Business Loan Calculator

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Calculate your business loan

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Business loan calculator: Understand how much you can borrow

Our business loan calculator can show an estimate of how much you may be able to borrow before you apply for any small business loans.

Typically, the business information you provide influences the loan amount for which you may qualify. Here’s a look at the info you may be asked to provide:

  • Business start date and annual revenue: Your annual gross revenue (sales before expenses are deducted) and your time in business can indicate to a lender whether your business is established enough to take on debt. Generally, lenders want to make sure your business makes enough money to cover your debt, so the total business loan amount that you’re approved to borrow will likely depend on how much revenue your business earns.
  • Previous bank statements: When applying for a loan, you may be required to provide bank statements, which can help a lender identify how much cash on hand your business has and whether you can afford monthly payments toward your debt.
  • Credit score: You may be eligible for a larger loan amount, a lower interest rate or more favorable loan terms if your credit score is good or excellent. In some cases, you may be asked to share a business credit score as well.
  • Home based or not:Any business that is run from a personal residence would be considered a home-based business. These types of businesses may have fewer assets to offer as collateral when applying for a loan, which can affect the type of loan the business might be eligible for, the loan amount it may be approved to borrow or loan approval in general. In addition, a lender may impose additional business loan requirements while you apply. This could include things like a business plan, financial projections or resumes. These documents can also impact your final loan amount.

Factors that affect your small business loan payments

The amount you can afford to spend on monthly business loan payments will play a role in how much you can afford to borrow. With that in mind, it’s important to understand how the loan’s principal, interest rate and repayment terms can affect your monthly payment, which can help you stay within your budget.

While we’ve laid out this information for you below, it’s a good idea to decide what monthly business loan payment you can afford before applying for funding. This will make it much easier to stick to an amount that works in your budget.

As a rule of thumb, business loan payments rely on a number of factors, such as:

Business loan amount

Average business loan amounts range from $13,000 to more than $1 million, depending on the lender. Banks and other traditional financial institutions are typically known to loan larger amounts compared to alternative business lenders, like online providers. That said, it can sometimes be easier to qualify for an online loan than a bank loan.

The type of business loan you’re seeking would also affect the amount. For instance, U.S. Small Business Administration (SBA) loans are available up to $5 million, and equipment loan amounts could be as high as $500,000 to $1 million. The size of the business expense that you need to cover can also help determine the type of loan you could pursue.

Interest rate

Business loan interest rates affect the overall cost of business loans and will vary from lender to lender. You may come across several types of interest rates as well. Some common forms of interest on business loans include:

  • Annual percentage rate (APR): APR is a form of compounding annual interest that includes fees, such as loan origination fees and closing costs.
  • Annual interest rate (AIR): In contrast, AIR is compounding annual interest that does not include any loan fees.
  • Factor rate: A factor rate is a decimal figure that shows the total cost of financing when multiplied by the original loan amount. It doesn’t reflect any loan fees.

The interest rate you’re offered largely depends on the strength of your financial profile as a borrower. Lenders will likely assess your personal credit score as well as your business credit score, if applicable, and your business’s financial standing to determine how likely you are to be able to repay the loan. The amount of time you’ve been in business and your annual revenue may also be factors as well.

When taking out a business loan, make sure you understand if the rate is variable or fixed for the entire loan term. This information should be outlined in your final business loan agreement. Looking at the loan’s amortization schedule is helpful in estimating how long it will take to pay off your loan based on a specific interest rate and monthly payment.

Common types of business loan fees

If the loan’s interest rate is expressed as an APR, there may be several fees included in the calculation of the rate. Even if that’s not the case, you may still have to pay some of these fees at the start or end of your loan term.

Common types of business loan fees include:

  • Origination fee: An origination fee covers the cost of processing and approving your loan application.
  • Service or processing fees: These fees cover expenses for ongoing administrative tasks, such as billing and managing your account.
  • Prepayment penalty: A prepayment penalty is a fee some lenders charge in exchange for allowing you to pay off your loan early.
  • Late payment fee: Late fees are charged when you make a payment after the due date.

Check with your lender to see what fees they charge and to get more information on when and how those fees should be paid. In some cases, your fees could be included in your monthly business loan payments. Alternatively, you may be expected to pay fees in addition to your recurring payments.

Loan term

The length of your loan term illustrates how long you have to repay your debt in full. Terms can span a few months to several years, depending on the type of loan and lender. SBA loans often have the longest maximum terms, ranging from 10 to 25 years. Traditional term loans are close behind, as terms may be as long as 10 years.

