How to use this calculator
The calculator has two modes, because business financing is priced in two different ways:
- Loan with an interest rate. Term loans, lines of credit, equipment loans and SBA loans charge interest on the balance. Enter the amount, the yearly interest rate and the term in months to see your monthly payment, total interest and APR.
- Cash advance with a factor rate. Merchant cash advances and some short-term products charge a flat fee expressed as a factor rate. Enter the amount, the factor rate and how long you expect to take to repay it to see the daily or weekly payment, the total payback and the estimated APR.
Two optional fields make the result more realistic:
- Upfront fee. If the lender takes an origination or underwriting fee out of the money before you receive it, enter it as a percentage. The calculator counts it in the APR.
- Monthly revenue. Enter your average monthly revenue to see the payment as a share of it. That one number tells you more about whether a loan is affordable than the rate does.
For SBA 7(a) and 504 loans with amortization tables and side-by-side comparisons, use our SBA loan calculator.
Interest rate, APR and factor rate: what's the difference?
- Interest rate is the yearly cost of the money you borrow, charged on the balance you still owe.
- APR (annual percentage rate) is the yearly cost including most fees. When there are no fees, APR equals the interest rate. A fee taken upfront means you receive less money but repay the same amount, so the APR goes up. Always compare offers by APR.
- Factor rate is a multiplier, not a percentage. A factor rate of 1.3 on $50,000 means you repay $65,000 in total, no matter how quickly. Because the cost is fixed, repaying faster makes the APR higher, not lower.
Worked examples
These use example rates to show how the math works. They are not quotes. Your rate depends on the lender, your credit and your business.
Loans with an interest rate
| Amount | Rate | Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|---|---|
| $50,000 | 10% | 3 years | $1,613 | $8,081 | $58,081 |
| $100,000 | 12% | 5 years | $2,224 | $33,467 | $133,467 |
| $250,000 | 11% | 10 years | $3,444 | $163,250 | $413,250 |
What an upfront fee does. $100,000 at 12% over 3 years costs $3,321.43 a month. If the lender keeps a 3% fee ($3,000) at closing, you receive $97,000 but still make the same payments, and the APR rises to about 14.1%.
A cash advance with a factor rate. $50,000 at a factor rate of 1.3 means $65,000 repaid. With daily payments on business days:
| Repaid over | Daily payment | Estimated APR |
|---|---|---|
| 6 months | $500 | about 109% |
| 9 months | $333 | about 73% |
| 12 months | $250 | about 55% |
The total cost is $15,000 in every row. Only the speed changes, and with it the APR.
What a payment means for your cash flow
A payment that looks small can still be too big for your business. Compare it with your revenue:
- A $50,000 loan at 10% over 3 years costs about $1,613 a month. For a business with $40,000 in monthly revenue, that is about 4% of revenue.
- The 9-month cash advance above costs about $7,222 a month in daily payments. For the same business, that is about 18% of revenue, taken out before you pay rent, payroll or suppliers.
There is no universal safe number, because margins differ by industry. A useful test is to run the payment against your slowest month, not your average one. If it only works in a good month, borrow less, choose a longer term, or look for a cheaper product.
Are business loan payments tax deductible?
Generally, the interest on a business loan is a deductible business expense, and the principal you repay is not, because you were not taxed on the money when you borrowed it. Fees can be treated differently depending on the type. Rules have limits and exceptions, so confirm with your tax professional. Our guide to whether business loan payments are tax deductible covers SBA loans, fees, equipment and leases.
Frequently Asked Questions
How do I calculate a business loan payment?
Enter the loan amount, the yearly interest rate and the term in months. The calculator uses the standard amortization formula, the same one lenders use for fixed-rate installment loans, to work out an equal monthly payment that covers interest and repays the balance by the end of the term.
How do I convert a factor rate to an APR?
Choose the cash advance mode and enter the amount, factor rate, expected repayment period and payment frequency. The calculator finds the yearly rate that makes those payments equal to the money you receive, which is the estimated APR. Because a factor rate is a fixed cost, the shorter the repayment period, the higher the APR.
What is the monthly payment on a $50,000 business loan?
It depends on the rate and term. At 10% over 3 years the payment is about $1,613 a month. At 12% over 5 years it is about $1,112 a month. Try your own numbers in the calculator above, or read how much is the monthly payment on a $50,000 business loan.
Why is my APR higher than my interest rate?
Because of fees. When a lender charges an origination or other upfront fee, you receive less money but repay the same amount, which raises the yearly cost. Enter the fee in the calculator to see the APR that includes it.
Is the calculator result a loan offer?
No. It is an estimate based on the numbers you enter. Real offers depend on your credit, revenue, time in business and the lender. For a realistic funding range without a credit pull, use our instant quote.