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Business Loan Calculator

Estimate loan payments, see the total interest, and read the full amortization schedule by payment or by year.

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Amortization

This calculator provides estimates and is not financial or lending advice. Actual payments depend on your lender's terms, fees and interest calculation method.

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How is this calculated?

Each payment first covers the interest on the remaining balance; the rest reduces the balance. Early payments are mostly interest, later payments mostly principal.

Payment = P x r x (1 + r)^n / ((1 + r)^n - 1), where r is the rate per payment period and n is the number of payments
Interest This Period = Remaining Balance x r
Total Repayment = Loan Amount + Total Interest

Worked Example

Loan amount: $10,000. Interest rate: 10 percent per year. Term: 1 year, monthly payments.

Estimated payment = $879.16 a month. Total interest over the year is about $549.91, so the total repayment is about $10,549.91.

The schedule shows why: the first payment includes $83.33 of interest, while the last includes only a few dollars, because the balance shrinks every month.

How to Calculate a Loan Payment

A loan payment is sized so that, with interest charged on the shrinking balance, the debt reaches exactly zero at the final payment. The formula spreads the loan evenly: divide the annual rate by the number of payments per year, raise it through the amortization formula, and you get a fixed payment for the whole term.

Payment frequency matters more than most borrowers expect. Bi-weekly payments add one extra monthly-sized payment a year compared with monthly, which shortens the real payoff time and trims total interest. Compare frequencies in the calculator before signing anything.

Why Total Interest Matters

The payment is what you feel monthly, but total interest is what the loan actually costs. A longer term lowers the payment while raising the total cost, sometimes dramatically. For a business, the loan only makes sense if the revenue it enables, checked with the Revenue Calculator and your margins, comfortably exceeds that cost.

Also remember the payment becomes a fixed cost. Adding it to your break-even calculation shows how many extra sales the borrowed money has to produce each month.

How to Improve Your Numbers

Reduce the cost of borrowing by shortening the term when cash flow allows it, making a larger down payment, improving the rate through a better credit profile or collateral, and choosing a payment frequency that pays the balance down faster. Even a small rate difference matters over a long term, so compare total interest, not just the monthly payment, between offers.

Frequently Asked Questions

Why is my lender's payment slightly different?

Lenders may calculate interest with different day counts, include fees in the balance, or compound on a different schedule (Canadian mortgages, for example, often compound semi-annually). This calculator uses the standard amortization formula with interest charged each payment period, so treat it as a close estimate.

Is a longer term ever a good idea?

It can be, when cash flow is tight and the payment must fit the budget. Just read the total interest line: that is the real price of the extra time, and it should be a deliberate trade, not a surprise.

What does the annual summary view show?

It groups the payment schedule by year: how much principal and interest you pay each year and the balance at each year end. It is the quickest way to see how slowly the balance falls in the early years.

Should I include loan fees in the amount?

If fees are added to the loan balance, include them in the amount you enter. Fees paid up front in cash do not change the payment, but they do change the true cost of borrowing.

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