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Business Loan Calculator

Calculate commercial loan amortization, total interest costs, and monthly debt service. Includes options for origination fees and balloon payments.

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About

Capital allocation decisions require precise visibility into future cash outflows. A business loan calculator differs from consumer tools by accounting for commercial-specific variables such as origination fees, non-standard terms, and balloon payments. Understanding the Debt Service Coverage Ratio (DSCR) impact is critical for maintaining solvency.

Interest expense on commercial debt is often tax-deductible, effectively lowering the cost of capital. However, high leverage ratios increase the risk of default during revenue downturns. This tool generates a full amortization schedule, separating principal and interest components to aid in financial planning and accounting entries.

Accuracy in these projections prevents liquidity crises. Small variations in interest rates or term lengths result in significant differences in Total Cost of Capital (TCC). Use this to compare term sheets from different lenders.

business loan amortization DSCR commercial finance interest calculator

Formulas

The monthly payment M is derived from the principal P, monthly interest rate r, and total payments n.

M = P r(1 + r)n(1 + r)n − 1

For loans with a Balloon Payment, the amortization is calculated over a longer period namort, but the balance becomes due at nterm. The effective cost of loan includes the Origination Fee F:

Proceeds = P − (P × F)

Reference Data

Loan TypeTypical APR RangeTerm LengthOrigination Fee
SBA 7(a)10.5% − 13.5%10 − 25 years2% − 3.75%
Traditional Bank Term Loan6% − 12%3 − 10 years0.5% − 2%
Equipment Financing4% − 15%1 − 7 years0% − 5%
Business Line of Credit8% − 24%Revolving1% (Annual)
Merchant Cash Advance20% − 80%3 − 18 monthsFactor Rate

Frequently Asked Questions

An origination fee is an upfront charge by the lender for processing a new loan application. It is typically deducted from the loan proceeds. For example, a $100,000 loan with a 2% fee results in $98,000 deposited, but you pay interest on the full $100,000.
A balloon payment structure lowers monthly payments by amortizing the principal over a long period (e.g., 20 years) but requiring the remaining balance to be paid in full after a shorter term (e.g., 5 years). This improves short-term cash flow but creates a significant refinancing risk at the end of the term.
The interest rate is the cost of borrowing the principal amount. The APR (Annual Percentage Rate) includes the interest rate plus other costs like origination fees, closing costs, and insurance, expressed as a yearly percentage. APR provides a more accurate measure of the total cost of borrowing.
Amortization is the process of spreading out a loan into a series of fixed payments over time. While the total payment remains the same, the portion applied to principal increases over time, while the interest portion decreases.