Business Loan Calculator
Estimate the monthly payment, total interest and origination fee on a fixed-rate business term loan, and see the true cost of borrowing once fees are included.
Monthly payment
£1,013.82
- Total repayment
- £60,829.18
- Total interest
- £10,829.18
- Origination fee
- £1,000.00
- Total cost of borrowing
- £11,829.18
- Net proceeds (after fee)
- £49,000.00
A term business loan is repaid in fixed monthly instalments that cover both interest and principal. Origination fees are typically deducted up front but still count as part of the true cost of the loan — comparing two loans by monthly payment alone hides them.
How to use this calculator
Enter the loan amount, the annual interest rate quoted by the lender, the term in months, and any origination or arrangement fee expressed as a percentage of the loan. The calculator returns the fixed monthly repayment, the total amount you will pay back over the life of the loan, the breakdown between interest and fees, and the net cash you actually receive after the fee is deducted.
How the calculation works
The monthly payment uses the standard amortisation formula P = L × r / (1 − (1+r)^−n), where L is the principal, r is the monthly rate (annual ÷ 12), and n is the number of months. Total interest is monthly payment × n − L. The origination fee is a flat percentage of the loan amount, deducted by the lender at drawdown but still owed in full as part of your true cost. Comparing two offers by monthly payment alone hides fee differences — that is why the calculator reports the total cost of borrowing (interest + fee) and the net proceeds you actually receive.
Worked example
A 50,000 loan at 8% over 60 months gives a monthly payment of about 1,013.82. Total repayment is 60,829, of which 10,829 is interest. With a 2% origination fee the lender keeps 1,000 up front, so you receive 49,000 in net cash but still owe the full 50,000. True cost of borrowing is 11,829.
Frequently asked questions
How is a business loan payment calculated?
A standard amortising business loan uses the same payment formula as a mortgage or car loan: P = L × r / (1 − (1+r)^−n). L is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments. Every payment is the same size, with the interest share falling and the principal share rising over time.
What is an origination fee and does it change the monthly payment?
An origination fee is a flat charge — typically 1% to 6% of the loan amount — that the lender deducts from the funds released at drawdown to cover underwriting and setup. It does not change the monthly payment, which is calculated on the full loan amount, but it does raise your true cost of borrowing. A 2% fee on a 50,000 loan means you receive 49,000 in cash but still repay the full 50,000 plus interest.
Is the interest rate the same as the APR?
No. The interest rate is the cost of borrowing the principal. The APR (annual percentage rate) bundles the interest rate together with origination fees and any other mandatory charges, so it is the more accurate comparison number between lenders. This calculator works in interest rate plus separate fee so you can see both sides — adding the fee into the interest rate would let lenders hide the structure.
What term length should I pick for a business loan?
Short-term business loans usually run 3 to 24 months and are used for working capital, inventory or bridging. Medium-term term loans run 1 to 5 years and suit equipment or expansion. Commercial real estate loans can run 10 to 25 years. A shorter term means a higher monthly payment but far less interest paid overall, and lenders generally offer better rates on shorter terms — match the term to the useful life of what you are financing.
Does this work for SBA loans, equipment loans and lines of credit?
It works for any fixed-rate, fixed-term, amortising business loan — including SBA 7(a) term loans, equipment finance and bank term loans. It does not model variable-rate loans (where the rate resets), interest-only periods, balloon payments, or revolving facilities like lines of credit and business credit cards, which charge interest only on the drawn balance.
How can I lower the true cost of a business loan?
Compare lenders on total cost of borrowing (interest + fees), not monthly payment. A larger down payment or pledged collateral often unlocks lower rates. A shorter term cuts total interest sharply at the cost of a higher monthly payment. Ask whether the origination fee is negotiable, and whether prepayment is allowed without penalty so you can pay down early when cash flow permits.