Use this free business loan calculator to compare financing options before you apply. Enter the loan amount, interest rate, and term to calculate your exact monthly payment, total interest cost, and the true annual percentage rate (APR) including any fees.
Whether you're researching SBA 7(a) loans, bank term loans, or business lines of credit, this calculator gives you side-by-side numbers so you can choose the cheapest financing for your small business.
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| Loan Type | Typical APR | Best For |
|---|---|---|
| SBA 7(a) | 8–13% | Real estate, expansion |
| Bank Term Loan | 6–15% | Established businesses |
| Line of Credit | 8–25% | Working capital, gaps |
| Merchant Cash Advance | 30–150%+ | Fast cash, poor credit |
Most business loans use simple interest on the declining principal balance — the same as a standard amortization. Each month: interest = remaining balance × (annual rate ÷ 12); principal = payment – interest. Use our business loan calculator above to see the exact split for every payment and understand how fast you're paying down principal.
The interest rate is just the cost of borrowing the principal. APR (annual percentage rate) includes the interest rate PLUS all fees — origination fees, closing costs, monthly fees, and any other charges — expressed as a yearly rate. APR is a more accurate measure of true cost. Always compare APR when shopping business loans.
SBA 7(a) loans require: 2+ years in business, personal credit score 680+, annual revenue sufficient to service the debt, and collateral (though not always required to fully secure the loan). Most SBA loans go through approved lenders (banks, credit unions). Lendio matches you with SBA-approved lenders in one application.
A business loan is almost always cheaper than a merchant cash advance (MCA). MCAs commonly have effective APRs of 30–150%+ because they charge a factor rate (e.g., 1.3–1.5× the borrowed amount) over a short period. A $150,000 MCA at 1.4 factor rate costs $60,000 in fees — use our calculator to compare the true APR against a traditional term loan.
Lenders typically want a Debt Service Coverage Ratio (DSCR) of 1.25 or higher. DSCR = Net Operating Income ÷ Total Debt Service. Above 1.25 means you generate 25% more income than required to cover loan payments — a buffer that protects you from income drops. Below 1.0 means the business can't service its debt from operating income alone.
This calculator provides estimates for informational purposes only. Consult a financial advisor or licensed lender for actual loan terms and rates.