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What will my business loan cost?

See the payment on a business term loan, what it costs in all, and the APR once fees are counted.

Your numbers

Your payment
$2,075.84

A $100,000.00 business loan at 9% over 5 years is repaid with 60 payments of $2,075.84; with fees of $2,000.00, the APR is 9.87%.

Cash you get $98,000.00Cost of the loan $26,550.13
79% cash you get21% cost of the loan
APR
9.87%
Number of payments
60
Cash you get
$98,000.00
Fees
$2,000.00
Total interest
$24,550.13
Total of payments
$124,550.13
Cost of the loan
$26,550.13
Years
5

Your payment: $2,075.84. A $100,000.00 business loan at 9% over 5 years is repaid with 60 payments of $2,075.84; with fees of $2,000.00, the APR is 9.87%.

How much of what you repay is cost?

Where does each year of payments go?

What does each year of the loan look like?

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Computes the payment, total cost, and APR of a fixed-rate business term loan paid monthly, every two weeks, weekly, or quarterly, with fees taken from the proceeds.

Example with the default inputs (Loan amount $100,000.00, Interest rate 9%, Loan term (years) 5, Payments Monthly, Origination fee 2%, Other fees $0.00): A $100,000.00 business loan at 9% over 5 years is repaid with 60 payments of $2,075.84; with fees of $2,000.00, the APR is 9.87%.

Method: payment = L × i ÷ (1 − (1 + i)^−n), with i = rate ÷ payments a year and n = round(years × payments a year); the APR is (payments a year) × j, where j is the rate at which the n payments repay the loan minus its fees.

  • The rate is fixed; interest for each payment period is the balance times the rate divided by the payments a year.
  • Payments are equal and made at the end of each payment period.
  • Fees are paid up front out of the loan, so you receive the loan amount minus the fees.
  • The APR follows the actuarial method of Regulation Z, with each payment period as the unit period.
  • Values are not rounded to the cent between payments; only the display is rounded.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Loan amount $100,000.00, Interest rate 9%, Loan term (years) 5, Payments Monthly, Origination fee 2%, Other fees $0.00 gives Your payment $2,075.84, Fees $2,000.00, Cash you get $98,000.00, APR 9.867677%, Total interest $24,550.13.Source: hand calculation in content.mdx; Python 3 in docs/progress/WP-31/python/business_loan.py
  2. Loan amount $50,000.00, Interest rate 12%, Loan term (years) 2, Payments Weekly, Origination fee 3%, Other fees $500.00 gives Your payment $541.32, Number of payments 104, Fees $2,000.00, APR 16.252052%, Cost of the loan $8,297.16.Source: hand calculation in content.mdx; Python 3 in docs/progress/WP-31/python/business_loan.py
  3. Loan amount $250,000.00, Interest rate 8%, Loan term (years) 10, Payments Quarterly, Origination fee 0%, Other fees $0.00 gives Your payment $9,138.94, APR 8%, Number of payments 40, Total interest $115,557.48.Source: hand calculation in content.mdx: with no fees the APR equals the rate

How it works

Write L for the loan amount, r for the yearly rate as a decimal, and p for the payments a year (12, 26, 52, or 4).

  1. Rate per payment: i = r ÷ p.
  2. Number of payments: n = years × p, rounded to the nearest whole number. When it rounds to 0 there is no answer.
  3. Payment: payment = L × i ÷ (1 − (1 + i)^−n). At 0% it is L ÷ n.
  4. Schedule: for each payment, interest = balance × i and the rest of the payment lowers the balance. The last payment (number n) pays whatever is left. Each row of the table is one loan year of p payments; the last year may have fewer.
  5. Fees and cash: fees = L × origination fee rate + other fees. The cash you get is L − fees; it must be more than 0.
  6. Totals: total interest is the sum of the interest on every payment, which equals n × payment − L exactly because the last payment pays what is left; total of payments is L plus the interest; the cost of the loan is the total of payments minus the cash you get (the interest plus the fees).
  7. APR: find the rate j per payment period at which the n payments, discounted at j, add up to the cash you get: cash = payment × (1 − (1 + j)^−n) ÷ j. The APR is p × j (the actuarial method of Regulation Z, appendix J, with the payment period as the unit period). With no fees the APR equals the rate. The page finds j with a root finder.

Assumptions

  • The rate is fixed and there is no balloon payment.
  • Payments are equal and made at the end of each payment period.
  • All fees are paid up front out of the loan.
  • Values are not rounded to the cent between payments; only the display is rounded.

Worked examples by hand

$100,000 at 9% over 5 years, paid monthly, with a 2% fee. i = 0.09 ÷ 12 = 0.0075 and n = 60. 1.0075^−60 = 0.638700, so the payment is 100,000 × 0.0075 ÷ (1 − 0.638700) = $2,075.84. The fee is $2,000, so you get $98,000. Sixty payments total $124,550.13, so the interest is $24,550.13. The monthly rate at which 60 payments of $2,075.84 are worth $98,000 is 0.822306%, so the APR is 12 × 0.822306% = 9.87%.

$50,000 at 12% over 2 years, paid weekly, with a 3% fee and $500 of other fees. i = 0.12 ÷ 52 = 0.0023077 and n = 104. (1 + i)^−104 = 0.786845, so the payment is 50,000 × 0.0023077 ÷ (1 − 0.786845) = $541.32. The fees are 1,500 + 500 = $2,000, leaving $48,000 in cash. The total of payments is 104 × 541.319 = $56,297.16, so the loan costs 56,297.16 − 48,000 = $8,297.16. The weekly rate at which 104 payments of $541.32 are worth $48,000 is 0.312539%, so the APR is 52 × 0.312539% = 16.25%.

$250,000 at 8% over 10 years, paid quarterly, no fees. i = 0.08 ÷ 4 = 0.02 and n = 40. 1.02^−40 = 0.452890, so the payment is 250,000 × 0.02 ÷ (1 − 0.452890) = $9,138.94. The interest is 40 × 9,138.937 − 250,000 = $115,557.48, and with no fees the APR is the rate, 8%.

Other questions people ask

How is a business loan payment calculated?

Like any fixed-rate term loan: payment = L × i ÷ (1 − (1 + i)^−n), where L is the loan amount, i is the yearly rate divided by the number of payments a year, and n is the number of payments. $100,000 at 9% over 5 years, paid monthly, is $2,075.84 a month.

Why does the APR matter if I already know the rate?

Fees such as an origination fee come out of the money you receive, but you still repay the full loan. The APR counts them: it is the yearly rate at which your payments repay only the cash you get. A 2% fee on the $100,000 loan above raises the APR from 9% to 9.87%.

Do lenders have to tell me the APR on a business loan?

The federal Truth in Lending rules (Regulation Z) cover consumer credit and do not apply to credit for business purposes, so a lender may quote only a rate, a fee, or a factor rate. This page works out the APR the same way Regulation Z does for consumer loans, so you can compare offers on one scale.

Does paying weekly cost more than paying monthly?

At the same yearly rate, weekly payments reach the lender sooner, so the interest is a little lower. Short-term business loans with weekly or daily payments often come with higher rates and fees, though, so compare the APR and the total cost, not the payment.

What fees should I include?

Any fee you pay to get the loan: an origination or packaging fee, documentation and closing fees, or a guarantee fee the lender passes on. Enter a percentage fee as the origination fee and flat fees as other fees. Fees paid over time (a monthly service fee) are not included here.

What if my loan has a balloon payment?

This page assumes the loan is fully repaid by equal payments. A loan with a balloon (a large final payment) has lower payments and a different APR. Ask the lender for its amortization period and term.