Business Loan Calculator
Calculate the monthly payment on a business loan, including any origination fee rolled into the amount financed. Helps owners budget debt service and compare financing offers.
Last updated: May 2026
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About this calculator
This calculator estimates the monthly payment on a business loan after accounting for a down payment and an origination fee. It first determines the financed amount as the loan amount minus the down payment plus the origination fee, since lenders frequently add that fee to the balance rather than collecting it separately. It then applies the standard amortizing-loan formula to that amount: M = P × (c × (1 + c)^n) / ((1 + c)^n − 1), where P is the financed amount, c is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the total number of payments (term in years × 12). The result is the fixed monthly debt-service payment. For a business, this figure feeds directly into cash-flow planning and metrics like the debt-service coverage ratio, which lenders use to judge whether the company can comfortably afford the loan. The rate, term, and fees are the key levers: a longer term eases monthly cash flow but raises total interest, while origination fees and points increase the effective cost beyond the stated rate. Edge cases: a large down payment reduces the financed amount and payment, and a 0% rate reduces the payment to the financed amount divided by the number of months. The calculator does not include variable-rate adjustments, balloon payments, prepayment penalties, or covenants common in commercial lending, nor does it compute the loan's APR, which would incorporate fees to give a truer cost of borrowing.
How to use
Example 1 — a $100,000 loan with $20,000 down, 7.5% over 10 years, $2,500 origination fee. Enter Loan Amount = 100000, Down Payment = 20000, Interest Rate = 7.5, Loan Term = 10 years, Origination Fee = 2500. The financed amount is 100000 − 20000 + 2500 = $82,500, giving a monthly payment of $979.29. Verify: the origination fee adds $2,500 to the balance you repay with interest, so it costs more than its face value over the term. Example 2 — a $250,000 loan with $50,000 down, 8.5% over 7 years, $5,000 fee. Enter 250000, 50000, 8.5, 7 years, 5000. The payment is $3,246.48. Verify: the larger loan, higher rate, and shorter term combine to produce a substantial monthly obligation — exactly the kind of figure to stress-test against the business's monthly cash flow before borrowing.
Frequently asked questions
Why is the origination fee added to the loan amount?
Lenders often roll the origination fee into the financed balance rather than collecting it in cash at closing, which means you pay interest on the fee over the life of the loan. This calculator reflects that by adding the fee to the amount financed. The practical effect is that the fee costs more than its sticker value, since it accrues interest just like the principal. Some lenders instead deduct the fee from the disbursed funds, so you receive less than the loan amount — always confirm how your lender handles it. Either way, fees raise the true cost of borrowing beyond the quoted interest rate.
What is debt-service coverage and why does it matter?
Debt-service coverage ratio (DSCR) measures whether a business generates enough operating income to cover its loan payments, calculated as net operating income divided by total debt service. Lenders typically want a DSCR of at least 1.25, meaning the business earns 25% more than its debt payments. The monthly payment this calculator produces is the core input to that ratio. If your projected payment pushes the DSCR below the lender's threshold, you may be denied or offered worse terms. Calculating the payment first lets you check coverage before applying, and ensures the loan won't strain your cash flow.
How do I compare two business loan offers fairly?
Compare the total cost over the life of each loan, not just the monthly payment or the headline rate, because fees and terms vary. A loan with a lower rate but high origination fees can cost more than one with a slightly higher rate and no fees. The annual percentage rate (APR) is designed for this comparison because it folds fees into a single rate, so ask each lender for the APR. Also weigh the term length, any prepayment penalties, and whether the rate is fixed or variable. Running each offer's financed amount and term through the calculator, then adding total fees, reveals the true cost.
What is a common mistake when taking a business loan?
A frequent error is focusing only on the monthly payment and ignoring the total cost, fees, and the effect on cash flow during slow periods. Owners also sometimes borrow the maximum offered rather than what the business actually needs, increasing interest and risk. Failing to read the fine print for prepayment penalties, variable-rate triggers, or restrictive covenants can cause problems later. Another mistake is not stress-testing the payment against a downturn in revenue. Treat the loan as a fixed obligation that must be met even when sales dip, and borrow conservatively against realistic cash-flow projections.
When should I NOT rely on this calculator?
Avoid it for variable-rate, interest-only, or balloon-payment loans, since it assumes a single fixed rate and full amortization over the term. It does not compute APR, so it understates the true cost when fees are significant — use the lender's APR for an apples-to-apples comparison. It also excludes prepayment penalties, late fees, collateral requirements, and covenants common in commercial lending, all of which affect the real deal. And it does not assess whether your business can afford the payment; pair it with a cash-flow projection and a DSCR calculation. Use it to estimate the base monthly payment and confirm exact terms in the loan agreement.