Business Loan Calculator
Estimate your monthly payment on a business term loan.
Your Details
Principal vs. Interest
Share of total amount paid over the loan term
- Principal$75.0K
- Interest$19.5K
Payment by Interest Rate
How your monthly payment changes with rate
Principal vs. Interest by Year
How your payments are split each year
Year-by-Year Schedule
Full breakdown of principal, interest, and balance
| Year | Principal | Interest | Balance |
|---|---|---|---|
| Year 1 | $12,303 | $6,598 | $62,697 |
| Year 2 | $13,524 | $5,377 | $49,172 |
| Year 3 | $14,867 | $4,035 | $34,306 |
| Year 4 | $16,342 | $2,560 | $17,964 |
| Year 5 | $17,964 | $938 | $0 |
How It Works
- Enter the loan amount you're financing.
- Enter the interest rate and loan term.
- Press Calculate to see your payment and full schedule.
- Use Reset any time to start over from the defaults.
Formula Used
P = loan amount, r = monthly interest rate, n = number of monthly payments.
Good to Know
- • A shorter term means a higher payment but less total interest.
- • Your actual rate depends on credit history and lender.
- • Paying extra toward principal shortens the payoff time.
Important Notes
- • Rates shown are for comparison, not a live quote.
- • Fees are not included in this estimate.
- • Consult a lender for a formal offer.
Term Loans vs. Other Business Financing
A term loan provides a lump sum upfront, repaid on a fixed schedule with regular payments — straightforward to budget for, which is why it's frequently used for one-time investments like equipment purchases, expansion, or a specific growth initiative. It differs meaningfully from a business line of credit, which offers flexible, revolving access to funds you draw and repay as needed, or invoice financing, which advances money against unpaid customer invoices rather than providing a fixed lump sum.
Choosing between these financing types depends largely on the purpose: a term loan suits a known, one-time capital need with a clear repayment plan, while a line of credit suits ongoing, variable working-capital needs like managing seasonal cash flow gaps or unpredictable short-term expenses.
What Lenders Typically Look At
Business loan rates and terms are usually shaped by time in business, annual revenue, personal and business credit history, and whether the loan is secured by collateral. Newer or smaller businesses without an extensive financial track record often see meaningfully higher rates or shorter available terms than established businesses with strong, consistent revenue — lenders price in the additional risk of a shorter operating history.
Offering collateral — equipment, real estate, or other business assets — can often unlock a lower rate than an unsecured loan of the same size, since it reduces the lender's risk if the business is unable to repay. It's worth weighing that rate benefit against the real risk of pledging a valuable business asset before choosing a secured loan structure.
Breaking Down the Terminology
- Term loan — a lump sum borrowed and repaid on a fixed schedule over a set period.
- Collateral — an asset pledged to secure a loan, which the lender can claim if the loan isn't repaid.
- Line of credit — a flexible, revolving borrowing arrangement, as opposed to a fixed lump-sum term loan.
A Hands-On Example: A $75,000 Equipment Loan
9.5% interest over a 5-year term:
Monthly payment ≈ $1,575
Total interest over 5 years ≈ $19,500
If this same business had a shorter 3-year operating history and qualified only for a 16% rate instead of 9.5%, the monthly payment would rise to roughly $1,830 and total interest would climb to about $34,800 — nearly double the interest cost purely from the higher rate typically charged to newer businesses.
Rate by Business Age Table
| Business Age | Typical Rate Range |
|---|---|
| Under 2 years | 12-25% |
| 2-5 years | 8-15% |
| 5+ years, strong revenue | 6-10% |
Traps to Avoid With Business Loans
- Borrowing more than the specific need requires — increases interest cost without adding proportional business benefit.
- Not comparing multiple lenders — rates and terms can vary substantially for small business loans depending on the lender's risk appetite and specialty.
- Ignoring the collateral trade-off — a lower secured rate comes with the real risk of losing the pledged asset if repayment becomes impossible.