What the Business Loan Calculator Does
The business loan calculator computes the fixed monthly payment on a fully amortizing loan — the standard structure for term loans from banks, online lenders, and development finance institutions. It assumes the same payment every month, with early payments weighted toward interest and later payments toward principal. Knowing the payment before you sign matters because the obligation is fixed while business revenue is not; our editorial analysis treats the payment-to-average-monthly-revenue ratio as the first affordability check any borrower should run.
```
M = P × r × (1 + r)^n / ((1 + r)^n − 1)
```
What each input means
Worked example
Borrow $50,000 at 9.5% APR over 36 months.
1. Monthly rate: r = 0.095 / 12 = 0.0079167.
2. Growth factor: (1 + r)^36 = (1.0079167)^36 = 1.32827.
3. Numerator: 50,000 × 0.0079167 × 1.32827 = 525.79.
4. Denominator: 1.32827 − 1 = 0.32827.
5. Payment: M = 525.79 / 0.32827 = $1,601.65 per month.
Total repaid: $1,601.65 × 36 = $57,659.31. Total interest: $57,659.31 − $50,000 = $7,659.31 — roughly 15.3% on top of the amount borrowed.
Limitations — when not to rely on this
The formula assumes a fixed rate and perfect on-time payments. It excludes origination fees, insurance add-ons, late penalties, and prepayment charges, all of which raise the true cost. It does not apply to interest-only loans, lines of credit, merchant cash advances, or revenue-based financing, which price risk differently. Compare lenders on total cost of credit, not on the monthly payment alone — a longer term lowers the payment while increasing total interest.
> [!TIP]
> Run the same loan at two or three term lengths before applying. Stretching a $50,000 loan from 36 to 60 months cuts the payment but can add thousands in interest; the calculator shows the trade-off in seconds.