Business Loan Calculator

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Should I get a business loan?


Business loan calculator: Understand how much you can get

Our business loan calculator can show much you may be able to borrow before you apply. Understanding how the loan amount, interest rate and repayment term affects your monthly payment would help you stay within your budget.

Certain information about your business influences the loan amount for which you could qualify:

  • Business start date & annual revenue: The month and year you started your business and the gross revenue you generate on an annual basis would show a lender if your business is established enough to take on debt. Gross revenue is the total amount of money your business earns before you deduct expenses. A lender would want to make sure your business makes enough to cover your debt, so your business loan amount would depend on how much money your business earns.
  • Last month’s deposits: This information would also help a lender identify how much cash on hand your business has, and it would show whether you can afford monthly payments toward your debt. When applying for a loan, you may be required to provide bank statements to show your previous deposits.
  • Estimated credit score: You may be eligible for a larger loan amount if your credit is good or excellent, while your loan amount may be smaller if you have fair or poor credit. You may have a business credit score as well. A strong business credit profile could help you secure more money as you move through the loan application process.
  • Home based or not: Any business that is run from a personal residence would be considered a home-based business. These types of businesses may have fewer assets to offer as collateral when applying for a loan, which could affect the loan amount.
  • A lender may require more specifics when reviewing your loan application, such as your business plan, financial projections and collateral, which would impact your final loan amount.

Factors that impact your small business loan payments

The total amount of money you borrow may depend on the size of payments you can afford to repay your loan. It may be best to calculate your desired monthly payment before applying for funding to see what works with your budget. Small business loan payments rely on a number of factors, such as:

Business loan amount

Average business loan amounts range from $13,000 to more than $1 million, depending on the lender. Banks are known to loan larger amounts compared to alternative, online business lenders. But, it may be easier to qualify for an online loan than a bank loan.

The type of business loan you’re seeking would also impact the amount. For instance, the U.S. Small Business Administration (SBA) loans are available up to $5 million and equipment loan amounts could be as high as $500,000 to $1 million. Whether you need to cover a small or large business expense would determine the type of loan you’d pursue.

Interest rate

Interest rates affect the overall cost of business loans and vary from lender to lender. You may come across several types of interest rates as well. Some common forms of interest on business loans include:

  • Annual percentage rate (APR): Compounding annual interest that includes fees, such as loan origination fees and closing costs.
  • Annual interest rate (AIR): Compounding annual interest that does not include any loan fees.
  • Factor rate: Decimal figure that shows the total cost of financing when multiplied by the original loan amount. A factor rate does not reflect any loan fees.

Whether your interest rate is high or low depends on how risky you are as a borrower. A lender would assess your personal credit score, as well as your business credit score, if applicable, and your business’s financial standing to determine your risk level. The amount of time you’ve been in business and your annual revenue may be factors as well.

When taking out a business loan, make sure you understand if your rate is variable or fixed for the length of the loan. This should be outlined in your final loan agreement. You can use a business loan amortization calculator to estimate how long it may take to pay down your loan based on a specific interest rate and monthly payment.

Types of business loan fees

If your interest rate is expressed as APR, there may be several fees wrapped up in your rate. But if not, you may pay these fees at the start or end of your loan term. Common types of business loan fees include:

  • Origination fee: Covers the cost of processing and approving your loan application.
  • Service or processing fees: Covers the expense of activities such as billing and managing your account.
  • Prepayment penalty: Paying off your loan early may result in a prepayment penalty.
  • Late payment fee: Charged when you make a payment past the due date.

Check with your lender to see when and how you would be expected to pay these fees. In some cases, fees could affect your monthly loan payments. Other times, you may be expected to pay fees in addition to your recurring payments.

Loan term

The length of your loan term illustrates how long you have to repay your debt in full. Terms can span a few months to several years, depending on the type of loan and lender. SBA loans often have the longest maximum terms ranging from 10 to 25 years. Traditional bank loans are close behind, as terms may be as long as 10 years.

Online loans typically have the shortest terms. You may have to repay debt in as few as three months. These loans usually come with higher interest rates than bank loans. Keep in mind that you may have a short timeline to repay your loan plus interest, which could increase the amount of your monthly payments.

Thing to know: Watch out for daily or weekly repayment schedules when borrowing short-term loans. Some lenders collect automatic, recurring payments on a daily or weekly basis until the loan is paid off. While this may result in lower payments, you would need to budget for regular withdrawals from your business bank account.

Where to find business loans

Once you have an idea of how much you can borrow and the size of loan payments you can afford, it’s time to shop for a business loan that meets your needs. As mentioned earlier, there are several types of business loans available that may offer various loan terms and repayment schedules. Generally, you could start with three broad categories of business loans before narrowing down your choice.

Online loans

Online business loans from alternative lenders typically have lenient borrower requirements and fast time to funding, sometimes as quick as one business day. The downside to online loans is that they are often expensive with higher rates than what you’d find with traditional bank loans. Loan amounts may be smaller for online loans, which typically max out at $500,000. But if you need fast access to funding to cover a small or medium-sized business expense, an online loan may be a suitable option if you can afford the cost, especially if your credit profile is less than perfect.

SBA loans

SBA loans are issued through banks and other financial institutions and are backed by the U.S. Small Business Administration (SBA). The SBA guaranty reduces risk for lenders, which makes it easier for those lenders to approve borrowers who may not otherwise qualify for financing. Individual lenders may charge their own interest rates, but the SBA caps rates to keep loan costs low, making SBA loans a desirable financing option.

Bank loans

You may want to take the traditional route and pursue bank financing if your business is well established. You may qualify for favorable rates and terms if you have a good relationship with the bank and have been a long-time customer. Also, you may be able to secure a larger loan amount from a bank than an online lender. But remember that it may take a few weeks or months for a bank to approve your loan application.

Be sure to shop around to compare loan offers from various types of lenders. Look for a lender that offers the amount you need with rates you can afford and a repayment schedule your business can manage.

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