Business Loan Calculator
This business loan calculator estimates the monthly payment and total cost of financing for working capital, equipment, or expansion, while also folding any origination fee into a true APR. Commercial and SBA loans frequently charge an upfront origination fee as a percentage of the loan, which raises the effective borrowing cost above the headline rate. Enter the loan amount, rate, term, and origination fee percentage to see the payment, total interest, total cost, the fee in dollars, and the fee-adjusted APR.
Formula
M = P · r(1 + r)^n / ((1 + r)^n − 1); Fee = P × origination% ÷ 100
- P
- Loan amount (principal)
- r
- Monthly rate = annual rate ÷ 12 ÷ 100
- n
- Number of payments = years × 12
- M
- Monthly payment; APR is then solved to include the origination fee
How it works
- Enter the loan amount, the annual interest rate, and the repayment term in years for the business financing you are evaluating.
- Add the origination fee as a percentage of the loan; the calculator converts it to a dollar amount that the lender typically deducts or charges upfront.
- It computes the monthly payment with the amortizing loan formula, totals the interest and overall cost, and when a fee is present solves for the APR that reflects the fee on top of the stated rate.
Worked example
A $150,000 business loan at 9% over 7 years with a 3% origination fee.
- Monthly rate = 9 ÷ 12 ÷ 100 = 0.0075 over 84 payments; monthly payment = $2,413.36.
- Total cost = 2,413.36 × 84 = $202,722.39; total interest = 202,722.39 − 150,000 = $52,722.39.
- Origination fee = 150,000 × 3% = $4,500; solving for the rate that includes this fee gives an APR of about 9.97%.
The monthly payment is about $2,413.36, total interest is roughly $52,722.39, and the $4,500 origination fee pushes the effective APR to about 9.97%, well above the 9% nominal rate.
Frequently asked questions
- What is an origination fee on a business loan?
- It is an upfront charge for processing the loan, usually quoted as a percentage of the amount borrowed. Because it is paid at closing while your payments are based on the full principal, it raises your effective cost, reflected here in the APR.
- How is an SBA loan different from a conventional business loan?
- SBA loans are partially guaranteed by the Small Business Administration, which can mean lower rates, longer terms, and a guarantee fee. This calculator handles the core payment math; enter the actual rate, term, and fees your SBA or conventional lender quotes.
- Why is the APR higher than the interest rate I entered?
- The interest rate covers only the cost of borrowing the principal, while the APR also spreads the origination fee across the loan. With no origination fee the APR equals the nominal rate; any fee makes the APR higher.