Business Loan Calculator
Calculate monthly payments, total cost, effective APR and first-year breakdown for business loans.
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Calculate the monthly payment, total interest, effective APR, and first-year interest/principal split for a business loan, including an origination fee.
How Business Loan Calculator Works
The monthly payment uses the standard amortization formula: Payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where P is the loan amount, r is the monthly interest rate, and n is the number of monthly payments. The origination fee is calculated separately as a percentage of the loan amount and is typically deducted from the loan proceeds upfront rather than financed.
Because the origination fee is paid upfront but doesn't reduce your stated interest rate, the calculator solves for an effective APR using Newton's method — finding the rate at which the present value of your payments equals the loan amount minus the fee. This effective APR is always higher than the nominal rate whenever a fee is charged, and gives a more accurate picture of the loan's true cost.
The first-year breakdown shows how much of your initial 12 payments goes toward interest versus principal — as with any amortizing loan, the earliest payments are weighted more heavily toward interest, and that split shifts toward principal as the balance shrinks.
See It In Action
Who Uses Business Loan Calculator and Why
- Estimating the monthly payment on a business term loan given the amount, rate, and term.
- Comparing the true cost of a loan offer that includes an origination fee against one that doesn\'t, using effective APR.
- Checking how much of the first year\'s payments go toward interest versus paying down principal.
- Estimating how many months it takes for interest savings to offset an upfront origination fee.
Mistakes to Avoid
- Comparing loan offers by their stated interest rate alone — a lower rate with a higher origination fee can have a higher effective APR than a slightly higher rate with a lower fee, since the fee is deducted upfront but doesn\'t reduce your total repayment obligation.
- Forgetting the origination fee is typically deducted from the loan proceeds you receive, not added on top of your payments — so your net cash in hand is less than the loan amount even though you repay the full amount plus interest.
- Assuming the first-year interest/principal split stays the same for the whole loan term — as with any amortizing loan, the split shifts toward more principal and less interest as the balance shrinks over time.
Tips for Best Results
- Use effective APR, not the stated rate, whenever comparing two loan offers with different origination fees — it\'s the number that reflects the loan\'s true annualized cost.
- If you\'re deciding between two similar loans, check the break-even month for the origination fee — a fee that takes a long time to "pay for itself" in interest savings may make a slightly higher-rate, lower-fee loan the better deal.
Fixing Common Problems
My effective APR is noticeably higher than the stated interest rate. — This is expected whenever an origination fee applies — since you receive less money than you\'re obligated to repay, the calculator\'s Newton\'s-method APR solve correctly reflects that added cost, which the nominal rate alone does not.
Terms Explained
Origination fee: A one-time upfront charge, usually a percentage of the loan amount, that lenders deduct from loan proceeds to process and fund the loan.
Effective APR: The loan\'s true annualized cost including upfront fees, solved for by finding the rate at which the present value of your payments equals your net proceeds.