A business loan calculator estimates payments and financing costs from a loan amount, rate, term, fee, and repayment structure. This tool models amortizing, interest-only, and balloon loans, showing payments, interest, remaining balance, and net proceeds after an entered origination fee. Its effective-rate output is an estimate, not a lender's disclosed APR.
These are calculations based on the inputs, not a lender offer, approval, or assessment of whether a business can afford the debt. Actual contracts may include fees, payment dates, variable rates, or other terms that are not modeled here.
Inputs and assumptions
- Loan amount: The gross principal requested. Payments are calculated on this amount.
- Annual interest rate: The model treats the rate as fixed and divides it by 12 for monthly interest.
- Term: Enter a whole number of months. The calculator accepts 1 to 600 months.
- Origination fee: Enter 0% to 10% of the gross loan amount. The calculator deducts it from proceeds, but does not reduce the principal used to calculate payments.
- Repayment structure: Choose amortizing, interest-only, or balloon. For a balloon, enter a balloon month before the final month of the loan term.
The loan-type selector is descriptive only; choosing Standard, Line of Credit, or Other does not change the calculations or apply program-specific rules. In particular, the calculator does not model revolving draws or a separate credit limit.
Amortizing payment and origination fee
With a fixed monthly rate i and n monthly payments, an amortizing payment is calculated as Loan amount × i / [1 - (1 + i)-n]. At a 0% rate, the payment is the loan amount divided by the number of payments. Each modeled payment covers interest and reduces principal until the balance is cleared in the final payment.
An origination fee is calculated as a percentage of the gross amount and deducted from the proceeds. For example, a $100,000 loan with a 2% fee has $98,000 in modeled net proceeds, while payments and interest are calculated on $100,000. The calculator's effective APR estimates the annualized rate implied by those proceeds and the payment cash flows; it is an estimate, not an official lender or regulatory disclosure.
For example, a $100,000 amortizing loan at 7% for 60 months with a 2% fee has an estimated monthly payment of $1,980.12, total interest of $18,807.22, and total payments of $118,807.22. Net proceeds are $98,000, and the calculator's effective-rate estimate is 7.8513%.
That payment also connects to how lenders size the loan. A 1.25 debt-service coverage ratio — a level commonly cited in term-loan underwriting — requires roughly $2,475.15 of monthly cash flow to carry a $1,980.12 payment. The calculator does not compute coverage, but it does price the payment, and the payment is the denominator of that test: adjust the amount or term here until the figure your cash flow can support appears, then discuss collateral, covenants, and guarantees with the lender.
Interest-only and balloon structures
These options change what is due each month and what balance remains at the end:
- Interest-only: The monthly payment covers interest, so the principal does not decline. The full loan amount remains due at the end of the selected term. The term is interest-only throughout; the tool does not switch to amortizing payments later.
- Balloon: The regular payment is calculated as if the loan amortized over the full entered term. At the selected balloon month, the remaining balance is due in addition to that month's regular payment.
In a $250,000 example at 8.50% with a 120-month amortization term and a balloon after 60 months, the modeled payment is $3,099.65 per month and the remaining balance after the 60th scheduled payment is $151,079.65. With a 2% fee deducted from proceeds, the effective-rate estimate is 9.0987%. The business would need to plan for the balloon rather than assume it can be refinanced.
For comparison, an interest-only structure on $250,000 at 8.50% for 120 months with no fee has a modeled payment of $1,770.83 per month. It generates $212,500 in interest over the modeled term, and the $250,000 principal remains due separately at the end. The lower monthly payment does not mean the principal has been repaid.
Three structures on identical inputs
Put $100,000 at 7.00% over 60 months with no fee through all three structures, and the trade becomes concrete:
| Structure | Monthly payment | Interest in the model | Balance still owed at the end | Total cash out |
|---|---|---|---|---|
| Amortizing | $1,980.12 | $18,807.22 | $0.00 | $118,807.22 |
| Interest-only | $583.33 | $35,000.00 | $100,000.00 | $135,000.00 once the principal is repaid |
| Balloon at month 36 | $1,980.12, then $44,226.18 due | $15,510.50 to the balloon | $44,226.18 at month 36 | $115,510.50 |
The interest-only row is the one that misleads. Its monthly payment is $1,396.79 lower than the amortizing payment, but the principal never moves, so the loan costs $135,000 in total against $118,807.22 and the business still owes $100,000 on the last day. The saving is a deferral, not a discount. The balloon row looks cheapest on paper because the table stops at month 36; the loan does not, and the $44,226.18 has to come from somewhere at a date the borrower does not control. Compare structures on total cash out and the balance that survives, not on the monthly payment alone.
What the calculator does not determine
The calculator does not assess debt-service coverage, business cash flow, collateral, personal guarantees, credit history, lender eligibility, SBA program fees or limits, taxes, or whether a particular structure suits your business. It does not model a variable rate, revolving credit draws, extra payments, or fees other than the entered origination percentage. Check the proposed contract and consult appropriate financial or tax professionals for situation-specific advice.
For information about SBA-guaranteed loan options and their general eligibility considerations, consult the U.S. Small Business Administration's loan guidance. This calculator does not determine whether a business or loan qualifies for an SBA program.
For related calculations, compare a level-payment estimate with the Loan Payment Calculator, review a fee-inclusive rate estimate with the APR Calculator, or inspect payments over time with the Amortization Calculator.
Price the loan here, then negotiate collateral, covenants, and guarantee terms with the lender.
Last verified: October 2026. Calculator figures are outputs for the inputs entered; they are not live quotes, current rates, or an offer.