Business Loan Calculator – Monthly Payment and the True Cost With Fees
A lender quotes you a payment. What they rarely quote is the whole bill. Enter the amount, rate and term, then add the origination fee — this page shows the payment, the total interest, and the true cost of the loan with the fee counted in, plus a year-by-year table of how the balance actually falls.
Your loan, on the table
Advanced options — origination fee, extra payment and start date
Origination fee, extra payment and start date are already included in the result with their default values — open Advanced options to change them.
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What the loan really costs
The full picture
What your extra payment buys
Paying extra shortens this loan and cuts its interest — your saving will appear here.
Reading this loan honestly
Borrowing $100,000 at 8% over 5 years costs $2,027.64 a month. Of the $121,658.37 you hand over in total, $21,658.37 is interest — the price of the money itself. With the origination fee at 0% there is nothing added on top, so the true cost is the same $121,658.37. Before you sign anything, set the fee field to the percentage in your offer and watch the true-cost line: that figure, not the payment, is what the loan actually takes out of your business.
The payment is the headline; the true cost is the story. Two loans can quote the same monthly payment and differ by thousands once a fee is added. This page always counts the fee in — and if your lender finances the fee into the loan instead of charging it upfront, the interest on it is already inside the payment maths.
- Early payments are mostly interest: in year one of the default loan $7,387.66 of $24,331.67 is interest; by year five only $1,022.37.
- An origination fee of 1–3% sounds small but is $2,000 on $100,000 at 2% — true cost counts all payments plus the fee.
- An extra $200 a month on the default loan cuts 60 payments to 54 and saves $2,427.44 of interest.
Year by year: where the balance goes
The payoff table lenders rarely show upfront. Early payments are mostly interest; the balance only starts falling fast later on. Change any figure above and every row follows — pay extra and you will see whole years drop off the end.
| Year | Payments | Interest | Principal repaid | Balance left |
|---|---|---|---|---|
| Year 1 | $24,331.67 | $7,387.66 | $16,944.01 | $83,055.99 |
| Year 2 | $24,331.67 | $5,981.32 | $18,350.35 | $64,705.64 |
| Year 3 | $24,331.67 | $4,458.25 | $19,873.43 | $44,832.21 |
| Year 4 | $24,331.67 | $2,808.76 | $21,522.91 | $23,309.30 |
| Year 5 | $24,331.67 | $1,022.37 | $23,309.30 | $0.00 |
The fee: the charge that never appears in the payment
Right now the fee is set to 0%, so nothing is added. Try 2% — a typical origination fee — on a loan like this one: the fee would be $2,000.00, the payments would still total $121,658.37, but the true cost of the loan would become $123,658.37. No payment figure anywhere shows you that extra $2,000.00. It is either taken out of the amount you receive or added to what you owe, and either way it is real money out of the business.
How it works, in 3 steps
Enter the loan as offered
Amount, the annual rate from the offer, and the term. Pick how often you will pay — monthly is standard. The calculator works out the payment that exactly clears the loan by the end of the term, neither a cent short nor a cent over.
Add the fee you were quoted
Most business loan offers carry an origination fee, commonly 1% to 3% of the amount. Type it in and the true-cost line swallows it whole: payments plus fee, the full amount the loan takes out of your business over its life.
Test an extra payment
Add whatever extra you could realistically pay each period and watch two things happen: the interest falls, and the payoff date moves closer. On the default loan, an extra $200 a month saves $2,427.44 of interest and ends the loan 6 months early.
The maths behind the payment
The default, worked through. Borrow $100,000 at 8% a year, paid monthly over 5 years. The monthly rate r is 8% ÷ 12 = 0.6667%, and the number of payments n is 60. So payment = $100,000 × 0.006667 ÷ (1 − (1.006667)−60) = $2,027.64. Sixty payments of that size total $121,658.37, of which $21,658.37 is interest. In the first month alone, $666.67 of your payment is interest and only $1,360.97 touches the balance — which is why the balance falls slowly at first, as the year-by-year table shows.
A bigger loan, worked through. Borrow $250,000 at 7.5% over 10 years: r = 0.625% a month, n = 120, and the payment is $2,967.54 a month. The total interest is $106,105.31 — a lower rate than the default loan, but twice the term, and term is what quietly feeds interest. Doubling the term never doubles the cost; here it multiplies the interest almost five times over compared with the 5-year default.
