Business Loan Calculator
Calculate monthly payments for all major business loan types including SBA 7(a), SBA 504, equipment loans, and term loans. Enter your monthly revenue to see your Debt Service Coverage Ratio (DSCR) — the key metric lenders use to approve business financing.
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How It Works
Business loan payments use the same amortization formula as personal loans. Fixed-rate term loans have equal monthly payments that cover both interest and principal throughout the loan term.
M = P × r(1+r)^n / [(1+r)^n - 1]$250,000 at 8.5% for 60 months = $5,130/moDSCR divides monthly net operating income by monthly debt service. Most lenders require 1.25 or higher. Below 1.0 means the business cannot cover payments from operations. Enter monthly revenue and the calculator computes your DSCR automatically.
DSCR = Net Operating Income / Total Debt Service$6,500 NOI / $5,130 payment = 1.27 DSCR ✓Annual cost is 12 times the monthly payment. Knowing the annual cost helps plan cash flow budgets and compare the loan cost against the revenue or value it is expected to generate.
Annual = Monthly × 12$5,130/mo × 12 = $61,560/yearBusiness loan origination fees range from 1% to 5%. Unlike personal loans where fees may be deducted from proceeds, business loan fees are often paid at closing. Include fees in total cost comparisons.
Fee = Loan Amount × Fee%$250,000 × 2% = $5,000 origination feeSBA 7(a) loans go up to $5 million. The SBA guarantees 75% to 85% of the loan, reducing lender risk. The guarantee fee (0% to 3.5%) is paid by the borrower and funds the SBA program. The maximum loan for the SBA Microloan program is $50,000.
Max SBA 7(a): $5,000,000SBA guarantee fee: $150,000 loan × 2% = $3,000Equipment loans use the equipment as collateral, providing lower rates than unsecured business loans. Rates of 5% to 15% versus 15% to 30% for unsecured are common. The loan term should not exceed the equipment's useful life.
Secured equipment rate < unsecured term loan rate$100K equipment: 7% secured vs 18% unsecured = $16K savingsQuick Reference
Common examples — verify instantly above.
$100K, 8%, 60mo
Monthly payment
$2,028/mo
$250K, 8.5%, 60mo
Monthly payment
$5,130/mo
$500K, 7%, 120mo
SBA 7(a) payment
$5,805/mo
DSCR check
$6,500 NOI / $5,130 pmt
1.27 — approved ✓
DSCR check
$5,000 NOI / $5,130 pmt
0.97 — too low ✗
Origination fee
$250K at 2%
$5,000 upfront
Annual cost
$5,130/mo payment
$61,560/year
Total interest
$250K at 8.5%, 60mo
$57,800
Tips & Shortcuts
Calculate your DSCR before applying. If it is below 1.25, reduce the loan amount or extend the term to lower the payment before submission.
SBA loans offer the best terms for qualified businesses — lower rates, longer terms, and smaller down payments. If you qualify, pursue SBA first.
Separate your business and personal credit. Business credit scores from Dun & Bradstreet and Experian Business are increasingly used by lenders.
Build a relationship with a community bank or credit union. They process SBA loans frequently and often provide faster approval than large banks.
Time loan applications strategically. Q4 can be slower at banks with staff changes, while Q1 budgets are freshly approved.
Compare the annual cost of financing against the expected revenue or cost savings from what is being financed. The loan should pay for itself.
Common Mistakes to Avoid
Not checking DSCR before applying
Submitting an application you do not qualify for creates hard inquiries, wastes time, and may signal desperation to future lenders. Calculate DSCR first and size the loan accordingly.
Choosing the shortest term to minimize interest without checking cash flow
A shorter term lowers total interest but raises monthly payments. Ensure your business cash flow can handle the payment even in slow months before choosing an aggressive term.
Ignoring SBA options because of perceived complexity
SBA loans offer the best terms available to small businesses. A business loan specialist or SBA-preferred lender can navigate the paperwork. The extra effort for a 2% lower rate saves tens of thousands on a large loan.
Using personal savings instead of business financing for growth
Business financing preserves personal capital and builds business credit. If the investment return exceeds the loan rate, financing is preferable to depleting personal savings.
Not shopping multiple lenders for the same loan product
Business loan rates vary by 2% to 5% between lenders for identical borrowers. Getting 3 quotes takes days but can save thousands in interest.
Overlooking equipment loans for asset purchases
Equipment loans are secured by the asset and offer rates 5% to 10% lower than unsecured term loans. For any purchase of a specific asset, an equipment loan is almost always cheaper.
Frequently Asked Questions
DSCR measures your business's ability to cover loan payments with operating income. It is calculated as net operating income divided by total annual debt service. Most lenders require a DSCR of at least 1.25, meaning your income is 25% higher than your debt payments. A DSCR below 1.0 means you cannot cover payments from income.
Common types include SBA 7(a) loans (up to $5 million, 10-25 year terms), SBA 504 loans (for real estate and equipment, up to 25 years), equipment loans (secured by the equipment, 3-7 years), business term loans (1-5 years), and lines of credit (revolving). Rates and terms vary significantly by type.
SBA loans typically range from prime plus 2.75% to prime plus 4.75%. Equipment loans run 5% to 15%. Business term loans range from 6% to 30% depending on creditworthiness. Online lenders charge 10% to 40%+ for convenience and speed of funding.
Origination fees on business loans typically range from 1% to 5% of the loan amount. SBA loans have a guarantee fee of 0% to 3.5% depending on the loan amount. These fees compensate the lender for underwriting, processing, and the SBA guarantee.
SBA loan eligibility requires being a for-profit business operating in the US, having reasonable owner equity invested, using the funds for a sound business purpose, and demonstrating the ability to repay. Most SBA programs require 2 years in business, a personal credit score of 650+, and strong business financials.
SBA 7(a) working capital loans go up to 10 years. SBA 504 loans for equipment go to 10-20 years and for real estate up to 25 years. Equipment loans are typically 3-7 years. Business lines of credit renew annually. The term should match the expected useful life of what is being financed.
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