Business loan amortization calculator

An amortizing loan is one formula and then one loop. The formula sizes the payment: P = L x i / (1 - (1 + i) to the power of minus n), where L is the face amount of the note, i is the annual rate divided by twelve, and n is the number of monthly payments. On $250,000 at 9.25 percent over 120 months that is $3,200.82. At a zero rate the formula divides by zero, so an interest free note has to be its own case rather than trusted to the algebra.

The loop produces the schedule. Each month, interest is the outstanding balance times i, rounded to the cent, and principal is whatever is left of the payment. The balance falls by that principal, so next month's interest is smaller. That explains the shape everyone notices: payment one on the default loan is 60.2 percent interest and payment 120 is 0.8 percent, without the rate ever moving. Interest is not front loaded by policy. It is front loaded because you owe more at the start.

What separates a real schedule from a spreadsheet approximation is the last line. Because each month's interest is rounded to the cent independently, a level payment repeated 120 times never quite retires the balance. A servicer fixes that by adjusting the final payment, and so does the Business Loan Amortization Calculator: the last payment is $3,200.43 rather than $3,200.82, and the closing balance is zero rather than three cents. If a schedule ends on anything but zero, do not reconcile a payoff quote against it.

Every figure is computed in integer cents from first line to last. That sounds pedantic until you are checking a lender's table against a payoff statement, which is the only reason anyone opens a schedule. Floating point arithmetic on dollars produces one cent disagreements at exactly that moment, and one cent is enough to make a borrower distrust the page.

There are two prices on every business loan and lenders quote the smaller one. The note rate accrues on the balance. The APR is what the money costs once you account for not having received all of it. Regulation Z defines the gap at 12 CFR 1026.18(b): the amount financed is the principal loan amount, plus any other amounts financed, minus any prepaid finance charge. Origination, packaging and SBA guaranty fees deducted at closing are prepaid finance charges, so they come off the cash and never off the balance you repay.

On the default loan, $6,500 of fees turns $250,000 of face value into $243,500 of cash while the repayment schedule is unchanged, so the rate that reconciles the two sides is 9.87 percent rather than 9.25. Appendix J to 12 CFR Part 1026 sets out the solve: find the unit period rate at which the present value of the payments equals the amount financed, then multiply it by the number of unit periods in a year. Multiplied, never compounded. Section 1026.22(a) permits the actuarial method or the United States Rule method, and paragraph (a)(2) allows a regular transaction one eighth of one percentage point of tolerance.

The size of the effect depends almost entirely on the term, which is the part borrowers get wrong. A fee is paid once, so a long loan spreads it over many periods and a short loan does not. Three percent of principal on a ten year note adds 72 basis points to the APR. The identical fee on a three year note adds 210. On short paper, negotiate the fee. On long paper, negotiate the rate.

Regulation Z does not require any of this to be disclosed to you. Section 1026.3(a) exempts credit extended primarily for a business or commercial purpose, so no APR box is federally required on a business loan. It is the same exemption that lets merchant cash advance funders quote a factor rate with no annual rate beside it, and while a handful of states now require a commercial financing disclosure, in most of the country nobody has to tell you the number.

SBA does not lend. It guarantees part of a bank loan and charges an upfront guaranty fee for doing so. The FY 2026 schedule, in SBA Information Notice 5000-872051 effective 28 August 2025, covers 7(a) loans approved between 1 October 2025 and 30 September 2026. On a maturity over twelve months it is 2 percent up to $150,000, 3 percent from $150,001 to $700,000, and 3.5 percent from $700,001 to $5,000,000 with 3.75 percent on the slice above one million. A maturity of twelve months or less is 0.25 percent, and manufacturers in NAICS sectors 31 to 33 borrowing $950,000 or less pay nothing.

Here is the part that gets miscalculated everywhere. Every one of those percentages applies to the guaranteed portion, not to the loan. SBA guarantees 85 percent of a loan of $150,000 or less and 75 percent above that, so a 3 percent fee on a $500,000 loan is 3 percent of $375,000, which is $11,250 and not $15,000. On this page's default $250,000 loan the guaranteed portion is $187,500 and the fee is $5,625. A calculator that multiplies the face amount by the tier percentage overstates the fee by a third, then feeds an overstated APR.

