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When you are considering taking out a business loan, the loan amount, loan term and interest rates all need to be considered. Our easy business loan calculator helps you find out what you can afford.
How does this calculator work?
This calculator takes your loan amount, loan term, and interest rate and calculates for you what your estimated monthly payments will be, as well as how much you will pay in total for the loan.
The inputs to your business loan are:
- Loan amount: This is how much money you need to borrow. The loan amount is also called the principal.
- Loan term in years: Enter the number of years you want the loan to last for. For example, if you enter 5 years, then you will spend 5 years paying off the loan.
- Interest rate: This is the annual interest rate for the loan. Your interest rate may vary depending on the financial climate and your credit score.
Understanding your results
Learn how to interpret your calculated results.
- Monthly payment: This is the fixed payment you make each month and includes principal and interest.
- Total payment: This is the total payments made on the loan, including repaying the loan amount and all of the accumulated interest. This is the total amount that you have paid on the loan at the end the loan term.
- Total principal paid / Loan amount: The loan amount is also known as the principal.
- Total interest paid: This is the sum of all the interest payments you will make over the life of the loan.
Things to learn about business loans
Small business loans can help you start a business, expand your business, or bring a new product to market.
Loans and lines of credit are the most common ways to fund small businesses, according to a survey by the U.S. Federal Reserve. Business typically seek loans from small and large banks as well as online lenders.
Before applying for one, here are a few things you should consider.
- Loan amount: How much do you need to borrow? Larger loans are riskier than smaller loans.
- Ability to repay: Will you be able to make your monthly payments in full and on time?
- Credit history: Your credit history is an important determinant of what interest rate you will receive and the probability of getting your loan application approved.
What do banks and online lenders consider?
Given that around 60% of business who apply for loans are approved and 22% are partially approved, it is useful to understand what lenders consider when looking at your loan application.
Because loans can be risky to lenders, they want assurance that lending to your business will be low risk. Here are the things they consider:
- Integrity: Lenders care about your character and history. This is determined by your credit score, payment history, and even letters of reference.
- Loan size: How much money do you need to borrow? The more money you need, the riskier the loan to the lender.
- Ability to repay the loan: What capacity do you have to repay the loan? Lenders want you show them that you will be able to repay your loan in full and on time.
- Collateral: Some lenders may require collateral, but not all do. Collateral could be real estate, machinery, or inventory.
How to increase your chances of getting approved
Business loans can be hard to get depending on your credit score, business history, and the economic environment. There are a few things that can help increase our chances of getting your small business loan approved.
- Co-signer: A co-signer is another person who puts their name on the loan and agrees to be liable for repayment. A co-signer with high credit score can be helpful. Co-signing does place the co-signer at risk if your business is unable to repay the loan.
- Speak with a loan specialist: Speaking with a financial specialist has been shown to increase the chances of getting your loan approved. You can speak with the Small Business Administration, a government agency, that has offices in every state and offers free consultations.