Business Loan Calculator
Calculate your monthly business loan payment including origination fees and down payments. Use it when comparing lender offers or modeling cash flow impact before taking on commercial financing.
About this calculator
Business loan payments are calculated using the standard amortizing loan formula, adjusted to account for a down payment and any upfront origination fee. The net financed amount is: loanAmount − downPayment + originationFee. The monthly payment formula is then: M = P × (r × (1+r)^n) / ((1+r)^n − 1), where P is the net financed amount, r is the monthly interest rate (annualRate / 100 / 12), and n is the total number of monthly payments (loanTerm × 12). Adding the origination fee to the financed amount reflects the common practice of rolling closing costs into the loan rather than paying them upfront. Total loan cost equals M × n, and total interest equals total cost minus the net amount borrowed.
How to use
Say you borrow $100,000, put $10,000 down, have a 2% origination fee ($2,000), a 7% annual rate, and a 5-year term. Net financed amount P = $100,000 − $10,000 + $2,000 = $92,000. Monthly rate r = 7/100/12 ≈ 0.005833. n = 5 × 12 = 60 payments. Numerator: $92,000 × 0.005833 × (1.005833)^60 = $92,000 × 0.005833 × 1.4176 ≈ $761.87. Denominator: 1.4176 − 1 = 0.4176. Monthly payment ≈ $761.87 / 0.4176 ≈ $1,824. Total paid over 5 years = $1,824 × 60 = $109,440. Total interest = $109,440 − $92,000 = $17,440.
Frequently asked questions
How does an origination fee affect the total cost of a business loan?
An origination fee is a one-time upfront charge — typically 1–5% of the loan amount — that lenders use to cover processing costs. When rolled into the loan (as this calculator models), it increases your principal balance, meaning you pay interest on the fee for the entire loan term. For example, a $2,000 origination fee on a 7% loan over 5 years adds roughly $370 in extra interest. Always factor origination fees into your APR comparison when evaluating multiple lenders.
What loan term length is best for a business loan to minimize total interest?
Shorter loan terms mean higher monthly payments but significantly less total interest paid, because the principal is eliminated faster. Longer terms lower monthly payments, improving short-term cash flow but increasing total borrowing cost. The optimal term depends on your business's cash flow capacity and the purpose of the loan — equipment with a 5-year useful life, for example, is best financed with a term no longer than 5 years to avoid paying for an asset after it's obsolete.
How is a business loan monthly payment different from a personal loan payment?
Mathematically, both use the same amortization formula. However, business loans often include additional cost components such as origination fees, SBA guarantee fees, or prepayment penalties that alter the effective cost. Business loans may also have variable interest rates tied to benchmarks like the prime rate, meaning payments can fluctuate. This calculator models a fixed-rate business loan with a down payment and origination fee, which covers the most common small business financing structures.