Business Loan Calculator
Payment, total interest, and the true APR once the origination fee is counted — plus what the interest deduction actually saves you.
Your details
Details
Deducted from the amount you receive
Used to value the interest deduction
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
Monthly payment
$2,451.60
$55,934 of interest over 7.0 years — $205,934 repaid in total
Includes your inputs, the full breakdown, and every row of the table.
Cash you receive
$147,000
After a $3,000 fee
True APR
10.15%
Stated rate is 9.50%
Total interest
$55,934
After the tax deduction
$44,188
Saves $11,746 at 21%
- Loan amount
- $150,000
- Origination fee
- − $3,000
- Cash in hand
- $147,000
- Total repaid
- $205,934
- Real cost after tax relief
- $47,188
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $15,847.40 | $13,571.77 | $134,152.60 |
| 2 | $17,420.22 | $11,998.95 | $116,732.38 |
| 3 | $19,149.13 | $10,270.03 | $97,583.25 |
| 4 | $21,049.64 | $8,369.53 | $76,533.61 |
| 5 | $23,138.76 | $6,280.40 | $53,394.85 |
| 6 | $25,435.23 | $3,983.94 | $27,959.62 |
| 7 | $27,959.62 | $1,459.55 | $0.00 |
What this means
- The origination fee is taken out of the proceeds, so you borrow $150,000 but receive $147,000 while repaying the full amount. That gap is why the true APR of 10.15% exceeds the 9.50% on the paperwork.
- Business loan interest is generally deductible as a business expense, which lowers the real cost. The principal is not deductible — only the interest portion of each payment.
- Compare offers on APR rather than the headline rate. A lower rate with a 5% origination fee is frequently more expensive than a higher rate with none, particularly on shorter terms where the fee is spread over fewer payments.
- Watch for prepayment penalties and, on some short-term products, a fixed total repayment amount rather than accruing interest. In the latter case paying early saves nothing at all.
How the business loan calculation works
A business loan is priced by three things: the interest rate, the term, and the fees. Borrowers concentrate almost entirely on the first, which is how lenders end up competing on a number that is only part of the cost.
The origination fee is the piece most often overlooked. A 2% fee on a $150,000 loan means $3,000 comes off the top, so you receive $147,000 and repay as though you borrowed the full amount. On a seven year term that is a modest uplift to the effective rate. On a two year term the same fee is spread over far fewer payments and the effective rate rises sharply — which is why APR, not the stated rate, is the only fair way to compare offers.
The term cuts both ways. A longer term lowers the monthly payment and preserves cash flow, which for a growing business can matter more than the total cost. It also increases the total interest paid, sometimes dramatically. There is no universally right answer; the question is whether the cash freed up each month earns more in the business than the extra interest costs.
Interest is deductible as a business expense, which reduces the real cost by your marginal tax rate. That makes debt meaningfully cheaper than the headline rate suggests, but only to the extent the business is actually profitable enough to use the deduction.
Frequently asked questions
What is the difference between the interest rate and the APR?
The interest rate is what accrues on the balance. The APR folds in origination and other required fees, expressing the whole cost as an annual rate. A 9.5% loan with a 2% origination fee over seven years works out closer to 10.2% APR. Always compare on APR.
Is business loan interest tax deductible?
Generally yes, when the loan is used for business purposes — interest is deductible as a business expense, while repayments of principal are not. At a 21% rate, that turns $50,000 of interest into an effective $39,500. Rules vary by structure and there are limits on interest deductibility for larger businesses, so confirm with an accountant.
Should I take a longer term for lower payments?
It depends on what the cash does. A longer term always costs more in total interest but frees up monthly cash flow, which is often the binding constraint for a growing business. If that cash generates a return above the loan rate, the longer term is the better decision even though it looks more expensive on paper.
What is a factor rate?
Some short-term lenders and merchant cash advances quote a factor rate — 1.3 means you repay $1.30 for every dollar borrowed — rather than an interest rate. Because the total is fixed up front, paying early saves nothing, and the equivalent APR is frequently far higher than it appears. Convert to APR before comparing against a conventional loan.
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Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.