Business Loan Payment Calculator
Compute business loan monthly payment, total interest, and DSCR (debt service coverage ratio) for any term loan or SBA loan. Free, no signup.
Business Loan Payment Calculator
Standard amortization math plus the DSCR (Debt Service Coverage Ratio) check lenders use to evaluate business loan applications. Pass: 1.25× minimum NOI ÷ monthly debt service. Strong: 1.5×+. Below 1.25×: most lenders decline.
How to Use the Business Loan Calculator
Enter realistic monthly NOI
Net operating income is revenue minus operating expenses, before any loan payments. Use a typical month from recent accounts, leaving out one-off income such as an asset sale. The tool divides it by the payment to get the debt service coverage ratio (DSCR).
Enter the rate you were offered
Use the rate in the offer you have. For SBA 7(a) loans, sba.gov sets maximum spreads over the base rate by loan size, from base + 3.0% for loans over $350,000 to base + 6.5% for $50,000 or less, so the cap moves with the base rate.
Pick the term
A longer term lowers the payment and raises the total interest. SBA 7(a) maturities run up to 25 years for real estate and up to 10 years for equipment (longer where the equipment's useful life is) and for working capital.
Read the payment and DSCR
A DSCR of 1.0× means operating income exactly covers the payment; below it, the business cannot pay from operations. Lenders set their own minimum above 1.0×, so ask yours. A smaller loan, a longer term or a lower rate each reduce the payment.
Business Loan Math — Beyond Just the Monthly Payment
DSCR: how many times the income covers the payment
The debt service coverage ratio is net operating income divided by the loan payment for the same period. At 1.0× every dollar of operating income goes to the lender; at 1.25× there is a 25% cushion for a weaker month. This calculator works per month: at the defaults, USD 5,000 of monthly NOI against the payment on USD 250,000. Lenders set their own minimum, so ask the lender for theirs rather than relying on a figure from a website, this one included.
The payment itself is the standard level-payment formula: the same amount each month, mostly interest at the start and mostly principal at the end, until the balance reaches zero after the last payment. The test suite checks exactly that, by running the balance down month by month.
A longer term lowers the payment and raises the interest
USD 250,000 at 12% costs USD 5,561 a month over 5 years and USD 3,587 over 10. Over 10 years, though, the total interest is USD 180,413 against USD 83,667 over five. Over 25 years the payment falls to USD 2,633 and the interest rises to USD 539,918. Rate and term trade off the same way. A 3-year loan at 22% pays USD 93,714 of interest, less than the 10-year loan at 12%, because the money is borrowed for a much shorter time, but its payment is USD 9,548 a month. A longer term improves the DSCR; it does not make the loan cheaper.
"A longer term improves the coverage ratio by lowering the payment. It does not make the loan cheaper."
SBA 7(a) and 504, from sba.gov
The SBA's 7(a) programme lends up to USD 5 million. Its maximum interest rates are set as spreads over a base rate by loan size: base + 6.5% for USD 50,000 or less, + 6.0% up to USD 250,000, + 4.5% up to USD 350,000 and + 3.0% above that. Maturities run up to 25 years for real estate and up to 10 years for equipment and working capital. Prepaying 25% or more of a loan with a maturity of 15 years or more within the first three years carries a fee of 5%, 3% and 1% of the prepaid amount in years one to three. The 504 programme lends up to USD 5.5 million for buildings and long-lived equipment, at 10-, 20- and 25-year terms, and cannot be used for working capital or inventory.
A longer loan lowers the payment and raises the interest
DSCR = net operating income ÷ debt service. Below 1.0× the business cannot pay from operations.
USD 250,000 at 12%: USD 5,561 a month over 5 years, USD 3,587 over 10 and USD 2,633 over 25.
Total interest on that loan: USD 83,667 over 5 years, USD 180,413 over 10 and USD 539,918 over 25.
A 3-year loan at 22% pays less interest (USD 93,714) than 10 years at 12%, but costs USD 9,548 a month.
SBA 7(a) lends up to USD 5 million (sba.gov).
7(a) rate caps are spreads over a base rate: + 3.0% above USD 350,000, up to + 6.5% for USD 50,000 or less.
7(a) maturities: up to 25 years for real estate, and up to 10 years for equipment and working capital.
Prepaying 25% or more of a 7(a) loan of 15+ years in its first three years costs 5%, 3% or 1% of the prepayment.