The fee, worked through. The payment formula knows nothing about fees, which is exactly the trap. On the default loan, a 2% origination fee is 2% of $100,000 = $2,000.00. The payments still total $121,658.37; the loan’s true cost is $121,658.37 + $2,000.00 = $123,658.37. If the lender takes the fee out of the amount you receive, you get $98,000 in hand but still repay on the full $100,000 — the fee costs you the same either way, and this page counts it either way.
Deep dives
What the fee pays for, on paper. An origination fee is the lender’s charge for setting the loan up — processing, underwriting, paperwork. It is quoted as a percentage of the loan, which makes it sound minor: 1% to 3% is typical on business loans. Percentages hide scale, though. On a $100,000 loan, 2% is $2,000; on $250,000 it is $5,000. Always translate the percentage into dollars before you judge it, which is what the fee line in the results does for you.
Upfront, withheld, or financed — the fee bites three ways. Some lenders take the fee in cash at signing. Some withhold it from the payout, so you receive less than you borrowed but repay the full amount. Some add it to the balance, where it then gathers interest of its own for the whole term — the most expensive way to pay a fee. This calculator shows the fee-inclusive total cost of credit rather than pretending to a precise APR: if your fee is financed into the balance, enter the full amount owed (loan plus fee) as the loan amount and the interest on the fee is inside the maths automatically.
How to use the fee when comparing offers. Two offers with the same rate and term can still be thousands apart on fees alone. Compare offers on the true-cost line, not the payment: set each offer’s fee here and compare what each loan takes in total. A slightly higher rate with no fee can easily beat a lower rate carrying a 3% fee, especially on a shorter term — the numbers above will show you which, for your figures, in seconds.
What an SBA loan actually is. Loans under the US Small Business Administration’s programs are not lent by the government. They are made by ordinary banks and lenders, with the SBA guaranteeing part of the loan — which is why lenders offer them to businesses that might not qualify for a conventional loan. The guarantee is not free: SBA-backed loans can carry their own guarantee fees on top of the lender’s charges, and those fees vary with the loan’s size, type and maturity.
Why this page claims no SBA fee schedule. SBA guarantee fees, rate caps and terms change over time and differ by program, and a calculator that printed a precise-looking schedule it could not keep current would mislead you. So this page does the honest thing: it models the loan you describe — amount, rate, term and the fee percentage from your own offer — and shows the true cost of that loan. Take your lender’s actual fee percentage, whatever its name, and put it in the fee field; the arithmetic does not care what the fee is called.
What else moves a real offer. Beyond fees, real business loan pricing turns on your credit history, time in business, revenue, collateral and the industry you are in. Two businesses borrowing the same amount on the same day can be quoted rates several points apart. Treat the figures here as the shape of a loan — payment, interest, true cost — and any specific offer as one lender’s price for your risk, to be compared against at least one other on the true-cost line.
Term or rate: which moves the payment more?
Two levers change a loan’s payment — the rate and the term — and they do not pull equally. The table below holds the page’s $100,000 loan and moves one lever at a time from the default of 8% over 5 years, using the page’s own payment formula. The default row is the page’s worked example, verified against the calculator; the other rows are the same formula, so every difference in the table is a difference in the lever, not in the method.
| Loan | Monthly payment | Total interest | Total of payments |
|---|---|---|---|
| $100,000 at 8% over 5 years (default) | $2,027.64 | $21,658.37 | $121,658.37 |
| $100,000 at 8% over 10 years | $1,213.28 | $45,593.11 | $145,593.11 |
| $100,000 at 6% over 5 years | $1,933.28 | $15,996.81 | $115,996.81 |
| $100,000 at 10% over 5 years | $2,124.70 | $27,482.27 | $127,482.27 |
Doubling the term is the dramatic move. Stretching the default loan from 5 years to 10 nearly halves the monthly payment — $2,027.64 down to $1,213.28 — but more than doubles the interest, from $21,658.37 to $45,593.11. The payment falls because the same principal is spread over twice as many months; the interest rises because the balance stays outstanding for twice as long, and interest is charged on the balance every month it survives. The page’s bigger-loan example makes the same point from the other side: $250,000 at 7.5% over 10 years costs $106,105.31 in interest — a lower rate than the default, but twice the term, and term is what quietly feeds interest. Doubling the term never doubles the cost; here it multiplies the interest more than twice over.
Moving the rate is the quieter move, and that is precisely why it is easy to underrate. Two points of rate on the 5-year loan — 8% down to 6%, or up to 10% — move the payment by roughly $95 a month in either direction and the total interest by roughly $5,660 to $5,820. That is real money, but it is a fraction of what the term does, and it is the reason the page’s FAQ answers the “longer term for a lower payment” question the way it does: a lower payment bought with a longer term is not a cheaper loan, it is a slower one. When cash flow is tight, a longer term can be the right survival choice — but it should be chosen knowing the interest price, not mistaken for a discount.
