Business Loan Calculator

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Reviewed by: David Chen, CFA
David is a Chartered Financial Analyst with over 15 years of experience in corporate finance and commercial lending, specializing in small business (SBA) and enterprise loans.

This 4-in-1 Business Loan calculator helps you model your commercial loan payments. Enter any three variables—Loan Amount, Annual Rate, Term, or Monthly Payment—and we will solve for the fourth.

Loan Amount ($) (P)

Annual Rate (%) (R)

Loan Term (Years) (T)

Monthly Payment ($) (M)

Business Loan Payment Formulas

Solve for Monthly Payment (M):
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]

Solve for Loan Amount (P):
P = M [ (1 + i)^n – 1 ] / [ i(1 + i)^n ]

Solve for Loan Term (T):
T = ln(M / (M – Pi)) / (n * ln(1 + i))

Solve for Rate (R):
Solved iteratively (no direct formula)

Formula Source: U.S. Small Business Administration (SBA)

Formula Variables

(P) Loan Amount: The total principal amount borrowed for the business.
(R) Annual Rate: The fixed annual interest rate (APR) for the business loan.
(T) Loan Term: The total number of years you have to repay the loan (e.g., 5, 10, or 25 years for SBA loans).
(M) Monthly Payment: The fixed monthly payment (Principal & Interest) required to pay off the loan in the specified term.
(i) Monthly Rate: The annual rate divided by 12.
(n) Total Payments: The total number of payments (Term in years * 12).

Related Calculators

What is a Business Loan Calculator?

A Business Loan Calculator is a vital tool for entrepreneurs and business owners. It helps you estimate the monthly payments on a commercial loan, allowing you to understand the true cost of financing and how it will impact your company’s cash flow.

Most business loans, such as SBA 7(a) loans or conventional bank loans, function as amortizing term loans. This means you borrow a lump sum and pay it back with interest over a fixed period. This calculator is designed to model these types of loans, showing you the relationship between the loan amount, interest rate, term, and your monthly payment.

This 4-in-1 tool allows you to enter any three variables to solve for the unknown fourth. For example, you can calculate your monthly payment, determine how much you can afford to borrow, see how a different interest rate affects your payment, or find out how long it will take to pay off the loan.

How to Calculate Business Loan Payments (Example)

Identify Your Variables
Let’s say your business is approved for a Loan Amount (P) of $150,000. The Annual Rate (R) is 9.0%, and the Loan Term (T) is 10 years. You want to find your Monthly Payment (M).
Convert Annual Rate to Monthly (i)
First, convert the annual rate to a monthly decimal: i = (9.0% / 100) / 12 = 0.09 / 12 = 0.0075
Calculate Total Number of Payments (n)
Next, find the total number of monthly payments: n = 10 Years * 12 Months/Year = 120 payments
Apply the Amortization Formula
Use the standard loan payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
M = 150,000 [ 0.0075 * (1 + 0.0075)^120 ] / [ (1 + 0.0075)^120 – 1 ]
M = 150,000 [ 0.0075 * (2.45136) ] / [ 2.45136 – 1 ]
M = 150,000 [ 0.018385 ] / [ 1.45136 ]
M = 150,000 * 0.012668
M = $1,900.17
Final Result
Your fixed monthly principal and interest payment for the 10-year business loan will be $1,900.17.

Frequently Asked Questions (FAQ)

What is the difference between a business loan and a personal loan?

A business loan is used exclusively for business purposes (e.g., buying equipment, inventory, or working capital) and is underwritten based on the business’s finances. A personal loan can be used for any purpose and is based on your personal credit and income. Business loans often have different terms and rates.

How much can my business afford to borrow?

You can use this calculator to find out! Enter the Monthly Payment (M) your business’s budget can handle, the current Annual Rate (R) you’ve been offered, and the Loan Term (T). The calculator will solve for the Loan Amount (P) you can support.

How does the loan term affect my payment?

A longer term (e.g., 10 years) will result in a lower monthly payment, but you will pay significantly more in total interest over the life of the loan. A shorter term (e.g., 5 years) will have a higher payment but will save you money on interest and build equity faster. You can model both scenarios using this calculator.

Can I solve for the interest rate (R)?

Yes. If you know how much you are borrowing, the term, and what the monthly payment is, you can leave the “Annual Rate (%)” field empty. The calculator will solve for the APR of your loan, which is useful for comparing different loan offers.

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