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Business Loan Calculator
Model a fully amortizing business loan from the principal, annual interest rate, and term.
Model the loan and compare scenarios
Use the defaults as a worked example, then replace them with the lender’s proposed terms.
Scenario comparison
| Scenario | Rate | Term | Monthly | Total interest |
|---|---|---|---|---|
| Lower rate | 7.0% | 10 yr | $5,805 | $196,651 |
| Base case | 9.0% | 10 yr | $6,334 | $260,055 |
| Higher rate | 11.0% | 10 yr | $6,888 | $326,500 |
| Shorter term | 9.0% | 8 yr | $7,325 | $203,210 |
Remaining principal by year
Annual amortization schedule
| Year | Opening balance | Payments | Interest | Principal | Ending balance |
|---|---|---|---|---|---|
| 1 | $500,000 | $76,005 | $43,689 | $32,317 | $467,683 |
| 2 | $467,683 | $76,005 | $40,657 | $35,349 | $432,335 |
| 3 | $432,335 | $76,005 | $37,341 | $38,664 | $393,670 |
| 4 | $393,670 | $76,005 | $33,714 | $42,291 | $351,379 |
| 5 | $351,379 | $76,005 | $29,747 | $46,259 | $305,120 |
| 6 | $305,120 | $76,005 | $25,407 | $50,598 | $254,522 |
| 7 | $254,522 | $76,005 | $20,661 | $55,344 | $199,177 |
| 8 | $199,177 | $76,005 | $15,469 | $60,536 | $138,641 |
| 9 | $138,641 | $76,005 | $9,791 | $66,215 | $72,426 |
| 10 | $72,426 | $76,005 | $3,579 | $72,426 | $0 |
A $500,000 loan at 9% for 10 years produces a monthly payment of about $6,334 and annual debt service of about $76,008.
How this calculation works
The model uses the standard ordinary-annuity payment formula with monthly periods. It calculates principal-and-interest payment, multiplies by 12 for annual debt service, and subtracts principal from all scheduled payments to estimate total interest. Fees, interest-only periods, variable rates, irregular first periods, and prepayments are excluded.
How to interpret the result
A lower payment can result from a longer term while increasing lifetime interest. Affordability should be tested against normalized cash flow, taxes, maintenance capital expenditure, working-capital needs, and all other debt—not payment alone.
Limitations
Results are educational planning estimates. They do not include every tax, legal, accounting, financing, or business-specific consideration and are not professional advice.
Sources and further reading
Formula and example
A $500,000 loan at 9% for 10 years produces a monthly payment of about $6,334 and annual debt service of about $76,008.
Common use cases
- Compare lender quotes on common assumptions.
- Carry annual debt service into DSCR analysis.
- Test higher-rate and shorter-term cases.
- Estimate total contractual interest.
- Screen whether financing fits operating cash flow.
Business Loan Calculator FAQ
Does the payment include lender fees?
No. The model calculates principal and interest. Add origination, guarantee, closing, legal, and other lender fees separately.
What happens if the interest rate increases?
Use the scenario table to compare the base rate with a two-percentage-point increase and see the effect on payment and total interest.
How is Business Loan calculated?
The calculator uses the standard fixed-rate amortizing-loan formula and assumes equal monthly payments with no additional fees or prepayments.
How should I interpret the result?
Compare annual debt service with normalized business cash flow. A manageable payment alone does not prove that a loan is affordable.
Why can two lender quotes with the same rate differ?
Fees, compounding conventions, payment timing, amortization, balloon terms, and financed closing costs can differ. Compare cash received, payment schedule, total fees, and APR where applicable.
Does annual debt service include fees?
No. It is twelve modeled principal-and-interest payments. Add recurring fees and other required debt payments separately.
Should I choose the longest available term?
A longer term generally lowers required payment but slows principal reduction and increases interest. Match term to asset life, cash-flow resilience, and refinancing risk.