What This Calculator Does
This calculator helps business owners estimate monthly loan payments, total interest cost, and the real effective interest rate (APR) after accounting for various fees such as origination fees, documentation fees, and other charges.
Key Inputs Explained
- Loan Amount: The total amount you want to borrow.
- Interest Rate: The nominal annual interest rate.
- Compound: How often interest is calculated and added to the balance (affects the effective rate).
- Loan Term: The duration of the loan in years and months.
- Pay Back: How frequently you make payments (monthly, bi-weekly, weekly, etc.). More frequent payments can reduce total interest.
- Origination Fee (%): A percentage fee charged by the lender for processing the loan, usually deducted from the loan amount or added to the total cost.
- Documentation Fee / Other Fees: Fixed fees charged by the lender.
Important Calculations
- Monthly Payment: Calculated using the standard amortization formula based on loan amount, interest rate, and term.
- Total Interest: The sum of all interest payments over the life of the loan.
- Total Fees: Origination fee + Documentation fee + Other fees.
- Real APR (Effective Interest Rate): The true cost of borrowing after including all fees. This is usually higher than the stated interest rate.
How Fees Affect Your Loan
Fees are added to the total cost of the loan. Some lenders deduct origination fees from the loan amount you receive, while others add them to your total repayment amount. This calculator shows both the nominal payment and the effective APR so you can compare offers more accurately.
Amortization Schedule
The schedule shows month-by-month (or year-by-year) how your payments are applied — how much goes toward interest and how much goes toward reducing the principal balance. This helps you understand how quickly you build equity in the loan.
Tips for Business Loans
- Always compare the **APR**, not just the interest rate, because fees can significantly increase the true cost.
- Shorter loan terms usually mean higher monthly payments but much less total interest paid.
- Consider whether you can afford higher payments to pay off the loan faster and save on interest.
- Read the fine print regarding prepayment penalties.