Use this business loan calculator to work out your monthly repayment, the total interest you will pay and the true yearly cost once an upfront processing fee is included. The yearly schedule below the result shows how much of each year’s payments reduces the loan and how much goes to the bank as interest.
| Year | Principal paid | Interest paid | Balance left |
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Estimates only. Lenders use their own methods, rates and fees. Results update as you type; nothing you enter leaves your browser.
How to use the business loan calculator
- Loan amount: the amount you are asking the bank to lend, before any fee is deducted.
- Interest rate: the annual rate quoted on the term sheet. For a floating rate, use today’s benchmark plus the bank’s margin.
- Term: the repayment period in years. Longer terms lower the monthly payment but increase total interest.
- Processing fee: the arrangement or processing fee as a percentage of the loan. Enter 0 if there is none.
The formula behind the monthly payment
Most term loans are repaid in equal monthly instalments, often called EMIs. The payment is found with the standard amortisation formula: Payment = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12) and n is the number of monthly payments.
Early payments are mostly interest because the outstanding balance is high. As the balance falls, more of each payment goes to principal. That is why the schedule shows principal repaid rising every year.
Worked example
A business borrows $100,000 for 5 years at 12% a year, with a 1% processing fee. The monthly payment is about $2,224. Over 60 months the business repays about $133,467, so total interest is about $33,467. The $1,000 fee is taken upfront, so the business receives $99,000 while paying interest on the full $100,000. That lifts the true annual cost to about 12.44%.
What the bank looks at besides the payment
A payment you can afford on paper is only part of the credit decision. The lender will test whether your operating cash flow covers all debt payments with room to spare, usually through the debt service coverage ratio (DSCR). It will also check your security using loan-to-value. If you are not sure how large a loan your business can carry, start with the borrowing capacity calculator.
Frequently asked questions
Is the monthly payment the same as an EMI?
Yes. EMI stands for equated monthly instalment, the fixed monthly payment that repays both interest and principal over the loan term. This calculator gives the EMI for a standard fixed-rate term loan.
Why is the true annual rate higher than the quoted rate?
Because an upfront fee reduces the cash you actually receive while interest is still charged on the full loan. The calculator finds the rate at which the money you receive equals the value of all your payments, which is how an APR-style cost is measured.
Does this work for a line of credit or overdraft?
Not directly. A running line is usually interest-only on the amount drawn, with no fixed repayment schedule. See our guide to line of credit basics.
Do banks calculate interest monthly or daily?
It varies. Many business loans accrue interest daily on a 360- or 365-day basis, which can make small differences from this estimate. Ask your lender for their repayment schedule before you sign.
Comparing two offers? Use the loan comparison calculator. Before signing, read how to read a bank term sheet.
These figures are estimates for planning. They are not financial advice or an offer of credit. See our disclaimer.