The practical rule follows: negotiate the rate first, because it is pure saving with no term cost attached, and choose the term for cash flow with eyes open, because every extra year of term is bought with interest. And whenever two offers differ in both rate and term at once, compare them on total interest and true cost including fees — never on the monthly payment alone, which is the one figure engineered to look small.
What an extra $200 a month actually buys
The calculator has an extra-payment field, and it is the most powerful field on the page that most borrowers never touch. Set it to $200 a month on the default loan — the scheduled $2,027.64 plus $200.00 extra each month, applied to principal — and the engine’s own answer is: 54 monthly payments instead of 60, payoff in April 2031 instead of October 2031, total interest of $19,230.93 instead of $21,658.37. Six months of payments disappear, and $2,427.44 of interest with them, from $200 a month that most businesses can find somewhere.
Why does so little extra buy so much? Because extra principal early in a loan kills the interest that principal would have generated for every remaining month. In the first month of the default loan, $666.67 of the payment is interest and only $1,360.97 touches the balance — the balance falls slowly at first, as the page’s year-by-year table shows, with year one paying $7,387.66 of interest against $16,944.01 of principal. An extra $200 in that first month does not merely shorten the loan by a fraction of a payment; it removes $200 of balance that would otherwise have charged interest in all 59 remaining months. The earlier the extra payment, the more months of interest it prevents, which is why extra payments made early beat the same total paid late.
Two warnings belong with the enthusiasm. First, check the prepayment terms before you pay extra: some business loans charge prepayment penalties, and the page’s disclaimer names them among the charges this model does not itemise. An extra payment that triggers a penalty can cost more than the interest it saves. Second, the extra-payment figure here assumes the extra is applied every month, without fail, for the life of the loan. A business with seasonal revenue should check whether the lender allows uneven or lump-sum extra payments on the same terms, rather than assuming a monthly habit the cash flow cannot keep. The calculator shows what the habit is worth; the lender’s paperwork decides whether the habit is allowed.
Reading the year-by-year table
The page’s year-by-year table is the loan’s biography in five lines, and it repays a slow read. Year one: $24,331.67 of payments, $7,387.66 of interest, $16,944.01 of principal repaid, $83,055.99 still owed. Year five: the same $24,331.67 of payments, but only $1,022.37 of interest and $23,309.30 of principal, taking the balance from $23,309.30 to zero. The payments never change; the mixture inside them inverts completely. In year one, interest is 30.36% of what you pay; in year five, it is 4.20%. That inversion is the whole shape of amortisation: early payments mostly rent the money, late payments mostly return it.
That shape explains three practical facts. First, refinancing or repaying early saves the most when the loan is young, because the interest-heavy years are still ahead of you; refinancing in year five of a five-year loan saves almost nothing, because almost nothing is left to save. Second, the balance after year one — $83,055.99, still 83% of the original loan after a full year of payments — is why a business that borrowed $100,000 and paid $24,331.67 can still owe $83,055.99 without anything having gone wrong: the arithmetic, not the lender, produced that balance. Third, any fee or charge that is added to the loan behaves like principal from day one and therefore generates interest in the interest-heavy years — which is why the page counts the origination fee in the true cost even though the payment formula itself knows nothing about fees.
Use the table the way a lender would: before signing, ask for the equivalent schedule for the offer in front of you, and check that its year-one interest and its final balance match the shape above. If a schedule shows level principal from month one, or a balance that falls faster than amortisation allows, something else — a different payment structure, a fee folded in silently, a balloon — is hiding in the offer. The table is a lie detector as much as a summary.
Checks before you sign
1. Is the fee in dollars, not just percent? The page’s worked fee example is the template: a 2% origination fee on the default loan is 2% of $100,000 = $2,000.00, taking the true cost from $121,658.37 to $123,658.37. Percentages hide scale — on a $250,000 loan the same 2% is $5,000. Always translate the percentage into dollars before you judge it, and ask whether the fee is taken upfront, withheld from the amount you receive, or financed into the loan: the fee costs the same either way, and this page counts it either way.
2. What is not itemised here? Real business loan offers depend on the lender and on your business — its credit, revenue, time trading and collateral — and may include charges this model does not itemise, such as documentation fees, prepayment penalties or SBA guarantee fees on SBA-backed loans, which vary by program and change over time. No specific SBA fee schedule is claimed on this page, and none is claimed here: compare real offers on their full paperwork, and use the true-cost figure to see each offer whole.
