Free Business Loan Calculator
Calculate monthly payments and compare loan options
Loan Details
Payment Summary
Amortization Schedule
Showing first 12 payments. Expand to show all
| Payment # | Payment Date | Payment | Principal | Interest | Balance |
|---|
Loan Comparison
Compare two different loan scenarios side-by-side
Scenario A (Current)
Scenario B
Difference
Typical Business Loan Rates
| Loan Type | Typical Rate Range | Term Length | Best For |
|---|---|---|---|
| SBA 7(a) Loan | 6% - 13% | Up to 25 years | Working capital, equipment, real estate |
| Traditional Bank Term Loan | 5% - 12% | 1 - 10 years | Established businesses, major purchases |
| Business Line of Credit | 7% - 25% | 6 months - 5 years | Short-term cash flow, seasonal needs |
| Equipment Financing | 5% - 20% | 1 - 7 years | Purchasing machinery, vehicles, equipment |
| Online Lender Term Loan | 7% - 30% | 3 months - 5 years | Faster approval, lower credit requirements |
Understanding Business Loans
Types of Business Loans
- Term Loans: Lump sum upfront, fixed monthly payments, best for one-time investments like equipment or expansion
- SBA Loans: Government-backed loans with favorable rates and longer terms, strict qualification requirements
- Lines of Credit: Revolving credit up to a limit, pay interest only on what you use, good for ongoing or seasonal needs
- Equipment Financing: Loan secured by the equipment itself, often 80-100% financing available
Debt Service Coverage Ratio (DSCR)
DSCR measures your ability to repay debt using operating income. It is calculated as:
DSCR = Net Operating Income / Total Debt Service
- DSCR above 1.25: Strong - you generate $1.25 for every $1 of debt payment
- DSCR of 1.0 - 1.25: Acceptable but tight cash flow
- DSCR below 1.0: Negative cash flow - you are not generating enough income to cover debt
Most lenders require a DSCR of at least 1.25 for loan approval.
Break-Even Revenue Analysis
This calculator shows the monthly revenue needed to maintain a healthy DSCR of 1.25. This assumes your net operating income is approximately 25-30% of revenue (typical for many businesses). Use this as a guideline to ensure your loan payments are sustainable.
Effective APR vs. Stated Interest Rate
The effective APR includes all costs associated with the loan:
- Stated interest rate
- Origination fees (typically 1-5%)
- Closing costs and application fees
- Ongoing maintenance or draw fees (for lines of credit)
A loan with a 7% interest rate but a 3% origination fee has an effective APR of approximately 7.5-8%, depending on the term. Always compare effective APR when evaluating loan offers.
When to Use Each Loan Type
Term Loan: Use for purchasing real estate, major equipment, business acquisition, or significant expansion. Best when you need a large lump sum and can commit to fixed payments.
SBA Loan: Best for established businesses that can wait 60-90 days for approval and want the lowest rates and longest terms. Requires strong credit and documentation.
Line of Credit: Ideal for managing cash flow gaps, seasonal inventory, short-term opportunities, or emergency expenses. Provides flexibility to borrow as needed.
Equipment Financing: Use specifically for purchasing equipment, vehicles, or machinery. The equipment serves as collateral, making approval easier and rates competitive.
Qualification Requirements
Most business loans require:
- Credit score of 650+ (higher for better rates)
- 2+ years in business (some lenders accept 1 year)
- Annual revenue of $50,000+ (varies by lender)
- Positive cash flow or profitability
- Business plan or use of funds documentation
- Collateral (for secured loans)
Frequently Asked Questions
What is a good interest rate for a business loan?
Interest rates vary by loan type and creditworthiness. SBA 7(a) loans typically range from 6-13%, traditional bank term loans from 5-12%, and online lenders from 7-30%. Equipment financing rates are usually 5-20%, while lines of credit range from 7-25%.
How much can I borrow for my business?
Loan amounts depend on your business revenue, credit score, time in business, and collateral. SBA loans can go up to $5 million, traditional term loans from $25,000 to $5+ million, and equipment financing typically covers 80-100% of equipment value. Lenders often cap loans at 10-25% of annual revenue.
What is debt service coverage ratio (DSCR)?
DSCR measures your business's ability to repay debt. It's calculated as Net Operating Income divided by Total Debt Service. A DSCR of 1.25 or higher is preferred by most lenders, meaning you generate $1.25 for every $1 of debt payment. Below 1.0 indicates negative cash flow.
What are SBA loan requirements?
SBA loans require: US-based for-profit business, owner investment/equity, exhausted other financing options, good credit (typically 680+), ability to repay, and acceptable use of funds. Most require 2+ years in business, though startups may qualify for certain programs.
How do I calculate effective APR with fees?
Effective APR includes all costs: interest rate plus origination fees, closing costs, and other charges spread over the loan term. A 7% loan with a 3% origination fee has an effective APR higher than 7%. This calculator automatically computes effective APR including your origination fee.
What is the difference between a term loan and line of credit?
A term loan provides a lump sum upfront with fixed monthly payments over a set period. A line of credit provides access to funds up to a limit, you pay interest only on what you use, and you can borrow repeatedly as you pay down the balance. Lines of credit are better for short-term or variable needs.
When should I take out a business loan?
Good reasons include: purchasing equipment that generates revenue, expanding to new locations, hiring employees to grow, buying inventory for seasonal demand, or consolidating higher-interest debt. Avoid borrowing for operating expenses unless you have a clear plan to improve profitability.
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Privacy & Limitations
- All calculations run entirely in your browser -- nothing is sent to any server.
- Results are estimates for planning purposes and should not replace professional financial advice.
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Business Loan Calculator FAQ
What is a good interest rate for a business loan?
Interest rates vary by loan type and creditworthiness. SBA 7(a) loans typically range from 6-13%, traditional bank term loans from 5-12%, and online lenders from 7-30%. Equipment financing rates are usually 5-20%, while lines of credit range from 7-25%.
How much can I borrow for my business?
Loan amounts depend on your business revenue, credit score, time in business, and collateral. SBA loans can go up to $5 million, traditional term loans from $25,000 to $5+ million, and equipment financing typically covers 80-100% of equipment value. Lenders often cap loans at 10-25% of annual revenue.
What is debt service coverage ratio (DSCR)?
DSCR measures your business's ability to repay debt. It's calculated as Net Operating Income divided by Total Debt Service. A DSCR of 1.25 or higher is preferred by most lenders, meaning you generate $1.25 for every $1 of debt payment. Below 1.0 indicates negative cash flow.
What are SBA loan requirements?
SBA loans require: US-based for-profit business, owner investment/equity, exhausted other financing options, good credit (typically 680+), ability to repay, and acceptable use of funds. Most require 2+ years in business, though startups may qualify for certain programs.
How do I calculate effective APR with fees?
Effective APR includes all costs: interest rate plus origination fees, closing costs, and other charges spread over the loan term. A 7% loan with a 3% origination fee has an effective APR higher than 7%. This calculator automatically computes effective APR including your origination fee.
What is the difference between a term loan and line of credit?
A term loan provides a lump sum upfront with fixed monthly payments over a set period. A line of credit provides access to funds up to a limit, you pay interest only on what you use, and you can borrow repeatedly as you pay down the balance. Lines of credit are better for short-term or variable needs.
When should I take out a business loan?
Good reasons include: purchasing equipment that generates revenue, expanding to new locations, hiring employees to grow, buying inventory for seasonal demand, or consolidating higher-interest debt. Avoid borrowing for operating expenses unless you have a clear plan to improve profitability.