David is a Chartered Financial Analyst with 15 years of experience in commercial lending and business finance strategy.
This 4-in-1 Commercial Loan calculator helps you forecast payments for business financing. Enter any three variables—Loan Amount, Annual Rate, Loan Term, or Monthly Payment—to solve for the fourth.
Commercial Loan Calculator
Commercial Loan Amortization Formulas
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 (n, in months):
n = -ln(1 – (P*i / M)) / ln(1 + i)
Solve for Rate (i):
*Solved iteratively (no direct formula)
Formula Variables
- (P) Loan Amount (Principal): The total amount borrowed for the business.
- (R) Annual Rate: The annual interest rate (APR) for the loan.
- (T) Loan Term (Years): The total length of the loan repayment period.
- (M) Monthly Payment: The fixed principal and interest payment due each month.
- (i): Monthly Interest Rate (R / 12 / 100)
- (n): Total Number of Payments (T * 12)
Related Calculators
What is a Commercial Loan?
A commercial loan is any loan issued to a business rather than an individual. These loans are used to fund operations, purchase equipment, acquire real estate, or finance expansion. Unlike personal or residential loans, which are often standardized, commercial loans can have highly variable terms, rates, and structures based on the borrower’s business profile, industry, and the loan’s purpose.
Common types of commercial loans include term loans (which this calculator models), Small Business Administration (SBA) loans, equipment financing, and commercial real estate (CRE) mortgages. Because they represent a different risk profile to lenders, commercial loans may have shorter terms (e.g., 5-10 years) and higher interest rates than a typical home mortgage.
This calculator helps you analyze a standard, amortizing commercial term loan. You can use it to find a payment, determine how much you can borrow, see what interest rate you’d need, or find the right term for your budget.
How to Calculate a Commercial Loan Payment (Example)
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Identify Your Loan Details
Your business needs to borrow $250,000 (P) for new equipment. The bank offers a 10-year (T) loan at an 8.5% (R) annual rate. You want to find the monthly payment (M).
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Find Monthly Rate (i) and Total Payments (n)
Monthly Rate (i) = 8.5% / 12 / 100 = 0.0070833
Total Payments (n) = 10 Years * 12 Months = 120 -
Apply the Amortization Formula
The formula is: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
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Calculate the Payment
M = $250,000 [ 0.0070833 * (1.0070833)^120 ] / [ (1.0070833)^120 – 1 ]
M = $250,000 [ 0.0070833 * 2.3326 ] / [ 2.3326 – 1 ]
M = $250,000 [ 0.016518 ] / [ 1.3326 ]
M = $250,000 * 0.012395 -
Final Result
The monthly payment (M) for this commercial loan will be $3,098.75.
Frequently Asked Questions (FAQ)
The terms are often used interchangeably. “Commercial loan” is a broad category that includes various types of financing for businesses. A “business loan” typically refers to a specific product, like a term loan or line of credit, used for general business purposes (e.g., working capital, inventory).
What is a typical term for a commercial loan?Terms vary greatly by purpose. Equipment loans often have terms of 3-7 years, matching the equipment’s useful life. Working capital loans may be 1-3 years. Commercial real estate loans are longer, often with 15, 20, or 25-year amortization, but may have a “balloon payment” due after 5 or 10 years.
How do I find the loan term my business can handle?Use this calculator by entering the Loan Amount (P) you need, the Annual Rate (R) you expect, and the Monthly Payment (M) your business cash flow can afford. Leave the “Loan Term (T)” field blank and click “Calculate.” The result will show you how many years you’ll need to pay off the loan.
What interest rate can I expect?Commercial loan rates depend heavily on your business’s financial health, time in business, cash flow, and your personal credit score. SBA loans typically offer more favorable, lower rates, while faster, alternative online lenders will charge significantly more. You can use this calculator to solve for the Rate (R) if you know the other three terms of a loan offer.