Business Loan Calculator
Payments on a business loan with an optional interest-only start and balloon, and its effective rate once fees are counted.
Result
Monthly payment after the interest-only period: $3,732.76
Only the fees you enter are counted. Prepayment penalties and guarantees are not.
- Payment while interest-only
- $1,125.00
- Effective rate with fees
- 9.7509%
- Total interest
- $42,672.24
- Total cost: interest and fees
- $45,672.24
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Results are arithmetic estimates based on the values you enter. Rates, fees and terms are set by your lender or provider, and your actual agreement controls what you pay or receive. Confirm important figures with them or with a qualified adviser. Read the full disclaimer
How to use the Business Loan Calculator
- Enter the loan amount, the rate and the term in months.
- Enter any interest-only months at the start, a balloon date if the loan matures early, and the fees paid up front.
- Read the payment after the interest-only period, the interest-only payment, and the effective rate once fees are counted.
How it is worked out
interest-only months payment = P × i (i = rate ÷ 12)then payment = P × i ÷ (1 − (1 + i)⁻⁽ⁿ⁻ᵏ⁾) over the remaining n − k monthseffective rate = 12 × the monthly rate at which every payment is worth P − feesThe payments are worked to the cent. The effective rate is solved from the actual payments by the same method the APR calculator uses.
Balloons
Many commercial loans are amortised over a long schedule but fall due sooner, with the rest owed in one balloon payment. Enter the month the balloon is due and the page ends the loan there. The balloon appears as its own row, and it is included in the total interest and the effective rate. It has to be paid, refinanced or covered by a sale, and refinancing depends on rates and credit at that time.
What else to check
Business loans often carry costs this page does not model: prepayment penalties, personal guarantees, covenants, and fees charged over the life of the loan rather than at the start. Read the full terms before comparing offers on rate alone.
With your numbers
- First 12 months: interest only, $1,125.00 a month
- Then $150,000.00 over 48 months: $3,732.76 a month
- Effective rate with $3,000.00 of fees: 9.7509%
Quick reference
Only the fees you enter are counted. Prepayment penalties and guarantees are not.
| Example | Monthly payment after the interest-only period |
|---|---|
| USD 150,000 at 9% over 60 months | $3,113.75 |
| Same, 12 months interest-only | $3,732.76 |
| Same, 24 months interest-only | $4,769.96 |
| USD 150,000 at 0% over 60 months | $2,500.00 |
| USD 150,000 at 9%, USD 3,000 fees | $3,113.75 |
| USD 500,000 at 7.5%, 25-year schedule, 10-year balloon | $3,694.96 |
Common questions about the Business Loan Calculator
- Why does the payment jump after the interest-only period?
- Because none of the principal is repaid during it, and the whole amount then has to be repaid in fewer months. On 150,000 at 9% over five years, 12 interest-only months at 1,125.00 are followed by 48 payments of 3,732.76. With no interest-only period the payment would be 3,113.75 throughout. Twenty-four interest-only months push the later payment to 4,769.96.
- What is the effective rate?
- The rate the loan really costs once fees are counted. Fees paid at the start mean you receive less than you repay, which is equivalent to a higher rate. On the same loan, 3,000 of fees raise the cost from 9% to 9.87% a year. With no fees the effective rate is the interest rate, which is how the page checks itself.
- Does interest-only save money?
- Usually not. It lowers the early payments, which can help a new business with its cash flow, but because the balance stays high for longer, total interest is higher. The page shows both totals so you can weigh the trade.
- Why is no typical rate or fee filled in?
- Because business lending terms vary enormously with the lender, the business, the security and the loan type, and there is no single figure that would be right. Enter the terms on your offer.