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Business Term Loan Calculator

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  • Over 6 months in business
  • Annual revenue exceeding $160,000
  • Credit score of 575 or better

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Table of Contents

  • Business Term Loan Calculator - Estimate Payments, Interest & More
  • What Is a Business Term Loan?
  • How to Use the Term Loan Calculator
  • Understanding Your Results
  • Where to Find Business Term Loans
  • Final Thoughts

Business Term Loan Calculator - Estimate Payments, Interest & More

When you’re applying for a loan, chances are, you’re asking yourself several questions that a business term loan calculator can help you answer: How much can I afford to finance, over what period? What will my payments be? And how much will this loan cost me in the long run?

Fortunately, business term loans with their fixed payoff structures are one of the easiest financing products to calculate. Just plug the numbers into our business term loan calculator to find the answers to these questions and more.

What Is a Business Term Loan?

If you’ve ever financed a vehicle, home or tuition, you’re already quite familiar with what a term loan is and how they work. You receive a sum of cash for a specific purpose, and you pay it back with fixed, equal payments over a set term — a process known as amortization.

The interest owed is front-loaded, with most of your installment going towards interest early in the life of your loan. And with each subsequent installment, a higher percentage of the payment is applied against the loan’s principal.

To get a better handle on amortization, let’s run through a quick example.

Sample Amortization Table

Bob the baker takes out a $25,000 term loan to update his commercial kitchen. He’s quoted an interest rate of 7% and a term of 4 years. Over the life of the loan, Bob the baker will make a total of 48 monthly payments, totaling $599.

1$599$146$453$24,547
2$599$143$455$24,092
3$599$141$458$23,634
4$599$138$461$23,173
5$599$135$463$22,709
44$599$17$581$2,360
45$599$14$585$1,775
46$599$10$588$1,187
47$599$7$592$595
48$599$3$595$0

 

How Do I Read an Amortization Table?

As you can see, the table is broken down into five parts: installment, payment, interest, principal and balance.

The installment column indicates the number of payments made and the number of payments remaining. In this example, Bob the baker’s loan is broken into 48 payments.

The payment of $599 remains constant throughout the life of the loan. This payment is applied against the loan’s total interest and principal. The amount applied to interest diminishes as payments are made, while the total applied to principal, rises.

The balance of the loan is reflected in the last column. The beginning balance is the total amount financed. In the example given, Bob the baker took out a $25,000 loan. With each payment, the balance falls until it reaches zero at the time of loan maturity.

When everything is said and done, Bob the baker will pay $28,735 — $3,735 in interest. A large business loan calculator could’ve easily provided Bob with an estimate of the financing costs for his bakery loan. Let’s see how term loan interest calculators work.

The balance of the loan is reflected in the last column. The beginning balance is the total amount financed. In the example given, Bob the baker took out a $25,000 loan. With each payment, the balance falls until it reaches zero at the time of loan maturity.

When everything is said and done, Bob the baker will pay $28,735 — $3,735 in interest.

How to Use Our Business Term Loan Calculator

Use a business term loan calculator to estimate your payments and total cost of borrowing by simply inputting the following

Loan Amount: You can obtain a business term loan up to $250,000. Enter the amount you wish to borrow here.

Estimated Interest Rate: Term loan interest rates start at 7%. Your rate will depend on your business’s overall creditworthiness and financial health.

Loan Term: You can finance term loans with lengths and payment structures as varied as 1 year with weekly payments, to 5 years with monthly payments. The longer the term, the lower the payments and vice versa.

Understanding Your Business Term Loan Calculator Results

The business term loan calculator will output the weekly or monthly payment, the total repayment amount and the cost of the loan.

Here’s what the business term loan calculator numbers tell you:

  • Payment: This is the fixed amount you’ll repay each month (or week) in principal, interest and fees.
  • Total Repayment Amount: Your total repayment amount estimates what you’ll pay over the life of the loan, including all principal, interest and fees.
  • Cost of the Loan: This sum represents what the lender is charging you to finance the loan in interest and fees. If you pay off the loan early, you may be able to reduce this number, but be aware of prepayment penalties.
  • Amortization Table: An amortization table provides a granular itemization of your loan payoff schedule, detailing how much interest and principal is paid off with each payment. Use a term loan calculator with an amortization schedule to see an estimated breakdown of your payments.

Regardless of your company’s size or how much you need to borrow, there are small and large business loan calculators that can give you an idea of your total financing costs. As you run the numbers using our business term loan calculator, we encourage you to explore several different “what if” scenarios. Adjust the loan amount, interest rate and term to see how much of an impact these factors have on repayment. 

Like many, you may be drawn to a 60-month term over a 24-month term, as you’ll pay less with each installment. On the downside, stretching out the loan means you’ll pay more in interest — effectively increasing your total cost of capital. 

For this reason, it’s important to consider the big picture when using a term loan interest calculator and take all factors into account before closing on a loan agreement.

Where to Find Business Term Loans

Both banks and online lenders provide term loans to small business owners. Banks traditionally offer more favorable terms than their online lending counterpart. Unfortunately, the strict underwriting requirements at traditional lending institutions result in lower instances of approval for small business owners. 

According to the National Small Business Association, financing continues to be a challenge for small business owners particularly at large banks, where the number of small businesses relying on bank financing has hovered at just 15%. Also, banks take longer to fund borrowers, due in part to the extensive underwriting process.

As an alternative, small business owners can look to online lenders. Though they typically carry higher costs and shorter terms, the tradeoff is speed, convenience and looser qualification requirements. 

If you have a personal credit score of 600 or better, your business generates a minimum annual revenue of $100K and you have been in business for a year or more, you may qualify for a business term loan. And unlike traditional lenders, funds are distributed quickly — in certain circumstances, as fast as one day.

Get Answers with a Business Term Loan Calculator

Whether you’re seeking a secured or unsecured term loan from a bank, credit union or alternative lender, we recommend you start your search with our small business term loan calculator. By plugging in various “what if” scenarios, you’ll come away with a clearer understanding of what you can and cannot afford, what your loan payments might look like and how that will impact your operating cash flow.

If you have additional questions about financing or our business term loan calculator, talk to one of our Business Advisors. We’re here to help you uncover your lending options, compare the terms, crunch the numbers and identify the best financing option for your unique needs.