Before you sign for equipment financing, an SBA loan, or a term loan from your bank, find out what it will really cost and whether your cash flow can carry the payment. This calculator shows your monthly payment, total interest, the effective rate once fees are included, and the debt service coverage ratio lenders use.
Business Loan Calculator
Monthly payment, total interest, and whether cash flow can carry it.
Monthly payment
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Estimates only. Results update as you type. Nothing you enter leaves your browser.
How the loan payment is calculated
P = loan amount, r = APR ÷ 12, n = number of monthly payments
This is the standard formula for a fully amortizing loan with fixed monthly payments. Early payments are mostly interest. Later payments are mostly principal, which the year-by-year table shows.
Worked example
A $50,000 equipment loan at 9.5% over 5 years costs $1,050.09 a month, or $13,006 in total interest. Add a 2% origination fee ($1,000) taken from the proceeds and you actually receive $49,000. That pushes the effective rate above the quoted 9.5%. If the business has $2,500 a month available for debt payments, coverage is 2.38×, comfortably above the 1.25× many lenders look for.
What is debt service coverage (DSCR)?
DSCR compares the cash your business generates to the debt payments it has to make. A ratio of 1.0 means you have exactly enough. Many banks and SBA lenders look for 1.25 or higher, which leaves a 25% cushion. Count all your loan payments, not just the new one. If you're short, a longer term lowers the payment, though you pay more interest in total.
Before you borrow
- Compare offers using the effective rate including fees, not just the headline rate.
- Ask whether there's a prepayment penalty if you pay the loan off early.
- Match the term to the asset. Don't take a 7-year loan for equipment that lasts 3 years.
- Check the ROI of what you're financing. It should pay back well within the loan term.
Frequently asked questions
What is a typical interest rate on a small business loan?
Rates depend on the lender, the loan type, and your credit. SBA and bank term loans usually run a few points above the prime rate. Online lenders and merchant cash advances can cost far more. Compare offers by effective APR, including fees.
What DSCR do lenders require?
Many banks and SBA lenders look for a debt service coverage ratio of at least 1.25, and some want more for riskier industries. Below 1.0 means your cash flow does not cover your debt payments.
Why is the effective APR higher than my interest rate?
An origination fee reduces the cash you receive while your payments stay the same. That raises the true cost of the money. The effective APR in the calculator includes the fee.
Is a shorter or longer loan term better?
A shorter term has higher payments but less total interest. A longer term eases monthly cash flow but costs more over the life of the loan. Pick the shortest term your cash flow can carry comfortably.
More free small business calculators
See all thirteen on the small business calculators page.
These calculators give planning estimates, not tax, legal, or financial advice. Check important decisions with your accountant or lender.
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