Business Loan Calculator
Before you take a business loan, you want to know what it really costs — not just the monthly payment, but the total interest you’ll pay over the term. Enter the loan amount, the annual interest rate and the length of the loan, and this free calculator returns your fixed monthly payment, the total interest, and the total you’ll repay.
How a business loan is repaid
Most business term loans are amortising: you make the same fixed payment every month, and each payment is split between interest and principal. Early on, more of the payment goes to interest; later, more goes to paying down the balance. By the final payment the loan is fully cleared. This calculator works out that fixed payment and shows what the loan costs in total.
The key insight: a lower monthly payment from a longer term almost always means more total interest. Cheaper per month is not cheaper overall.
The loan payment formula
The standard amortisation formula is:
Monthly payment = P × r ÷ (1 − (1 + r)⁻ⁿ)
where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of months (years × 12).
Total repaid = monthly payment × n, and total interest = total repaid − loan amount.
A worked example
A $50,000 loan at 8% annual interest over 5 years:
- Monthly rate: 8% ÷ 12 = 0.667%
- Months: 5 × 12 = 60
- Monthly payment: ≈ $1,014
- Total repaid: $1,014 × 60 ≈ $60,829
- Total interest: $60,829 − $50,000 ≈ $10,829
Stretch the same loan to 7 years and the monthly payment drops, but the total interest climbs well above $15,000 — you pay for the breathing room.
Term length vs total cost
Choosing a loan term is a trade-off between cash flow and total cost. A shorter term means higher monthly payments but far less interest overall. A longer term eases monthly pressure but costs more in the end. The right choice depends on whether the loan is funding something that generates returns quickly (favour a short term) or a long-lived asset (a longer term can be justified). Run the calculator at a couple of term lengths and compare the total-interest figures side by side.
What the calculator doesn’t include
This is the core repayment maths. Real loans can add origination or arrangement fees, which raise the effective cost; variable rates, which change the payment over time; and prepayment penalties or, conversely, the savings from paying early. Always compare offers on the APR (which folds in fees), not just the headline rate, and ask whether the rate is fixed or variable before signing.
Frequently asked questions
Is the business loan calculator free?
Yes, free with no sign-up. The calculation runs entirely in your browser and nothing is stored.
How is the monthly payment calculated?
Using the standard amortisation formula: the loan amount times the monthly rate, divided by one minus (one plus the monthly rate) to the power of minus the number of months. The result is a fixed payment that fully repays the loan over the term.
Does a longer loan term cost more?
Yes. A longer term lowers the monthly payment but increases the total interest you pay, because you owe the balance for longer. Cheaper per month usually means more expensive overall.
What is the difference between interest rate and APR?
The interest rate applies only to the borrowed amount. The APR also includes fees such as origination charges, so it reflects the true cost. Compare loans on APR, not the headline rate.
Does this include fees?
No — it calculates the core repayment based on amount, rate and term. Add any origination or arrangement fees separately, or compare offers using their APR to capture those costs.
What happens if I pay the loan off early?
You save the remaining interest, since interest accrues on the outstanding balance. Some loans charge a prepayment penalty, so check your agreement before paying ahead of schedule.
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