How is a business loan payment calculated?

The monthly payment is calculated with fixed-rate amortization math, using the loan amount, annual rate, and term, so your principal and interest are spread evenly across each month.

Does this calculator include loan fees?

The monthly payment output is based on principal only. The calculator also estimates total fees separately and adds them to total borrowing cost for comparison.

What is the difference between total interest and total borrowing cost?

Total interest is the interest paid over the life of the loan. Total borrowing cost also includes the original principal and any included one-time fees used in this model.

How can I compare two loans fairly?

Use the same amount, same intended timeline, and the same time horizon as the first step. The comparison should include total borrowing cost and monthly payment burden, then check your own cash-flow room.

Business Loan Calculator - Free Loan Payment Calculator

Metric	Loan A	Loan B	Delta (B − A)
Monthly payment	$1,013.82	$1,001.90	-$11.92
Total interest	$10,829.18	$10,113.85	-$715.34
Fee amount	$500.00	$750.00	$250.00
Total borrowing cost	$61,329.18	$60,863.85	-$465.34

Metric

Loan A

Loan B

Delta (B − A)

Monthly payment

$1,013.82

$1,001.90

-$11.92

Total interest

$10,829.18

$10,113.85

-$715.34

Fee amount

$500.00

$750.00

$250.00

Total borrowing cost

$61,329.18

$60,863.85

-$465.34

What is a business loan calculator?

A business loan calculator helps you compare financing options before you commit to credit terms. It is most useful before signing, because it lets you test the same amount under different rates, fees, and terms and check what that means for monthly obligations.

How this calculator models loans

These results are based on fixed-rate amortization. The model assumes payments are level and the rate does not change during the term. It calculates interest on the principal amount, then adds an optional one-time origination fee estimate to total borrowing cost for side-by-side comparison.

Loan assumptions in this version

One principal amount, one fixed annual rate, one term.
No balloon payments, prepayment penalties, taxes, or insurance.
Origination fee entered as a percentage of principal and added once as upfront cost.
Fees do not automatically raise the payment schedule unless you include them as part of the principal.

Loan formulas

Monthly Rate = APR ÷ 12
Number of Payments = Years × 12
Monthly Payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
Principal = Loan amount
Total Interest = (Monthly Payment × Payments) − Principal
Total Borrowing Cost = Principal + Total Interest + Origination Fee

How to use a two-loan comparison

Enter the same loan amount in both rows to isolate the effect of rate, term, and fee. This keeps the comparison readable. Use the comparison output as an educational planning tool, then check the lender offer document for exact fees and conditions.

Why this remains educational

This page helps you compare structure and cost dynamics using standard formulas. It is not a pre-approval tool and should not replace lender-specific disclosure documents.

Methodology & Accuracy

How this calculator produces its results, and the limits you should keep in mind when using them.

Formula source

The result is produced by the exact mathematical formula shown on this page. The formula is derived from the definition of the relationship between the inputs and the output (for example, profit margin is profit divided by revenue by definition). Where a formula relies on an external rule, rate, or convention, the authoritative source supporting that claim is linked in the Sources section below. The calculation has not been certified or approved by any professional body.

Assumptions

Calculations assume the figures you enter are accurate and apply to your situation. These are simplified models that may not capture every business scenario, and the estimates depend entirely on the values you select.

Uncertainty and limitations

Results are estimates based on the information entered. Actual financial outcomes may differ depending on business circumstances, market conditions, taxes, location, and other factors.

Jurisdiction limitations

Financial rules, taxes, lending practices, and business requirements may vary by location. Consider local requirements when making financial decisions based on these results.

Tested with sample inputs

Tested with 50,000 principal: Loan A (8%, 5 years, 1% fee) and Loan B (7.5%, 5 years, 1.5% fee). Both calculations use fixed-rate amortization; values in the comparison use the same term and principal input.

Ownership and testing

This calculator is maintained by Small Business Finance Toolkit. Its calculation can be checked using the sample figures shown on this page. It has not been certified or reviewed by a licensed financial professional. Found an error or outdated information? Contact us.

Review status

Sample checks are listed above where available. This page is documented as an educational tool and is updated before major edits using a documented review process.

Sources and references

The notes below identify the topics each reference supports. Worked scenarios and calculator outputs are illustrations, not endorsements by these organizations.

Consumer Financial Protection Bureau — What is amortization?Explains that amortizing payments are divided between principal and interest, with earlier payments generally allocating more to interest. Referenced for the general concept only; the CFPB does not endorse or certify this calculator.https://www.consumerfinance.gov/ask-cfpb/what-is-amortization-and-how-could-it-affect-my-auto-loan-en-771/

Federal Reserve — Selected Interest Rates (H.15)U.S.Federal Reserve market interest rate data, referenced for context on how rates affect borrowing cost. The Federal Reserve does not endorse or certify this tool.https://www.federalreserve.gov/releases/h15/

Business Loan Calculator