3. Does the payment frequency match the offer? The page’s FAQ notes quarterly or annual payments change the total interest. A payment schedule that is not monthly reprices the whole loan; do not compare a monthly figure from this page against a quarterly figure from a lender without converting one to the other.
4. Is the loan an offer, or an estimate? This page is an estimate, not a loan offer, quote or financial advice. Every figure is standard amortisation arithmetic on the amount, rate, term and fee you enter. The offer that counts is the lender’s paperwork — and the true-cost comparison above is how you hold that paperwork to account.
Interest, payments, and the true cost, explained
Each payment is interest on the balance still owed plus principal that reduces it. The payment stays fixed, the interest share falls, and the principal share rises — and the rate moves the total interest far more than it moves the payment.
The monthly payment comes from the amortization formula: principal times the monthly rate times (1 plus the monthly rate) to the power of the number of payments, divided by (1 plus the monthly rate) to the power of the number of payments minus 1. On $100,000 at 8% over 5 years, the payment is about $2,027.64 a month and total interest about $21,658. At 6% the payment is about $1,933.28 and total interest about $15,997; at 10% the payment is about $2,124.70 and total interest about $27,482. Lengthening the term to 10 years cuts the payment to about $1,213.28 but more than doubles total interest to about $45,594. The term is the strongest lever on the payment and the most expensive lever on the total cost.
APR is broader than the interest rate: it includes certain fees and charges, so it is the better comparison between lenders, provided the fee inclusions match. Interest-only and balloon structures trade a lower payment now for a larger obligation later — on the same $100,000 at 8%, interest-only is $666.67 a month with $40,000 of interest over 5 years and the full $100,000 still owed — and extra payments, applied to principal in writing and checked against any prepayment penalty, are the most powerful cost-saving move available. The companion guide works the formula, the interest-principal split month by month, fixed versus variable rates, fees, and the extra-payment arithmetic in full.
Business loan questions, answered
How is a business loan payment calculated?
With the standard amortization formula: payment = P × r ÷ (1 − (1 + r)^−n), where P is the amount borrowed, r is the rate per payment period (the annual rate divided by the payments in a year) and n is the total number of payments. On this page’s default — $100,000 at 8% over 5 years, paid monthly — r is 0.6667% and n is 60, giving a payment of $2,027.64. Each payment first covers that period’s interest on the remaining balance; whatever is left reduces the balance, which is why the interest share shrinks as the loan ages.
What is an origination fee, and what does it do to the cost?
It is the lender’s upfront charge for setting the loan up, quoted as a percentage of the amount borrowed — often 1% to 3% on business loans. It never appears in the monthly payment, which is why payment-only comparisons understate the cost. On a $100,000 loan, a 2% fee is $2,000.00: the payments still total $121,658.37, but the true cost of the loan is $123,658.37. Whether the fee is paid in cash, withheld from your payout or added to the balance, it is real money out of the business, and this calculator always counts it in.
How much can paying extra each month save?
More than most borrowers expect, because every extra dollar goes straight to the balance and stops interest being charged on it for the rest of the term. On this page’s default loan — $100,000 at 8% over 5 years — adding $200 a month cuts the total interest from $21,658.37 to $19,230.93, a saving of $2,427.44, and the loan is paid off 6 months early, in 54 payments instead of 60. The extra-payment field in the calculator shows the saving for your own figures.
Should I take a longer term to get a lower payment?
A longer term always lowers the payment and always raises the total interest — the question is by how much. Borrowing $100,000 at 8% over 5 years costs $2,027.64 a month and $21,658.37 of interest. Stretch the same loan to 10 years and the payment falls to $1,213.28, a relief of $814.36 a month — but the interest climbs to $45,593.11, which is $23,934.74 more. If cash flow forces the longer term, an extra payment whenever you can afford one buys much of that interest back.
Do quarterly or annual payments change the total interest?
Yes — fewer, larger payments leave the balance higher for longer, so more interest builds up. The default loan paid quarterly costs $6,115.67 a quarter and $22,313.44 of interest over its life; paid annually it costs $25,045.65 a year and $25,228.23 of interest. Monthly payments of $2,027.64 keep the interest lowest at $21,658.37. The difference is not dramatic, but on a business loan it is real money paid for nothing but a billing schedule.
Is this calculator’s result the same as an SBA loan quote?
