How to use the business loan calculator
- Loan amount: the full amount you borrow, before any fee.
- Interest rate (% per year): the stated rate in your loan offer.
- Loan term: type a number, then choose years or months.
- Origination fee (% of loan, optional): the up-front fee the lender keeps. Leave it at 0 if there is none.
- Yearly cash flow before loan payments (optional): add it to see your debt service coverage ratio.
How the numbers are worked out
The monthly payment uses the standard level-payment formula: payment = loan x r / (1 - (1 + r)^-n), where r is the yearly rate divided by 12 and n is the number of monthly payments. Payments are rounded to the cent and the final payment clears what is left, so totals follow a cent-rounded schedule (your lender's may differ by a few cents).
The APR line finds the yearly rate that makes your payments worth exactly the money you actually received. That is the actuarial method behind APR in Regulation Z, Appendix J, and it is why a fee lifts the APR above the stated rate. For other fee setups, try the APR calculator.
Worked example with the starting numbers
A $150,000 loan at 8.5% for 10 years with a 2% fee has a monthly payment of $1,859.79. The fee is $3,000.00, so you receive $147,000.00. Across 120 payments you repay $223,173.95 (the final payment is $1,858.94), which is $73,173.95 of interest. Interest plus the fee is $76,173.95. Because you repay on $150,000 but receive $147,000, the APR including the fee is 8.97%, not 8.5%. Payments total $22,317.48 a year, so $40,000 of yearly cash flow would give a coverage ratio of 1.79.
Limits and edge cases
- It assumes a fixed rate and equal monthly payments. Variable rates, interest-only periods, balloon payments and daily or weekly repayments are not modeled.
- Only the origination fee is counted. Add guarantee fees or closing costs to the fee percentage if you want the APR to include them.
- Business loans fall outside the federal consumer APR rules, though some states, including California and New York, require APR disclosures on certain commercial financing.
- To see how extra payments shorten a loan, use the loan payoff calculator. To test whether sales can carry the payment, try the break-even sales calculator.
Business loan questions
Why is the APR higher than the interest rate on my business loan?
The lender keeps the origination fee out of the loan, so you receive less than you repay on. In the starting example you receive $147,000 but pay back $150,000 plus interest, so the APR rises from 8.5% to 8.97%. The shorter the term, the bigger the effect of a fee.
What is a good debt service coverage ratio for a business loan?
The ratio is yearly cash flow divided by yearly loan payments. Many banks look for 1.25 or higher, a 25 percent cushion, though requirements vary by lender and program. At 1.00 you only just cover the payments. This calculator counts only the new loan, so it overstates your ratio if you have other debt.
What interest rate can an SBA 7(a) loan charge?
Lender and borrower negotiate the rate within SBA maximums. For variable-rate loans the cap is the base rate plus 6.5 points up to $50,000, 6.0 points from $50,001 to $250,000, 4.5 points from $250,001 to $350,000 and 3.0 points above $350,000 (SBA terms checked October 2026).
How do I check the true cost of a factor-rate loan or merchant cash advance?
Enter the repayment total (advance times factor rate) as the loan amount, 0 as the rate, the months you repay over as the term, and the part you do not receive as the fee: (factor rate - 1) / factor rate x 100. A $50,000 advance at a 1.3 factor rate repaid over 12 months is $65,000, 0%, 12 months and a 23.077% fee, an APR of about 51%. Daily or weekly repayment makes the true figure higher.
Sources: SBA, 7(a) loan terms and conditions; CFPB, Regulation Z Appendix J. Results are estimates, not a loan offer.