Estimate Payments With a Short-Term Business Loan Calculator
A short-term loan can provide your business with the capital to continue operations and grow. However, before choosing a lender, you must understand how your terms impact repayment and the total cost of borrowing.
With Fast Capital 360’s easy-to-use short-term loan interest calculator, you can determine which financing option best serves your small business.
What Is a Short-Term Loan?
As its name suggests, a short-term loan functions as a condensed version of a conventional term loan with more frequent payments. Your business will receive a lump sum of cash that it will pay off, plus interest, according to a predetermined payment schedule over a set term.
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How to Use the Short-Term Loan Payment Calculator
When comparing short-term business financing options, interest rates are just one part of the overall loan agreement. You’ll also need to consider the time you have to pay off the loan. To calculate your monthly or weekly payments, enter:
- Desired loan amount: With Fast Capital 360, you can finance as little as $3,000 or as much as $500,000.
- Estimated interest rate: Interest rates for short-term loans with Fast Capital 360’s lending partners start at 10%. In the lending market, however, short-term business loan interest rates can range from 8%-99%, according to LendingTree. The specific rate you’re offered will depend on the lender, your credit history and business health. Alternatively, some short-term lenders may charge factor rates instead of interest rates.
- Loan term: The hallmark of a short-term loan is an accelerated payoff structure. Short-term loans often reach maturity in 18 months or less.
- Payment frequency: Short-term loans are riskier for lenders, so they could require more frequent payments, usually weekly.
Adjust the loan amount, interest rate, term and frequency in the short-term business loan calculator to see how these factors impact repayment.
Example Using the Short-Term Loan Calculator
Let’s say you were seeking a $35,000 short-term loan. You were able to secure a 10% interest rate for a term of 18 months. Entering this information into the short-term loan calculator, you’d calculate a weekly payment of $713. In contrast, if you were approved for a 12-month loan with all else the same, your payment would be $3,077 a month.
Understanding Your Short-Term Loan Interest Rate Calculator Results
The short-term business loan calculator will output the weekly or monthly payment. You’ll repay this fixed amount each week (or month) in principal and interest.
With this information, it’s easy to evaluate different loan options — whether you’re comparing lenders or choosing between a 3-month term or an 18-month term.
Frequently, borrowers are concerned with the weekly or monthly payment and whether or not they have enough cash on hand to cover the expense.
While this is important, it’s only one part of the big picture.
Other Fees to Consider When Calculating the Cost of a Short-Term Loan
In addition to the interest rate and term, you’ll want to think about any fees the lender might charge in relation to your short-term loan.
Commonly, lenders also charge a one-time fee at funding. Some lenders charge a fee based on a percentage of the loan, while others might charge a flat fee based on the approved rate. These upfront fees can also vary based on the term of the loan.
It’s important to note that there’s no one-size-fits-all lender fee. Every funder charges differently, and there are many variables lenders consider.
Also, if you miss a payment (or default), additional fees will apply.
Related: Common Loan Fees to Expect When Securing Business Financing
Using a Short-Term Business Loan Calculator to Evaluate and Compare Loan Offers
If you have more than one loan offer on the table, comparing each loan’s terms can make it easier to decide the best option for you.
First, consider how much each lender is offering. It may be tempting to pick the offer with the most favorable rate, but locking in a smaller loan than you need — even at a lower rate — won’t help cover a cash-flow gap. (On the flip side, taking out more financing than you need can leave you on the hook paying more than you can afford.)
Also, consider the loan repayment term. A short-term loan will reach maturity in approximately 18 months or less, while a longer term loan repayment period could last 5 years or more. You need to know what time frame works best for your business and specific investment.
Finally, consider whether your business is in a position to repay the loan. If the loan payments dramatically shrink your cash flow, you’ll have to consider how comfortable you’ll be working with a smaller margin for the duration of the payoff term.
As you set out to secure funding for your small business, a short-term loan repayment calculator is an excellent place to start. By experimenting with different loan amounts, rates and terms, you’ll come away with a clearer understanding of what you can and cannot afford, as well as what repayment terms are manageable given your cash flow.