SBA 504 lends up to USD 5.5 million for buildings and long-lived equipment, on 10-, 20- or 25-year terms.
504 loans cannot be used for working capital or inventory.
Frequently Asked Questions
- Above 1.0× is the floor: at exactly 1.0 all operating income goes to the lender, and below it the payment cannot come from operations. Beyond that, each lender sets its own minimum, often with a cushion for weaker months. Ask yours. If you are short, the tool shows the levers: a smaller loan, a longer term or a lower rate each reduce the payment and raise the ratio.
- Compare the offers on three numbers: the monthly payment against your income, the total interest, and the fees. SBA 7(a) loans run longer (up to 25 years for real estate) with capped rates, which keeps payments low. A shorter, more expensive loan can still cost less in total interest, as the worked example on this page shows, but it needs much more monthly cash. Enter each offer here with its own rate and term and compare.
- That depends on the lender and the programme, and this page does not have a rule it can source for every case. Many small-business loans ask the owners to guarantee them personally, which puts their own assets behind the business's debt. Read the guarantee terms before signing, and ask whether the lender will limit it, for example to a fixed amount.
- Each lender publishes its own list. Expect to show recent business and personal tax returns, current financial statements, a schedule of existing debts and what the money is for. Having the figures that feed this calculator ready, especially a defensible monthly net operating income, speeds up the conversation.
- It varies by lender and by how complete the application is, and this page does not have a sourced figure. If you need money by a date, ask the lender for its typical time to close and plan for a bridge if it is tight.
- A lender the SBA has delegated authority to, so it can approve SBA-guaranteed loans itself rather than sending each one to the SBA for a decision. That usually shortens the process. Ask any SBA lender whether it has preferred status.
- A term loan is a fixed amount repaid in level payments, which suits a one-off purchase and is what this calculator models. A line of credit lets you draw and repay as needed, usually at a variable rate, which suits seasonal or short-term gaps. The payment on a line depends on how much is drawn, so this tool applies only to the amount you would borrow for a fixed term.
- Interest on business borrowing is generally a deductible business expense, while repaying principal is not, because it only reduces the debt. The detail depends on the country, the business's size and how the money is used, so confirm with a tax adviser rather than relying on a general rule.
- Read the note. For SBA 7(a) loans with a maturity of 15 years or more, sba.gov sets a fee when 25% or more of the balance is prepaid in the first three years: 5% of the prepaid amount in year one, 3% in year two and 1% in year three. Other lenders set their own terms.
- SBA programmes have eligibility rules about the business and its owners; check them on sba.gov or with an SBA lender before applying. Outside the SBA, each lender sets its own rules. The arithmetic here works the same in any currency: enter the amount, the rate and the term you were offered.
Method & sources
How it computes
Level monthly payment P x r(1+r)^n / ((1+r)^n - 1), r = annual rate / 12, n = years x 12; total and interest; DSCR = monthly NOI / payment. RecaBusiness.loan, tested (balance runs to zero). SBA 7(a) and 504 limits from sba.gov.
What this tool implements
- The page said a $250k SBA loan at 12% over 10 years beats a 22% three-year online loan by $80-120k of interest. It is the reverse: $180,413 against $93,714, because the money is borrowed for longer; the shorter loan's payment is $9,548 a month.
- SBA 7(a): max $5M; rate caps are base + 6.5% (<= $50k), 6.0%, 4.5%, 3.0% (> $350k) - the page said Prime + 2.25-4.75%; maturities up to 25 years real estate, 10 equipment and working capital; prepayment fees 5/3/1% for 15+ year loans when >= 25% is prepaid in the first three years. 504: max $5.5M, 10/20/25 years, no working capital.
- Verdicts no longer assert a 1.25x 'lender minimum'. Removed as unsourced: rate ranges for conventional/online/equipment loans, SBA time-to-close, named top lenders, guarantee rules, fee percentages and the 504 50/40/10 split.
Sources
- U.S. Small Business Administration. 7(a) loans (maximum $5 million; maximum spreads over the base rate by loan size). https://www.sba.gov/funding-programs/loans/7a-loans
- U.S. Small Business Administration. 7(a) terms, conditions and eligibility (maturities; prepayment fees of 5%, 3% and 1%). https://www.sba.gov/partners/lenders/7a-loan-program/terms-condit…
- U.S. Small Business Administration. 504 loans (maximum $5.5 million; 10-, 20- and 25-year terms; no working capital). https://www.sba.gov/funding-programs/loans/504-loans
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