{
  "id": "business-loan",
  "version": "b6ba6e758d02",
  "status": "published",
  "name": "Business Loan Calculator",
  "question": "What will my business loan cost?",
  "summary": "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.",
  "category": "finance",
  "subcategory": "loans",
  "url": "https://www.acalculator.org/finance/business-loan-calculator",
  "markdown": "https://www.acalculator.org/finance/business-loan-calculator.md",
  "kind": "schedule",
  "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.",
  "assumptions": [
    "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."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "amount": {
        "title": "Loan amount",
        "description": "The amount of the loan, before fees.",
        "type": "number",
        "x-unit": "USD",
        "exclusiveMinimum": 0,
        "maximum": 100000000
      },
      "rate": {
        "title": "Interest rate",
        "description": "The yearly interest rate. The rate per payment is this divided by the payments a year.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 100
      },
      "years": {
        "title": "Loan term (years)",
        "description": "The length of the loan in years; decimals are allowed (1.5 is 18 months).",
        "type": "number",
        "exclusiveMinimum": 0,
        "maximum": 30
      },
      "freq": {
        "title": "Payments",
        "description": "How often you pay: 12, 26, 52, or 4 times a year.",
        "type": "string",
        "enum": [
          "12",
          "26",
          "52",
          "4"
        ]
      },
      "fee": {
        "title": "Origination fee",
        "description": "A fee charged as a percentage of the loan amount and taken from the money you receive.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 20
      },
      "other": {
        "title": "Other fees",
        "description": "Other up-front fees in dollars (documentation, closing, packaging), taken from the money you receive.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 10000000
      }
    }
  },
  "outputs": {
    "payment": {
      "label": "Your payment",
      "description": "The level payment made at each payment date (monthly, weekly, and so on, as chosen).",
      "format": "money"
    },
    "apr": {
      "label": "APR",
      "description": "The yearly rate at which the payments repay the cash you receive, so the fees count as a cost: the rate per payment times the payments a year.",
      "format": "percent"
    },
    "payments": {
      "label": "Number of payments",
      "description": "How many payments repay the loan.",
      "format": "integer"
    },
    "cash": {
      "label": "Cash you get",
      "description": "The loan amount minus the fees.",
      "format": "money"
    },
    "fees": {
      "label": "Fees",
      "description": "The origination fee plus the other fees.",
      "format": "money"
    },
    "interest": {
      "label": "Total interest",
      "description": "All the interest paid over the term.",
      "format": "money"
    },
    "paid": {
      "label": "Total of payments",
      "description": "The loan amount plus all the interest.",
      "format": "money"
    },
    "cost": {
      "label": "Cost of the loan",
      "description": "The total of payments minus the cash you get: the interest plus the fees.",
      "format": "money"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "amount": 100000,
      "rate": 9,
      "years": 5,
      "freq": "12",
      "fee": 2,
      "other": 0
    },
    "outputs": {
      "payment": 2075.835522635401,
      "apr": 9.867677311990626,
      "payments": 60,
      "cash": 98000,
      "fees": 2000,
      "interest": 24550.13135812407,
      "paid": 124550.13135812407,
      "cost": 26550.13135812407
    },
    "text": "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%."
  },
  "examples": [
    {
      "given": {
        "amount": 100000,
        "rate": 9,
        "years": 5,
        "freq": "12",
        "fee": 2,
        "other": 0
      },
      "expect": {
        "payment": 2075.835522635387,
        "fees": 2000,
        "cash": 98000,
        "apr": 9.867677311990066,
        "interest": 24550.131358124294
      },
      "source": "hand calculation in content.mdx; Python 3 in docs/progress/WP-31/python/business_loan.py"
    },
    {
      "given": {
        "amount": 50000,
        "rate": 12,
        "years": 2,
        "freq": "52",
        "fee": 3,
        "other": 500
      },
      "expect": {
        "payment": 541.3188880311321,
        "payments": 104,
        "fees": 2000,
        "apr": 16.252052152993876,
        "cost": 8297.16435523863
      },
      "source": "hand calculation in content.mdx; Python 3 in docs/progress/WP-31/python/business_loan.py"
    },
    {
      "given": {
        "amount": 250000,
        "rate": 8,
        "years": 10,
        "freq": "4",
        "fee": 0,
        "other": 0
      },
      "expect": {
        "payment": 9138.936949336869,
        "apr": 8,
        "payments": 40,
        "interest": 115557.47797347508
      },
      "source": "hand calculation in content.mdx: with no fees the APR equals the rate"
    }
  ],
  "sources": [
    "Regulation Z (Truth in Lending), 12 CFR 1026.3(a), exempt transactions: credit primarily for a business, commercial, or agricultural purpose. https://www.consumerfinance.gov/rules-policy/regulations/1026/3/",
    "Regulation Z, 12 CFR 1026 appendix J, Annual percentage rate computations for closed-end credit transactions (actuarial method). https://www.consumerfinance.gov/rules-policy/regulations/1026/j/",
    "U.S. Small Business Administration, Loans. https://www.sba.gov/funding-programs/loans",
    "Amortized loan payment (annuity) formula: S. A. Broverman, Mathematics of Investment and Credit, chapter 3."
  ],
  "related": [
    "loan",
    "personal-loan",
    "amortization",
    "lease"
  ],
  "changelog": []
}