation and other fees as prepaid finance charges and solves for the rate that equates your net proceeds to the payment stream. On the default $100,000 loan at a 9.5% note rate, $3,250 in fees pushes the real APR to roughly 10.9% — the gap most borrowers miss. Term sheets quote origination as a percentage and closing statements quote it in dollars, so the origination field takes either — enter 3% or $3,000 and you get the same answer.
What is an interest-only or balloon business loan?
Instead of paying the loan to zero, you make smaller payments for a few years and then owe a large lump sum — the balloon. In interest-only mode you pay only the monthly interest and the entire principal comes due at the end. In amortizing-balloon mode the payment is sized on a longer schedule (say 20 years) but the loan is called early (say 5 years), leaving the remaining balance due. On the default loan that balloon is about $89,300 after 5 years.
How is a factor rate different from an APR?
A merchant cash advance quotes a factor rate — a multiplier like 1.30 — not a percentage rate. A 1.30 factor on a $50,000 advance means you repay $65,000, a $15,000 cost. Because that cost is fixed and repaid quickly, the equivalent APR is far higher than "30%": spread over 12 months it works out to roughly 51% APR. This commercial loan calculator converts the factor rate so you can compare it against a normal loan.
What loan term should I choose for my business?
A longer term lowers the monthly payment but raises total interest; a shorter term does the reverse. Match the term to what the borrowed money produces — equipment financed over its useful life, short-term working capital over months, not years. Type any term into the amortization slider and the payment, total interest and true APR update instantly.
What does the “real APR” figure include?
The real (true) APR includes the interest on the note plus all upfront finance charges you entered — origination, documentation and other fees — annualized over the loan term. It does not include optional charges you did not enter, taxes, or late fees. It is the single number that lets you compare two offers fairly, even when one has a lower rate but higher fees.
Can I use this as an SBA loan calculator?
You can model the payment, fees and amortization schedule of an SBA-style term loan here, and export it for a business plan. SBA programs such as 7(a), 504 and Microloan are national government programs, and this tool is educational only — it does not check eligibility, guaranty fees or program rules. Confirm the exact rate, term and fees with your lender before relying on the numbers.
Disclaimer: these calculators are educational tools, not financial advice. They model your inputs with published formulas, but they cannot know your full situation — for decisions with real stakes, talk to a qualified professional. Formulas and defaults last reviewed .