Business Loan Calculator

How to Use Our Business Loan Calculator

Using a business loan calculator is straightforward. Follow this guide to get the most accurate results.

Step One: Choose a Loan Amount

Select a loan amount between $5,000 and $100,000. Simply drag the slider to your chosen amount.

Step Two: Input Your Annual Interest Rate

To understand the cost of your loan, you’ll need to enter in a business loan interest rate. Your own rate will vary depending on your business and personal credit scores, as well as other factors.

Step Three: Choose a Loan Term

The loan term is the length of time you’ll make payments. Terms range between one and 10 years. This is one of the best uses of a small business loan calculator because it can quickly show you how much your payments will change with different term lengths. You can also see how much you’ll pay or save in interest with different terms.

Step Four: Enter Origination Fee

The origination fee is a one-time fee charged by the lender. The amount you’ll pay will depend on various factors, such as your loan amount and credit risk. It typically ranges from 1% to 5% of the loan.

Understanding the Calculator Results

Once you’ve entered in the above information, the business loan payment calculator will give you four pieces of information:

•  Estimated monthly payment

•  Total interest paid

•  Origination fee amount

•  Total repayment amount

Keep in mind that your origination fee will most likely get subtracted from your total amount borrowed. If you have an exact amount needed, you may need to borrow more than you originally planned.

The total repayment amount is calculated by adding the origination fee, total interest, and the loan amount. You can tweak your loan term to change your estimated monthly payment amount. A shorter loan term will require a higher monthly payment, but you’ll save in interest over the life of the loan.

Tips for Adjusting Loan Parameters

There are a few things to keep in mind when adjusting your loan characteristics in the calculator.

First, remember to play around with different loan terms. This feature affects both your monthly payment and total interest paid. To determine which loan term you should choose, look at your expected monthly revenue. Your monthly payment should be lower than your revenue with some cushion factored in.

Once you understand your monthly payment with a business loan, you may want to compare it with other types of financing, such as a line of credit.

Types of Business Loans

A business loan calculator can help you estimate the cost of an installment loan spread out over a set period of time. These can be structured in different ways, and you can also explore other types of business loans to grow your company.

There are four common types of business financing to consider.

Small Business Loans

Small business loans are installment loans and can be found through banks, credit unions, and online lenders. Once approved, the business receives a one-time lump sum of money. Like a personal loan, the business loan’s principal is repaid over time, usually in equal installments.

A small business loan can be secured with collateral or unsecured. There’s also flexibility with interest rates; while usually fixed, you may also find variable options. In order to qualify, you typically need to meet revenue, credit score, and time in business requirements.

Benefits:

•  Easy to budget with fixed installment payments

•  Funds can be used with minimal restrictions

•  Larger loan amounts and longer repayment terms

Equipment Financing

Equipment financing is used to pay for specific equipment purchases. It’s secured by the asset you’re buying and you could finance up to 100% of the purchase price. Often, you can also roll in soft costs, such as taxes or delivery fees.

Benefits:

•  Many business expenses qualify as equipment, not just heavy machinery

•  Rates are often favorable because the loan is secured by your purchase

•  Business capital reserves remain intact

Business Lines of Credit

A business line of credit gives you ongoing access to financing instead of a single lump sum. You can repay the outstanding balance to replenish your credit line and borrow again at a later date.

Benefits:

•  Ongoing access to capital for emergencies or growth opportunities

•  Streamline uneven cash flow

•  Only pay interest on your unpaid balance

Microloans

Microloans are small installment loans that can help startups and fledgling businesses get access to credit. The eligibility standards for microloans are usually less stringent than other loan options and can get you working capital sooner.

Most private lenders and SBA lenders usually offer microloans of up to $50,000, while the average SBA microloan is $13,000. The repayment period is usually shorter, allowing you to get out of debt faster.

Benefits:

•  Lower revenue and time in business requirements

•  Available through either the SBA or private lenders

•  Funds can be used for flexible purposes

Which Loan Type Is Right for You?

Before you apply for a business loan, look at the eligibility requirements and the financing structure to find the right fit. Equipment financing, for example, can come with favorable terms, but you’ll actually have less flexibility in how you use the funds than with the other types of loans.

A microloan is best suited for newer companies with limited startup capital. A business line of credit, on the other hand, could be beneficial for seasonal businesses with uneven cash flow throughout the year.

Just as with any type of financing, compare multiple lenders to look at loan terms, interest rates, and fees that could impact the final cost.

Alternative Ways to Finance Your Business

Looking for access to capital that’s not through a traditional business loan? Consider crowdfunding or grants.

Business crowdfunding lets you take your business to the public and raise funds with contributions. Oftentimes, you may pledge product or equity in exchange for upfront cash.

Business grants are competitive, but come with the major benefit that you’re not required to pay back the funds. Search for grants that you’re eligible for, whether by industry or owner demographic.

Apply for a Small Business Loan

Using a business loan calculator is a straightforward yet powerful way to gain clarity and confidence in your business financial planning. By inputting details such as the loan amount, interest rate, and repayment term, you can quickly see an estimate of your monthly payments and total interest costs.

Ready to grow your business? SoFi Small Business Loans can give you fast access to the capital you need. Check your eligibility in minutes.

With SoFi Small Business Loans, it's fast and easy to get the financing your business needs to thrive.

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FAQ

What are typical interest rates for business loans?

Business loan interest rates vary based on factors like your business, loan amount, broader rates, and collateral. The type of lender also affects your rate. SBA interest, for instance, ranges from 11% to 16%, while an online term loan can go anywhere from 6% to 75%.

How does my credit score affect my ability to get a business loan?

Your personal and business credit scores significantly impact your ability to get a business loan. A higher score improves your chances of approval and can secure better interest rates and terms, while a lower score may limit your options or result in higher costs.

What documents do I typically need to apply for a business loan?

Most business loan applications require a fair amount of documentation, including:

•  Bank statements

•  Tax returns

•  Legal documents

•  Personal identification

•  Business plan

•  Revenue statements

•  Accounts receivable and payable

What’s the main difference between a term loan and a line of credit?

A term loan provides the business with a one-time lump sum of cash. The principal and interest are usually repaid in fixed installments over time. A line of credit, on the other hand, provides access to a credit line. Funds can be withdrawn at any time during the draw period. Interest is only charged on the balance.

How can I improve my chances of getting approved for a business loan?

To improve your chances of getting approved for a business loan, enhance your credit score, provide a solid business plan, demonstrate strong financial health, and show a clear need for the funds. Additionally, consider building relationships with lenders and having all required documentation ready.