Business Loan Calculator
Model business borrowing with fees, compensating balances and the true cost of capital.
About Business Loan Calculator
A business loan's stated APR understates the actual burden when upfront guaranty fees, compensating balance requirements and annual service fees are included. The 'true cost of capital' here is the rate that would produce the same total monthly outlay if the business had received the full net usable proceeds — making different loan structures directly comparable.
Formulas
Scheduled payment
Payment = Principal × monthly_rate / (1 − (1+r)^−n)
- P
- Full loan amount
- r
- Monthly rate
- n
- Months
True cost of capital
Solve for rate where PMT(net proceeds, r, n) = monthly payment + monthly fees
- F_up
- Upfront fee
- CB
- Compensating balance
- F_mo
- Monthly service fee
Worked example
With the default values below, Business Loan Calculator returns Monthly Payment of $1,879.90. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Loan Amountaccepts 1,000–50,000,000 $
- 150,000 $
- Annual Interest Rateaccepts 0–50 %
- 8.75 %
- Loan Termaccepts 1–25 years
- 10 years
- Upfront Guaranty / Origination Feeaccepts 0–10 %
- 2.25 %
- Compensating Balance Requirementaccepts 0–30 %
- 0 %
- Annual Service / Maintenance Feesaccepts 0–50,000 $
- 500 $
Results
- Monthly Payment
- $1,879.90
- True Cost of Capital (APR)All-in rate on net usable proceeds after fees and compensating balance.
- 9.80%
- Net Usable Proceeds
- $146,625
- Total Interest Paid
- $75,588
- Total Fees Paid
- $8,375
- Total Cost of BorrowingAll interest plus all fees over the life of the loan.
- $83,963
- Upfront Guaranty Fee
- $3,375
- Compensating Balance Required
- $0
Step by step
- 1Scheduled monthly payment= $1,879.90
- 2Upfront guaranty/origination fee= $3,375.00
- 3Compensating balance (locked up)= $0.00
- 4Net usable proceeds= $146,625.00The capital your business can actually deploy.
- 5True cost of capital (all-in rate on net proceeds)= 9.80%1.05% above stated rate.
- 6Total cost of borrowing (interest + all fees)= $83,963.15
Assumptions and limits
- The result is derived only from the 6 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation or tax into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
What is a compensating balance and why does it matter?
Some bank lenders require you to keep a deposit (often 10–15% of the loan) at their institution as a condition of the loan. You're effectively borrowing $100,000 but only deploying $85,000, while paying interest on $100,000. This raises the effective cost of capital materially.
What is the SBA guaranty fee?
The SBA charges a guaranty fee on the government-guaranteed portion of a 7(a) loan. For loans over $150,000 with terms over 1 year, it's currently 2.5–3.5% of the guaranteed amount (typically 75–85% of the loan). It's usually financed into the loan, but that increases interest.
How do I compare SBA vs. conventional business loans?
Use this calculator's 'true cost of capital' for both. SBA loans often have lower stated rates but carry guaranty fees; conventional loans may have higher rates but no guaranty fee. The true cost of capital after all fees is the correct comparison metric.