What is the monthly payment on a business loan?
It depends on the amount, rate, and term, and fees change the real cost without changing the payment. These rates are examples for comparison, not current offers.
| Loan amount | 7% | 9% | 11% | 13% | 15% |
|---|---|---|---|---|---|
| $50,000 | $755 | $804 | $856 | $910 | $965 |
| $100,000 | $1,509 | $1,609 | $1,712 | $1,819 | $1,930 |
| $150,000 | $2,264 | $2,413 | $2,568 | $2,729 | $2,895 |
| $250,000 | $3,773 | $4,022 | $4,281 | $4,548 | $4,824 |
| $500,000 | $7,546 | $8,045 | $8,561 | $9,096 | $9,648 |
| $1,000,000 | $15,093 | $16,089 | $17,122 | $18,192 | $19,297 |
Term matters as much as rate for cash flow. At 10.5%, $150,000 over 5 years costs $3,224 a month, and over 10 years $2,024. The longer loan gives you breathing room, but its interest totals $92,883 against $62,445 at 7 years.
Don't assume you'll be shown an APR. Regulation Z, the federal Truth in Lending rule, exempts credit made mainly for a business purpose. So a business offer may quote only an interest rate, leaving out fees. Enter the fees here to compare offers on the same basis.
Can your business afford the loan? Check the DSCR
Divide yearly net operating income by yearly debt payments. A ratio above 1 means income covers the payments. This calculator flags 1.25 because many lenders look for about that much cushion, but it's a rule of thumb, and each lender sets its own standard.
DSCR = annual net operating income ÷ annual debt paymentsWith $40,000 of net operating income and the $150,000 loan above, debt payments are $30,349 a year and the DSCR is 1.32. It clears the bar.
The trap is owner pay. The calculator's income figure comes before owner distributions, as the field note says. If you need $12,000 a year to live on, only $28,000 is available for the loan, and your real coverage is 0.92. That's a loan a lender could approve and you'd struggle to pay. Run the ratio both ways, and add your other debts in "Other debt payments."
| Net operating income | 5 years | 7 years | 10 years | 25 years |
|---|---|---|---|---|
| $50,000 | $155,083 | $197,699 | $247,033 | $353,039 |
| $100,000 | $310,166 | $395,397 | $494,065 | $706,079 |
| $150,000 | $465,248 | $593,096 | $741,098 | $1,059,118 |
| $250,000 | $775,414 | $988,494 | $1,235,163 | $1,765,197 |
| $500,000 | $1,550,828 | $1,976,987 | $2,470,325 | $3,530,394 |
How do you convert a factor rate to APR?
Multiply the advance by the factor to get the total you repay, then find the rate that makes those payments equal the cash you got. A $50,000 advance at 1.35 repays $67,500. Over 9 months of business-day payments, that's $357.14 a day and an APR of about 84%.
| Factor rate | 3 months | 6 months | 9 months | 12 months | 18 months |
|---|---|---|---|---|---|
| 1.15 | 113% | 57% | 38% | 29% | 19% |
| 1.20 | 149% | 75% | 50% | 38% | 25% |
| 1.30 | 217% | 109% | 73% | 55% | 37% |
| 1.40 | 283% | 142% | 95% | 71% | 48% |
| 1.50 | 346% | 174% | 116% | 87% | 58% |
Read across a row and you'll see the catch: the same factor gets more expensive as the time shrinks. Unlike a loan's interest, a factor charge is a fixed amount, set on day one, and it doesn't fall as you pay down. So paying early usually saves nothing unless your contract offers a discount. The Federal Reserve says a factor rate isn't comparable to an APR, and gives an example of a 1.15 factor implying about a 70% APR.
Merchant cash advances are often repaid as a share of sales, so your real timeline may differ from this even schedule, and the APR moves with it. FTC staff have flagged providers that don't reduce payments as promised when sales drop, and contracts that require a confession of judgment, which waives your right to contest a collection suit. Read for both before you sign.
What happens when a balloon payment comes due?
