Business Loan Calculator
Calculate monthly payments, total interest, and understand the true cost of financing your business.
Typical Business Loan Rates (2025):
Term Loan
7-30%
SBA Loan
6-13%
Line of Credit
8-24%
Monthly Payment
$2,028
for 5 years (60 payments)
Total Interest
$21,658
Origination Fee
$2,000
Annual Debt Service: $24,332/year
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $2,027.64 | $1,360.97 | $666.67 | $98,639 |
| 2 | $2,027.64 | $1,370.05 | $657.59 | $97,269 |
| 3 | $2,027.64 | $1,379.18 | $648.46 | $95,890 |
| 4 | $2,027.64 | $1,388.37 | $639.27 | $94,501 |
| 5 | $2,027.64 | $1,397.63 | $630.01 | $93,104 |
| 6 | $2,027.64 | $1,406.95 | $620.69 | $91,697 |
| 7 | $2,027.64 | $1,416.33 | $611.31 | $90,281 |
| 8 | $2,027.64 | $1,425.77 | $601.87 | $88,855 |
| 9 | $2,027.64 | $1,435.27 | $592.37 | $87,419 |
| 10 | $2,027.64 | $1,444.84 | $582.80 | $85,975 |
| 11 | $2,027.64 | $1,454.48 | $573.16 | $84,520 |
| 12 | $2,027.64 | $1,464.17 | $563.47 | $83,056 |
Types of Business Loans
Lump sum with fixed payments over a set term.
- Rates: 7-30%
- Terms: 1-10 years
- Best for: Equipment, expansion
Government-backed loans with favorable terms.
- Rates: 6-13%
- Terms: Up to 25 years
- Best for: Established businesses
Revolving credit to draw as needed.
- Rates: 8-24%
- Draw period: 1-5 years
- Best for: Working capital
Frequently Asked Questions
Term Loan vs Line of Credit: Choosing the Right Business Financing
A term loan provides a lump sum upfront with fixed monthly payments over a set period. Rates for established businesses range from 7-15% for bank loans and 15-30% from online lenders. Terms span 1-10 years depending on the purpose. Term loans are best for one-time investments: equipment purchases, real estate, vehicle fleets, or business expansion. The predictable payment schedule simplifies cash flow planning.
A business line of credit provides revolving access to funds up to a set limit. You only pay interest on the amount drawn, not the full credit line. Rates range from 8-24%, and draw periods typically last 1-5 years with a repayment period following. Lines of credit are ideal for working capital needs: covering payroll during slow months, purchasing inventory before peak season, or bridging gaps between accounts receivable and accounts payable.
| Feature | Term Loan | Business Line of Credit |
|---|---|---|
| Funding | Lump sum upfront | Draw as needed (revolving) |
| Interest | On full loan amount | Only on amount drawn |
| Typical rates | 7-30% | 8-24% |
| Repayment | Fixed monthly payments | Interest-only during draw, then principal + interest |
| Best for | Equipment, expansion, acquisition | Working capital, seasonal needs, emergencies |
| Collateral | Often required for large loans | May be unsecured for smaller lines |
SBA Loan Types: 7(a), 504, and Microloans
SBA 7(a) loans are the most versatile, available up to $5 million for working capital, equipment, real estate, or debt refinancing. The SBA guarantees 75-85% of the loan, reducing lender risk. Rates are capped at Prime + 2.25% to 4.75% depending on loan size and term. With the prime rate at approximately 8.5% in early 2025, SBA 7(a) rates range from roughly 10.75% to 13.25%. Maximum terms: 25 years for real estate, 10 years for equipment, 7 years for working capital.
SBA 504 loans are specifically for major fixed assets — commercial real estate, long-life equipment, and building improvements. The maximum is $5.5 million ($5.75M for manufacturers or energy-efficient projects). The unique structure involves three parties: a bank provides 50%, a Certified Development Company (CDC) provides 40% (at below-market fixed rates), and the borrower contributes 10% down payment. The CDC portion typically carries rates 1-2% below conventional loan rates.
SBA Microloans provide up to $50,000 through nonprofit intermediary lenders, targeting startups and underserved businesses. Average microloan size is approximately $13,000. Rates range from 8-13%, and terms max out at 6 years. SBA Express loans offer faster processing (36-hour SBA response) for amounts up to $500,000 but carry higher rates (Prime + 4.5% to 6.5%) and a lower SBA guarantee of 50%.
Amortization, Prepayment Penalties, and Collateral Requirements
Loan amortization allocates each payment between principal and interest. In the early years of a term loan, the majority goes to interest. On a $100,000 loan at 8% for 5 years ($2,028/month), the first payment splits approximately $667 interest and $1,361 principal. By the final year, the split reverses to roughly $133 interest and $1,895 principal. Total interest over the 5-year term: $21,660.
| Loan Amount | Rate | Term | Monthly Payment | Total Interest |
|---|---|---|---|---|
| $50,000 | 8% | 3 years | $1,567 | $6,395 |
| $100,000 | 8% | 5 years | $2,028 | $21,660 |
| $250,000 | 10% | 10 years | $3,304 | $146,433 |
| $500,000 | 7% | 25 years (SBA) | $3,533 | $559,900 |
Prepayment penalties charge borrowers for paying off a loan early, compensating the lender for lost interest income. SBA 7(a) loans with terms of 15+ years carry a prepayment penalty of 5% in year 1, 3% in year 2, and 1% in year 3. After year 3, there is no penalty. Many bank term loans have no prepayment penalty, while some online lenders charge penalties for early payoff — always verify before signing.
Collateral secures the loan with business or personal assets. SBA loans require collateral for loans over $50,000. Typical collateral includes commercial real estate (60-80% loan-to-value), equipment (50-70% LTV), inventory (50% LTV), and accounts receivable (70-80% of eligible receivables). The loan-to-value (LTV) ratio determines how much you can borrow against an asset's value. A $500,000 commercial property at 75% LTV supports a $375,000 loan.