Small Business Loan Repayment Calculator

This small business loan repayment calculator estimates a fixed monthly payment and the total interest on a fully amortizing loan. Enter the amount borrowed, annual APR, and term in years; the results show the monthly payment and interest over the scheduled term.

Formula

The calculator assumes equal monthly payments, a fixed APR, and a loan paid off in full over the stated term. It converts the annual percentage rate to a monthly rate, calculates the payment that amortizes the balance, rounds that payment to cents, then subtracts the amount borrowed from all scheduled payments to estimate interest.

• p = original loan principal, in dollars.
• apr = annual percentage rate, entered as a percentage per year.
• r = monthly rate as a decimal, calculated as apr / 1200.
• yrs = loan term in years; the number of payments is yrs × 12.
• pmt = monthly payment in dollars, rounded to the nearest cent.
• int = estimated total interest in dollars, calculated as pmt × yrs × 12 − p.

The level-payment formula is pmt = round[p × r / (1 − (1 + r)⁻ⁿ), 2], where n = yrs × 12. Total interest is int = pmt × n − p. Because the payment is rounded before the total is calculated, the interest result reflects the rounded monthly amount. A lender may use a different payment schedule, day-count method, rounding practice, or final-payment adjustment.

Worked Example

Using the calculator’s defaults—$20,000 principal, 8% APR, and a five-year term—the number of monthly payments is 5 × 12 = 60. The monthly rate is 8 / 1200 = 0.0066667, or about 0.66667%.

1. Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰].
2. The unrounded payment is approximately $405.528; rounded to cents, the monthly payment is $405.53.
3. Scheduled payments total $405.53 × 60 = $24,331.80.
4. Estimated interest is $24,331.80 − $20,000 = $4,331.80.

The figures are estimates from the formula and its stated rounding convention. The actual loan contract controls the payment amount and schedule.

Assumptions

• The interest rate remains fixed throughout the term.
• Payments are made monthly, at the end of each period, with the first payment one month after borrowing.
• Interest compounds monthly using APR divided by 12.
• The calculation excludes fees, taxes, insurance, collateral costs, and any other charges because they are not inputs.
• It assumes every scheduled payment is made on time and no extra principal payments, missed payments, or balloon payment applies.

How Business Loan Repayment Works

For a fully amortizing loan, each regular payment covers interest accrued for that period and pays down some principal. Early in the schedule, the outstanding balance is larger, so more of each payment generally goes to interest. As principal falls, the interest portion typically shrinks and the principal portion grows. After all scheduled payments, the balance reaches zero under the formula’s assumptions.

For example, a business might borrow funds for equipment or working capital and repay them monthly over a fixed term. The calculator does not determine whether the loan fits the business’s cash flow; it only estimates the payment implied by the inputs. Compare the estimated date and amount with the lender’s actual payment schedule and the timing of business income and expenses.

What Changes the Payment and Total Cost

• Principal: A larger amount borrowed increases the payment and, all else equal, total interest.
• APR: A higher APR increases the payment and interest under this fixed-rate model. Enter the APR supplied in the lender’s disclosure; do not substitute a quoted rate that excludes costs if the disclosed APR is available.
• Term: Extending the term generally lowers the scheduled monthly payment but means payments continue longer. With a positive rate, that commonly increases total interest.
• Fees and payment structure: Origination charges, financed fees, variable rates, irregular installments, or a balloon payment can make the contract’s cash flows differ from this estimate.

A monthly payment is not necessarily the entire cost of borrowing. Check whether fees are paid up front or added to the balance, whether the rate can change, and whether the agreement specifies additional charges or a final lump-sum payment. Those details are not calculated here.

Using the Estimate Carefully

Use the same principal, APR, and term shown in the lender’s written offer. APR and interest rate are related but are not always interchangeable: APR is intended to express borrowing cost in annual terms, while the contract may separately state a note rate and fees. This calculator uses the APR itself as the rate for its monthly payment formula, so it may not reproduce a lender schedule when the lender calculates payments using another rate or includes fees in a different way.

Also check whether the loan actually has equal monthly payments. Some business financing uses weekly or daily deductions, seasonal schedules, interest-only periods, variable rates, or a balloon balance. Those structures require different calculations. Extra payments can reduce a balance and future interest, but their effect depends on when they are credited and whether the contract applies them to principal.

A common misconception is that a longer term always costs less because the monthly payment is smaller. The smaller installment can come with more scheduled interest over time. Conversely, the calculator’s total-interest figure is not a complete measure of a loan’s business impact: cash-flow timing, fees, repayment flexibility, and contract terms matter but are outside this formula.

Frequently Asked Questions

How do I calculate a small business loan payment?
Convert APR to a monthly rate by dividing by 1,200, convert the term to months, and apply the fixed-payment formula shown above. This calculator performs those steps and rounds the payment to cents.

Does the monthly payment include fees?
No. Fees are not included unless they are already part of the principal amount you enter. Check the loan disclosure for charges and whether they are paid separately or financed.

Why is my lender’s payment different?
The lender may use a different rate, payment date, compounding or day-count convention, fee treatment, or rounding method. The contract may also have a variable rate or a non-monthly schedule.

Does a longer repayment term lower total interest?
It can lower the required monthly payment, but with a positive rate it generally means interest accrues over more time. The calculator estimates the difference for the entered APR and term.

Can I use this for a variable-rate or balloon loan?
Not reliably. The formula assumes a fixed rate and equal payments that repay the full balance by the end of the term. Variable rates and balloon structures need a calculation that reflects their specific schedules.

This result is an estimate for education, and the lender’s disclosure gives the exact figures.

Related

• Long-Term Loan Payment Calculator and Guide
• Long-Term Loan Payment Calculator and Repayment Plan
• 401(k) Loan Repayment Term Calculator

in p | 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 | $ | round(p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)), 2) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2