You owe the whole remaining balance in one payment, usually by refinancing or selling. A $1,200,000 commercial loan at 7.5% on a 25-year schedule pays $8,868 a month. If it balloons at 10 years, you still owe $956,611 on top of the final payment.
| Balloon at | Balance due | Share of the original loan |
|---|---|---|
| 5 years | $1,100,791 | 92% |
| 7 years | $1,049,488 | 87% |
| 10 years | $956,611 | 80% |
| 15 years | $747,075 | 62% |
The low payment is the appeal, and the refinance is the risk. Nobody promises you a new loan at that date. If rates are 2 points higher and you refinance $956,611 over the remaining 15 years, the payment becomes $9,989 instead of $8,868. Test your DSCR against the higher number now. Also ask what happens if the property's value or your income has dropped by then. To model one, set "Balloon due after" under More options.
What are the actual rules for SBA loans?
The SBA mostly doesn't lend to you directly. It guarantees part of a loan from a participating lender, which is why you apply with a bank or other lender. These are the published rules as of November 2026, and the SBA updates them, so confirm them with your lender:
- 7(a) loans: Most have a maximum of $5,000,000. Terms are generally 10 years or less, with up to 25 years for real estate or long-lived equipment. Rates are negotiated up to SBA caps, and variable-rate caps run from the base rate plus 3% on larger loans to base plus 6.5% at $50,000 or less.
- 7(a) fees: An upfront guaranty fee can be passed on to you. Enter it in "Other flat fees" so it counts in your APR.
- 7(a) prepayment penalty: On maturities of 15 years or more, prepaying 25% or more of the balance within three years costs 5%, 3%, or 1% of the prepayment, by year. Prepaying $200,000 in year one would cost $10,000.
- 504 loans: These come through SBA-regulated development companies, in terms of 10, 20, or 25 years, for buildings, land, and long-term equipment. They can't fund working capital or inventory.
- Microloans: Up to $50,000 for up to seven years, generally at 8% to 13% according to the SBA. They can't pay existing debts or buy real estate.
When this estimate won't match your offer
It assumes a fixed rate and even payments. It can't see a variable rate, collateral, a required deposit account, or a covenant. If you're making a down payment, enter only the amount you'll borrow. Before you sign anything large, ask your accountant to check the income figure, and have an attorney read any contract with a confession of judgment or personal guarantee.
SCORE mentors advise at no cost, and Small Business Development Centers help with funding and financial planning. To compare offers side by side, use the APR calculator. To test what you're buying with the loan, use the ROI calculator.
Common questions
How do I calculate business loan repayments?
Use the standard amortization formula, or enter the amount, rate, term, and frequency above. For weekly or daily payments, choose that frequency, since it changes the payment count and the APR. A CSV schedule is available for term loans.
How much can I borrow for my business?
Lenders look at cash flow, credit, and collateral. As a rough cap, divide net operating income by 1.25 to get the yearly payment it supports, then use the table above. Actual limits depend on the lender.
Do extra payments help on a business loan?
On a term loan, usually yes, because interest falls with the balance. Use "Extra per payment" to see it. Check for a prepayment fee first. On a factor-rate advance, the charge is usually fixed, so extra payments often save nothing.
What is the difference between the interest rate and the true APR?
The interest rate applies to the balance. The APR also counts upfront fees, based on the cash you actually receive. In the example above, 10.5% becomes 11.16% once the $3,000 fee comes out.
Is a higher DSCR always better?
For safety, yes. A very high ratio can also mean you could take a shorter term and pay less total interest. Compare a few terms and keep enough cushion for a slow year.
Sources
- 7(a) loan program: terms, conditions, and eligibility · U.S. Small Business Administration
- 504 loans · U.S. Small Business Administration
- Microloans · U.S. Small Business Administration
- Regulation Z, section 1026.3: exempt transactions · Consumer Financial Protection Bureau
- Consumer & Community Context, March 2025 · Federal Reserve Board
- Small business financing: Staff Perspective outlines issues · Federal Trade Commission