No. This page models the loan you describe and shows its payment, interest and fee-inclusive cost — it is an estimate, not a quote. SBA loans are made by partner lenders with part of the loan guaranteed by the US Small Business Administration; their rates, guarantee fees and terms vary by program, lender and your business’s profile, and they change over time. Take the rate and fee percentage from any real offer — SBA or conventional — enter them here, and the true-cost figure lets you compare offers on equal ground.
Why is most of my first-year payment interest?
Because interest is charged on the balance outstanding, and in year one that balance is at its largest. On the default loan, year one pays $24,331.67 in total, of which $7,387.66 — 30.36% — is interest, while only $16,944.01 reduces the balance. In the first month alone, $666.67 of the $2,027.64 payment is interest and only $1,360.97 touches the balance. As the balance falls, the interest share falls with it: by year five, only $1,022.37 of the same $24,331.67 is interest. Nothing is wrong and nothing is hidden — that inversion is the definition of amortisation, and it is why extra principal paid early saves far more interest than the same amount paid late.
Is an extra payment better than a shorter term?
They are cousins, not twins. A shorter term forces a higher scheduled payment every month — the loan must clear on the shorter schedule whether cash flow allows it or not. An extra payment is voluntary: on the default loan, $200 extra a month clears the loan in 54 payments instead of 60 and saves $2,427.44 of interest, but in a bad month you can skip it without defaulting. If cash flow is certain, the shorter term’s discipline costs nothing extra; if cash flow is seasonal or uncertain, the voluntary extra payment buys most of the same saving with an escape hatch. Check prepayment terms first either way — a penalty can erase the saving.
What does the origination fee do to the APR?
This page does not compute an APR, and that restraint is deliberate: an APR annualises the fee together with the rate into a single yearly figure, and its exact value depends on fee timing and payment structure in ways a payment calculator should not guess at. What this page does give you is the fee’s honest equivalent — the true cost, fee included. On the default loan a 2% fee adds $2,000.00, taking the true cost from $121,658.37 to $123,658.37. When a lender quotes you an APR, ask for it in writing with the fee schedule beside it, and compare it against this page’s true-cost figure: if the APR looks low but the true cost looks high, a fee is hiding in the gap between them.
My revenue is seasonal — does this loan model still apply?
As arithmetic, yes; as a payment plan, only if your lender agrees. This calculator models level periodic payments — the same amount every month, on schedule, for the full term. A seasonal business may need something else: uneven payments, a payment holiday, or lump-sum extra payments in strong months. Whether those are available, and what they cost in fees or penalties, is a term of the lender’s offer, not of the amortisation formula, and it is not modeled here. Take this page’s schedule to the lender and ask, in writing, which variations the offer allows — then price any variation that is allowed through the extra-payment field before you sign.
What is a balloon payment on a business loan?
A large final payment that repays the balance remaining after a shorter term than the amortization schedule assumes. A loan amortized as if over 25 years but due after 5 years has lower monthly payments and a large balloon at year 5, which must be repaid or refinanced. A balloon structure should only be chosen with a funded plan for the balloon date.
Should a business take a fixed or variable rate loan?
A fixed rate buys payment certainty for budgeting, at a premium over the variable starting rate. A variable rate starts lower and moves with a benchmark, so the payment can rise. The choice is a cash-flow decision: if the business needs payment certainty to meet payroll and rent, the fixed rate is worth its premium; if it expects to repay early or its revenues rise with rates, the variable rate may be worth the risk. Compare the fixed rate with the variable rate plus a realistic allowance for rises, not with the variable starting rate alone.
What is the difference between a business term loan and a line of credit?
A term loan lends a fixed amount repaid on a fixed schedule, and suits a fixed purchase such as equipment or fit-out. A line of credit lets the business draw what it needs up to a limit, paying interest only on the amount drawn, and suits variable working-capital needs such as inventory and receivables. Using a line of credit for a fixed purchase, or a term loan for a revolving need, mismatches the instrument to the need.
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An estimate — not a loan offer, quote or financial advice.
Every figure on this page is standard amortization arithmetic on the amount, rate, term and fee you enter. Real business loan offers depend on the lender and on your business — its credit, revenue, time trading and collateral — and may include charges this model does not itemise, such as documentation fees, prepayment penalties or SBA guarantee fees on SBA-backed loans, which vary by program and change over time. No specific SBA fee schedule is claimed here. Compare real offers on their full paperwork, and use the true-cost figure above to see each offer whole.
The payment is the headline. The true cost is the story. This page shows you both.
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