Calculate monthly payment, total interest, and total cost of a business loan — model SBA loans, term loans, and lines of credit with standard amortization.
A business loan calculator helps you understand the true cost of borrowing — not
just the interest rate, but the actual monthly payment, total interest paid, and
how much of each payment goes to principal vs interest.
The amortization formula
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n − 1]
Where:
- P = principal (loan amount)
- r = monthly interest rate (APR / 12 / 100)
- n = number of monthly payments (term in months)
For a $250,000 loan at 7.5% APR over 60 months:
r = 0.075/12 = 0.00625
Monthly payment = $250,000 × (0.00625 × 1.00625^60) / (1.00625^60 − 1) = $5,009/month
Total paid = $300,553
Total interest = $50,553 (20.2% of principal)
SBA loan benchmarks
Loan type
Typical rate
Max term
Use case
SBA 7(a)
Prime + 2.25–4.75%
10 years
General working capital, equipment
SBA 7(a) real estate
Prime + 1.5–2.75%
25 years
Commercial real estate
SBA 504
~6–7% fixed
10–25 years
Real estate + equipment
SBA Microloan
8–13%
6 years
Small businesses, <$50k
Note: SBA loans require personal guarantee and good credit (650+ FICO typical).
Debt service coverage ratio (DSCR)
Lenders evaluate your ability to repay using DSCR:
DSCR = Annual Net Operating Income / Annual Debt Service
Most lenders require DSCR ≥ 1.25 — meaning for every $1 in annual debt payments,
you earn $1.25 in NOI. A DSCR below 1.0 means the business can't cover debt service
from operations.
To calculate DSCR: take your annual net income before debt payments and divide by
total annual loan payments (this calculator's monthly payment × 12).
Interest cost comparison
Loan term affects total interest paid dramatically:
$250k at 7.5% APR
Monthly payment
Total interest
36 months
$7,758
$29,277
60 months
$5,009
$50,553
84 months
$3,866
$74,762
120 months
$2,978
$107,336
Longer terms lower monthly payments but significantly increase total interest. Choosing
the right term depends on your cash flow needs and the cost of capital.
Frequently asked questions
What does this calculator do?
Calculate monthly payment, total paid, and total interest for any business loan using
the standard amortization formula. Enter loan amount, APR, and term in months.
SBA Loan Calculator: Monthly Payment and Total Cost for SBA 7(a) Loans
Calculate SBA 7(a) loan payments with current Prime Rate. Understand monthly payment, total interest, and DSCR requirements before you apply.
The SBA 7(a) loan program is the most common government-backed small business loan
in the US. Backed by the Small Business Administration, these loans allow banks to
lend to businesses that might not qualify for conventional financing.
SBA 7(a) current rates
SBA 7(a) rates are variable and tied to the Wall Street Journal Prime Rate. As of 2026:
Loan size
Maximum variable rate
≤$25,000
Prime + 4.25%
$25,001–$50,000
Prime + 3.25%
>$50,000 (7+ year term)
Prime + 2.75%
>$50,000 (<7 year term)
Prime + 2.25%
Check the current Prime Rate at wsj.com. Add the SBA spread to get your maximum
rate (your actual rate may be lower based on creditworthiness).
SBA 7(a) payment example
Loan: $250,000 at 10.5% APR (Prime 7.5% + spread 3.0%) over 84 months:
Monthly payment: $4,149/month
Total interest: $98,506 (39.4% of principal)
DSCR requirement
SBA lenders require Debt Service Coverage Ratio ≥ 1.25:
DSCR = Annual Net Operating Income / Annual Debt Payments
For a $4,149/month payment (=$49,788/year), you need minimum NOI of:
$49,788 × 1.25 = $62,235/year ($5,186/month)
If your business generates less NOI, SBA lenders will decline the application.
How to qualify for an SBA loan
Credit: Most SBA lenders require 650+ personal FICO score. Some SBA preferred
lenders accept 620+. Your business credit score (Dun & Bradstreet, Experian Business)
also matters.
Time in business: Most lenders require 2+ years. SBA Microloans and some
Community Advantage programs accept startups.
Revenue: No minimum from SBA, but lenders need to see DSCR ≥ 1.25.
Personal guarantee: Required for all owners with 20%+ ownership. You're
personally liable even if the business fails.
