See the real cost of your business financing.
Enter the loan once and get the whole picture: your fixed monthly payment, total interest over the life of the loan, the fee that comes off the top, and the net funds that actually land in your business account.
Your loan
Your financing at a glance
The numbers over time
Balance and interest paid
Where each year's money goes
Each bar is one year of payments split into principal and interest. Early on more of it is interest; the balance you owe shrinks faster as the loan matures.
Key milestones
Full repayment schedule
Click any year to open its payments. Each payment is fixed; the split shifts from interest toward principal as the balance falls.
| Period | Payment | Principal | Interest | Balance |
|---|
Understanding business loans
Types of Business Loans and Their Rates
Business loans come in several forms including term loans, lines of credit, equipment financing, and invoice factoring. Traditional bank term loans typically offer rates from 5% to 13%, while online lenders may charge 7% to 30% or higher depending on your business profile. Equipment loans often carry lower rates because the equipment serves as collateral, and business lines of credit provide flexible access to funds with interest charged only on the amount drawn.
SBA Loans vs Conventional Business Loans
SBA loans are partially guaranteed by the Small Business Administration, which allows lenders to offer lower interest rates and longer repayment terms than conventional loans. SBA 7(a) loans offer up to $5 million with terms up to 25 years and rates tied to the prime rate plus a spread. The tradeoff is a longer application process that can take 30 to 90 days, compared to just days or weeks for conventional business financing.
How Lenders Evaluate Business Loan Applications
Lenders assess business loan applications based on the five Cs of credit: character, capacity, capital, collateral, and conditions. Your personal and business credit scores, annual revenue, time in business, and cash flow statements are all critical factors. Most traditional lenders require at least two years of business history and annual revenue above $100,000, while online lenders may approve businesses with as little as six months of operating history.
Calculating the True Cost of Business Financing
The true cost of a business loan extends beyond the stated interest rate. Origination fees, closing costs, and prepayment penalties can add significantly to the total expense. Use the Annual Percentage Rate rather than just the interest rate to compare loan offers, as APR includes most fees in a single figure. Factor in opportunity cost as well, since the revenue generated by the borrowed capital should exceed the total financing cost to make the loan worthwhile.
Common questions
What is a typical interest rate for a business loan?
Business loan rates vary widely: SBA loans range from 5%-10%, traditional bank loans from 6%-13%, and online lenders from 7%-30%+. Your rate depends on business revenue, credit score, time in business, and the loan type.
How do SBA loans differ from conventional business loans?
SBA loans are partially guaranteed by the government, resulting in lower rates and longer terms. However, they require more documentation and take longer to fund (30-90 days vs 1-7 days for online lenders). SBA 7(a) loans go up to $5 million.
What do I need to qualify for a business loan?
Most lenders require at least 2 years in business, $100,000+ in annual revenue, a personal credit score above 650, and a business plan or financial statements. SBA loans have additional requirements including collateral for larger amounts.
Are business loan interest payments tax deductible?
Yes, interest on business loans is generally tax deductible as a business expense, reducing your effective borrowing cost. If you are in the 24% tax bracket, a 9% loan effectively costs about 6.84% after the tax deduction.
Estimates for planning only. Actual payments depend on your exact rate, day-count method, payment timing and any fees your lender adds. Confirm the numbers with your lender before you rely on them.