The rate side has ceilings rather than prices. On a variable rate 7(a) loan SBA caps the spread over the base rate at 6.5 points for loans of $50,000 or less, 6.0 from $50,001 to $250,000, 4.5 from $250,001 to $350,000, and 3.0 above $350,000. With the bank prime loan rate at 6.75 percent on the Federal Reserve H.15 release dated 4 September 2026, the ceiling on a $250,000 loan is 12.75 percent and above $350,000 it is 9.75 percent. Knowing where the cap sits turns a quote into a negotiation.

Two structural limits belong beside the arithmetic. The 7(a) program maximum is $5 million, and 13 CFR 120.212 caps maturity at ten years unless the loan finances real estate or equipment with a useful life beyond ten years, in which case up to 25. A prime based SBA loan is variable, so the schedule the Business Loan Amortization Calculator prints is the path if the rate never moves, which it will. Re-run it at prime plus two and at prime minus one.

Extra principal is the only lever a borrower controls after closing, and it is worth less than the internet implies and more than most owners assume. On the default loan, adding $250 a month clears the note after 107 payments instead of 120 and saves $16,736.67 of interest. You put in $26,500 of extra principal to get that, so the return is real but it is not free money: it is a prepayment earning the note rate, which at 9.25 percent is a good use of idle cash and a poor use of March payroll.

Check the note before you start. Business term loans commonly carry a declining prepayment charge in the first two or three years, and an SBA 7(a) loan with a maturity of fifteen years or more carries a statutory prepayment charge in the first three years when you prepay more than a quarter of the balance in a single year. Check how the servicer applies unscheduled money too: if it is held as a prepaid regular payment rather than applied to principal, the extra saves you nothing at all.

A balloon deserves more suspicion than it gets. The payment is sized on a long amortization, the note matures early, and the unpaid balance falls due in one lump. Take the same $250,000 at 9.25 percent, size the payment on ten years and mature it at five: the payment is still $3,200.82, but $153,296.45 is outstanding at maturity, so the final payment is $156,497.27. Sixty payments of ordinary money and then one forty nine times the size of the others.

That last one is not really a payment, it is an appointment to refinance. You are agreeing today to be creditworthy in five years, at whatever rate exists then. Price the refinance the day you sign, not the quarter before it matures.

Most businesses reaching this calculator are choosing between a bank and a faster, more expensive product, usually a merchant cash advance, and the two are quoted in units that do not compare. A loan is quoted as a rate. An advance is quoted as a factor, a flat multiplier with no time in it. The default loan puts $243,500 in the account and takes back $384,098.01, which as a factor rate is 1.58.

That translation is where most comparisons stop, and stopping there is the mistake. Equal dollars are not an equal price. The loan takes those dollars over ten years. An advance at a 1.58 factor with a normal holdback repays out of daily card settlement in six to nine months, so the same total charge is compressed into a fourteenth of the time and the annualized cost lands in triple digits. The factor answers how many dollars. The APR answers how expensive. Run the advance on the merchant cash advance calculator first.

The benchmark that matters here is what borrowers report afterwards. In the Federal Reserve Banks' 2026 Report on Employer Firms, published 3 March 2026 from the 2025 Small Business Credit Survey, 60 percent of firms that borrowed from online lenders said the actual cost was higher than expected, against 37 percent at small banks and 32 percent at large banks. Fifty seven percent of applicants at small banks were fully approved. Slow money that gets approved is usually cheaper than fast money that always does.

So when does the Business Loan Amortization Calculator tell you to act, and when does it tell you to do nothing. Act when the APR gap between two live offers beats the delay: on $250,000 over ten years, one percentage point is $16,518.55 of extra interest, worth waiting three weeks for. Act when a fee is large and the term is short, because that is where fees dominate. Do nothing when the only offer is a refinance that resets a partly amortized note to the start, since you would pay front loaded interest twice on the same principal. And price the boring option first: forty basis points off your processing rate on $100,000 a month is $4,800 a year with nothing to repay.