Business loan refinance rates vary by lender and depend on factors such as the loan, business finances, collateral, repayment term, and borrower qualifications; banks do not publish one rate that applies to every applicant. This calculator estimates the monthly payment and total interest on a replacement loan using the amount, APR, and term you enter, so you can compare a lender’s quoted terms with your existing debt.
Formula
The calculator uses the standard fixed-payment loan formula. It calculates the payment from the principal, monthly interest rate, and number of monthly payments:
Monthly payment = P × r ÷ [1 − (1 + r)−n]
- P is the replacement loan amount in dollars.
- r is the monthly rate, calculated as APR ÷ 1,200 when APR is entered as a percentage per year.
- n is the term in months: years × 12.
- Total interest is the rounded monthly payment × number of payments − principal.
The displayed payment is rounded to cents; total interest uses that rounded payment. This calculation assumes equal monthly payments and a fixed rate. A real offer may include fees or terms that change the amount financed or actual payment schedule.
Worked Example
Using the calculator’s defaults—$20,000, an 8% APR, and a five-year term:
- Convert the APR to a monthly rate: 8 ÷ 1,200 = 0.0066667.
- Convert the term to payments: 5 × 12 = 60 months.
- Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)−60] = approximately $405.53 per month.
- Calculate interest using the rounded payment: $405.53 × 60 − $20,000 = $4,331.80.
The estimate is therefore a monthly payment of $405.53 and total interest of $4,331.80 over 60 payments, before any fees or other charges.
Assumptions
- The interest rate is fixed for the entire term.
- Payments are equal, made monthly, with the first payment one month after the loan begins.
- Interest compounds monthly at APR ÷ 12.
- Fees, taxes, insurance, collateral costs, and other charges are not included unless reflected in the loan amount or APR you enter.
Why Business Refinance Rates Differ by Bank
A bank’s advertised rate, if it publishes one, is not a personal quote. A lender may price a refinance differently depending on the business’s cash flow and credit history, the borrower’s credit profile, time in business, loan purpose, collateral, requested amount, and repayment period. The existing loan’s payment record and whether the new loan pays it off in full may also matter.
Rates can also be presented in different ways. A fixed APR is not directly comparable to a variable rate that can change, and an interest rate alone may not capture all borrowing costs. Ask each lender for a written quote that identifies the APR, whether it is fixed or variable, the payment schedule, the total amount due, and any fees. Do not assume that a published starting rate is available to every business.
How Business Loan Refinancing Works
Refinancing means taking out a new loan to pay off one or more existing business debts. The new loan has its own amount, rate, term, payment schedule, and contract conditions. A longer term can lower the scheduled monthly payment while increasing the number of payments; it can therefore increase total interest even when the new APR is lower.
For example, the calculator’s $20,000, 8% APR, five-year illustration costs $4,331.80 in interest under its assumptions. That is not a comparison with a specific existing loan. To evaluate a refinance, compare the new loan’s total payments and charges with the remaining payments and payoff amount on the current debt, using figures supplied by the lenders.
Payoff amounts can differ from the balance shown on an account because interest may accrue between the statement date and payoff date, and a lender may include charges under the contract. Obtain a current payoff figure rather than treating the original loan amount or a past statement balance as the exact amount needed.
How to Compare Written Offers
Request comparable terms from lenders and record the details side by side. The following items can materially change the cost or flexibility of a refinance:
- APR and whether the rate is fixed or variable.
- Loan amount actually disbursed to pay off debt, including any amount added for fees.
- Term, payment frequency, monthly payment, and total scheduled repayment.
- Origination, closing, documentation, or other stated charges.
- Collateral requirements, guarantees, and any restrictions or conditions in the offer.
- Early repayment terms and whether a charge applies if the balance is paid ahead of schedule.
Use the same proposed amount and term in this calculator when comparing payment estimates. Then account separately for fees and contract terms that the formula does not model. Ask the lender to explain any difference between the calculator’s estimate and its official payment schedule.
Common Costs and Comparison Traps
A lower monthly payment does not by itself mean the new loan costs less. It may result from extending repayment over more months, and added fees can reduce or erase any interest savings. Conversely, a shorter term may raise the monthly payment while reducing the total interest calculated under a fixed-rate schedule. Compare total dollars owed and the timing of payments, not just the payment amount or headline rate.
Another common mistake is comparing an APR with a nominal interest rate as though they were identical. APR is intended to express borrowing costs in an annualized figure, but the exact treatment of charges can vary by offer and disclosure. Confirm which costs are included and use the lender’s stated figures for the specific loan. This calculator does not determine eligibility, predict a bank’s quote, or establish whether refinancing is beneficial for a particular business.
Frequently Asked Questions
What are business loan refinance rates by bank?
There is no single rate for each bank that applies to every business. Rates and terms depend on the application and loan structure; request a written, personalized quote directly from each lender.
Can I refinance a business loan at a lower rate?
A lender may offer a different APR, but no particular rate is guaranteed. Compare written terms, fees, payoff figures, and total repayment rather than assuming the replacement loan will cost less.
Will refinancing lower my monthly business loan payment?
It may, depending on the new rate, amount, and term. Extending the term can reduce the payment while increasing total interest, so compare both figures.
Does this calculator include refinance fees?
No. It estimates principal-and-interest payments from the amount, APR, and term entered. Check the lender’s disclosure for fees and charges, and account for them separately.
What information should I get before comparing offers?
Get the current payoff amount and each lender’s written APR, fixed or variable rate status, proposed amount and term, payment schedule, fees, and early repayment conditions.
This result is an estimate; the lender’s disclosure gives the exact figures.
Related
Formula used
in p | New loan amount | $ | 20000 | 1 | 100000000 in apr | Interest rate (APR) | % | 8 | 0.01 | 100 in yrs | Loan term | years | 5 | 0.0833 | 50 out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2 out int | Total interest | $ | pmt * yrs * 12 - p | 2
Each line is one input (in, sel, list) or one result (out: label, unit, formula, decimals). How the calculators work
Method: the standard loan formula for this calculation, fixed rate and monthly compounding unless stated, rounded as each result states. Not financial advice; no lender, rate or product is recommended. See formulas and assumptions, the disclaimer or report an error.
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