Collateral: SBA requires lenders to take available collateral but won't
decline solely due to insufficient collateral. Your home equity often serves
as collateral for larger loans.
Business Loan vs Line of Credit: Which Is Right for Your Business?
Term loans and lines of credit solve different problems. Learn when each is appropriate, the cost difference, and how to compare total cost of capital.
Choosing between a term loan and a line of credit depends on what you're financing.
Using the wrong product costs more and can create cash flow problems.
Term loan: what it is and when to use it
A term loan provides a lump sum that you repay with fixed monthly payments over a
set term (1–10 years). Interest accrues on the full balance from day one.
Use for:
- Equipment purchases
- Leasehold improvements
- Acquisitions
- Specific projects with defined costs
Advantages:
- Predictable fixed payment
- Lower interest rate than revolving credit
- No temptation to re-borrow
Disadvantages:
- You pay interest on the full amount from day one, even if you don't need it all yet
- Prepayment penalties on some loans
Line of credit: what it is and when to use it
A line of credit is a revolving credit facility. You draw what you need, repay it,
and draw again. Interest accrues only on the outstanding balance.
Use for:
- Working capital gaps (waiting for customer payments)
- Seasonal inventory needs
- Bridge financing between invoices
- Emergency operating buffer
Advantages:
- Only pay interest on what you use
- Flexible draws and repayments
- Reusable — repay and redraw without a new application
Disadvantages:
- Higher interest rate than term loans (typically 1–3% more)
- Often requires annual cleanup (30+ days at $0 balance)
- Temptation to treat it as permanent capital (risky)
Total cost comparison
$100k term loan at 8% over 36 months: total interest = $12,740
$100k line of credit at 11%, drawn 50% for 24 months: total interest = $11,000
The line of credit can be cheaper if you don't use it fully — but if you draw the
full amount continuously, a term loan is significantly cheaper.
How Much Can I Borrow for My Business? Loan Sizing Guide
Lenders use revenue multiples, DSCR, and collateral coverage to determine how much you can borrow. Learn the formulas lenders use to size your loan.
Lenders evaluate loan requests using a combination of cash flow coverage, collateral,
and revenue benchmarks. Understanding these formulas helps you walk into a loan
application with a realistic ask.
The DSCR method (most important)
Lenders start with your ability to repay. The core ratio is:
DSCR = Annual NOI / Annual Debt Service ≥ 1.25
Annual NOI = Net income + depreciation + amortization + interest (before new loan).
Working backwards: if your annual NOI is $100,000 and lender requires DSCR 1.25:
Maximum annual debt service = $100,000 / 1.25 = $80,000
Maximum monthly payment = $80,000 / 12 = $6,667
With a $6,667 monthly max at 8.5% APR over 84 months:
Maximum loan = ~$423,000 (per the amortization formula)
This is the most reliable method for estimating maximum loan size.
Revenue multiples (quick estimate)
Lenders often use annual revenue as a quick sanity check:
Loan type
Typical maximum
Working capital loan
8–15% of annual revenue
Equipment loan
Up to equipment value
SBA 7(a)
Up to $5M, limited by DSCR
Business line of credit
10–25% of annual revenue
For a $2M/year business: working capital loan up to $200–300k. Line of credit up
to $200–500k.
Collateral coverage
Collateral reduces lender risk and may allow higher loan amounts:
Accounts receivable: Lenders lend 70–85% of eligible AR (invoices <90 days).
Equipment: 50–80% of appraised value.
Real estate: 70–80% LTV.
Inventory: 25–50% of appraised value.
Note: collateral is a secondary factor for most lenders. DSCR coverage is primary.
Don't over-borrow just because you have collateral.
What lenders look at beyond the numbers
Industry risk: Restaurants, retail, and seasonal businesses face stricter
scrutiny. SaaS and professional services typically get better terms.
Business age: Under 2 years limits options significantly. Plan to wait or
use alternative funding (revenue-based financing, angel investment).
Owner credit: Your personal FICO score heavily influences rate and approval.
A 700+ score typically unlocks the best terms; 650–699 is workable; below 650
limits you to SBA or alternative lenders.
Use the Business Loan Calculator to back into
a loan size from your maximum affordable monthly payment.
Business loan marketplace — submit one application and receive offers from multiple lenders. Good for comparing SBA, term loan, and equipment financing.