Online business loans typically have the shortest terms, and you may have to repay the debt in as few as a few months. These loans also typically come with higher interest rates than bank loans. Keep in mind that since you may have a short timeline to repay your loan plus interest, the size of your monthly payments may increase.

Thing to know: Watch out for daily or weekly repayment schedules when borrowing short-term business loans. Some lenders collect automatic, recurring payments on a daily or weekly basis until the loan is paid off. While this may result in lower payments overall, you would need to budget for regular withdrawals from your business bank account.
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Where to find business loans

Once you have an idea of how much you can borrow and the size of loan payments you can afford, it’s time to get a business loan that meets your needs.

As mentioned earlier, there are several types of business loans available that may offer various loan terms and repayment schedules. You could start researching the three broad categories of business loans before narrowing down your choice.

Online loans

Online business loans from alternative lenders typically have more lenient borrower requirements and fast funding times, sometimes as quick as one business day. However, the downside to online loans is that they are often expensive, charging higher rates than what you’d find with traditional bank loans. Available loan amounts may also be smaller for online loans, which typically max out at $500,000.

Still, if you need fast access to funding to cover a small or medium-sized business expense, an online loan may be a suitable option, especially if your credit profile is less than perfect.

SBA loans

SBA loans are issued through banks and other financial institutions and are backed by the U.S. Small Business Administration (SBA). The SBA guarantee reduces risk for lenders, which helps offer competitive interest rates. Individual lenders may charge their own interest rates, but the SBA caps rates to keep loan costs low, making SBA loans a desirable financing option.

There are several types of SBA loans that you can choose from:

  • SBA 7(a) loan: The SBA 7(a) loan is a primary source of funding for small business owners. Loan terms range from 10 to 25 years, depending on how you intend to use the funds. You can borrow up to $5 million.
  • SBA 504 loan: The SBA 504 loan combines funds from the SBA and Certified Development Companies (CDCs) to provide small businesses with the funds they need to purchase fixed assets, such as commercial real estate or machinery.
  • Microloans: As the name suggests, SBA microloans are smaller loans, with amounts capped at $50,000. The loan terms last between two and six years and, in contrast to the other loans on this list, microloans are funded by nonprofit lenders and other community-based organizations.
  • Disaster loans: SBA disaster loans work a bit differently from the other types of SBA loans in that the SBA funds disaster loans directly instead of merely guaranteeing them. These loans are available to business owners in areas where a federally declared disaster occurred.

Bank loans

If your business has been established for several years and you have good credit, you may want to pursue financing from a traditional brick-and-mortar bank. You may qualify for even more favorable rates and terms if you have a good relationship with the bank and have been a long-time customer. Also, you may be able to secure a larger loan amount from a bank than an online lender. A bank, however, may take a few weeks or even months to approve your loan application.

It’s a good idea to shop around to compare loan offers from various types of lenders. Look for a lender that offers the amount you need with rates you can afford and a repayment schedule your business can manage.

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Alternative financing options to fund your business

At the end of the day, business loans aren’t the right financing option for every company. If you have funding needs that can’t be met by a traditional installment loan, you may want to consider another source of funding.

  • Business credit card: Like a business line of credit, business credit cards are another form of revolving credit that allows you to borrow as you go. Credit cards are typically recommended for covering recurring expenses, such as inventory or utility costs.
  • Personal loan for business use: Personal loans for business use can be a good option for financing a large business expense if you have a strong personal credit score and little business history. However, be aware that you run the risk of damaging your personal financial profile if you default on the loan. You also miss out on an opportunity to build business credit if you use a personal loan instead.
  • Merchant cash advance: Merchant cash advances are a type of short-term business financing that allows you to leverage a portion of your future credit card sales in exchange for a cash advance.
  • Invoice factoring: Invoice factoring is another type of short-term financing. It allows you to get a cash advance on a portion of your unpaid invoices.

Frequently asked questions

The length of the loan term depends on the type of business loan you choose. Long-term business loans can have loan terms lasting up to ten years. Short-term business loans typically last anywhere from three to 24 months.

Long-term business loans typically follow a monthly repayment schedule, but short-term business loans may require weekly or even daily payments. A business line of credit is a form of flexible funding: You only make payments when you borrow against the credit line.

The level of difficulty in getting a business loan will depend on a number of factors, including the amount you’re seeking to borrow, the lender you choose and your business’s qualifications.

According to the Federal Reserve’s 2023 Report on Employer Firms, which is based on findings from the 2022 Small Business Credit Survey, 563 of surveyed applicants received all the financing they sought while an additional 26% were approved for some financing.