Business Loan Calculator
Price a term loan the way a lender does. Enter the amount, rate, term, and compounding, add the origination fee (financed or paid upfront) and an optional balloon — and get the payment, total cost, and the real APR the fee creates.
Principal, interest & fee
How your rate compares to SBA 7(a)
Your rate vs. the SBA 7(a) rate-cap range
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Compare optionsWhat a business loan really costs
The advertised rate is only part of the price. Most lenders charge an origination fee of 1–6% of the amount, plus documentation and other charges — and whether that fee is deducted from your proceeds or rolled into the balance, it raises the true cost of the cash you can actually deploy. That true cost is the APR, and it is the only fair way to compare a 9.5% bank loan with a 3% fee against, say, an 11% online loan with no fee.
SBA 7(a) loans anchor the market: the government caps their pricing at Prime + 2.25% to + 6.5% depending on size — 9.00%–13.25% with Prime at 6.75% in July 2026. A quote far above those caps deserves a second bid.
How it’s calculated
The quoted rate is converted to a monthly rate i = (1 + r÷m)m/12 − 1 for compounding m per year. With balloon B and principal P (amount + fee if financed): payment = (P − B(1+i)−n) × i ÷ (1 − (1+i)−n). The real APR is the rate that discounts all payments and the balloon back to your actual proceeds (amount received minus any upfront fee), found by bisection — the standard closed-end credit APR definition.
Models one origination fee and fixed monthly payments; documentation fees, prepayment penalties, and variable-rate resets are not included. Estimates only — not financial advice.
Worked example
A $100,000 loan at 9.5% for 7 years with a 3% origination fee ($3,000) financed into the balance costs $1,683.43 a month. Total interest is $38,408, total cost with the fee $41,408, and the real APR is 10.45% — nearly a full point above the sticker rate. Pay the fee upfront instead and the payment drops to $1,634.40 with $40,289 total cost (APR 10.48%). Add a $20,000 balloon and the payment falls to $1,514.88, but $20,000 is still due at the end.
Common mistakes
- Comparing loans by note rate while ignoring origination fees — the APR line is the comparison that matters.
- Forgetting the balloon: a low payment with 20% of principal due at maturity is a refinancing risk, not a bargain.
- Sizing the loan to the purchase price and forgetting the fee reduces your usable proceeds when paid from the advance.
- Taking daily-compounding offers at face value — the same nominal rate costs more than monthly compounding.
Where it is used
- Comparing SBA 7(a), bank term-loan, and online-lender offers on equal APR footing.
- Budgeting the monthly payment for equipment, working capital, or an acquisition.
- Stress-testing a balloon structure before signing.
- Preparing lender conversations with the true cost of each fee scenario.
Frequently asked questions
Why is the real APR higher than my interest rate?
Fees. An origination fee either reduces the cash you actually receive or gets added to what you owe, so the true cost of the money you can use is higher than the note rate. In the worked example a 9.5% rate with a 3% financed fee works out to a 10.45% APR.
Is it better to finance the origination fee or pay it upfront?
Paying upfront keeps the balance smaller and total dollars lower, but ties up cash on day one — often the scarcest resource for a small business. Financing the fee costs a bit more in interest ($1,119 more over 7 years in the example). The APRs land within a few hundredths either way, so decide based on cash flow.
What is a normal business loan rate in 2026?
SBA 7(a) variable rates are capped at Prime plus 2.25% to 6.5% depending on loan size — 9.00% to 13.25% with Prime at 6.75% as of July 2026, and loans over $350,000 cap at Prime + 3% (9.75%). Conventional bank term loans for strong borrowers can beat those caps; online lenders often charge well above them.
How does the balloon option work?
A balloon leaves part of the principal due as one lump sum at the end of the term, which shrinks the monthly payment but adds a big final bill you must pay or refinance. Set the balloon equal to the full amount to model an interest-only loan.
Are business loan interest and fees tax deductible?
Interest on money borrowed for business purposes is generally deductible as a business expense, and origination fees are typically amortized over the loan’s life rather than deducted at once. Rules depend on your structure and use of funds — confirm with a tax professional.