With this simple business loan calculator, entrepreneurs in any industry can determine exactly how much they’re likely to spend on repaying the money they borrow from banks and unions.
Not only can you quickly see how much you’re likely to spend on a monthly loan repayment, but our calculator will also give you an insight into the total overall price of your loan. This should help you to make the right decision when choosing a loan product for your budding company.
You can use the free calculator below, or scroll down to learn more about business loans and the factors that might influence your repayments.
How to Use Our Business Loan Calculator
Figuring out exactly how much you’re going to spend on repaying a business loan can be tricky.
While many loan providers will give you a basic overview of your APR or interest rate on a loan, you won’t always be able to see how much you’re going to repay both monthly, and in total, until you’ve officially applied for capital. If you decide you want to shop around for a better deal, requesting too many quotes could have a negative impact on your credit score.
Our business loan calculator aims to eliminate this problem, by making it easy to predict exactly how much a loan is going to cost you in the long-term. All you need to do is enter the total amount of the money you want to borrow into the field at the top, then use our slider to select your interest rate.
Enter the term length (the number of years you want to borrow the money for), and our calculator will automatically generate an insight into your monthly repayments and total repayment costs.
What are Business Loans?
Business loans are straightforward financial solutions, designed to help companies finance their company. They can be used for a variety of purposes, from launching a new startup, to growing a business, investing in supplies, or paying for essential investments.
Similar to other loans, business loans come in a variety of different formats. The most common options fall into two categories: unsecured, and secured business loans.
An unsecured business loan allows you to borrow money from a bank or lender without offering anything in return. You simply agree to make repayments on a consistent basis until you’ve paid off the balance of your loan. The lender doesn’t gain access to any assets if you fail to pay off your loan on time, however, they can still pursue legal action if you’re not making repayments.
Secured business loans are secured by collateral, such as a home, a business property, or something else of significant value. If a borrower defaults on one of these loans, the lender can seize the collateral provided. While secured loans include more risk for the company borrowing the money, they can often come with better terms, and higher limits than their unsecured alternatives.
Similarly, unsecured loans don’t always have the best limits or terms, depending on your business standing or credit rating, but they don’t require you to offer any assets as collateral.
What Influences The Price of Business Loans?
When you take out a business loan, you enter into an agreement with a lender which legally binds you to pay back both the money you borrowed, and an additional fee, known as interest. The overall cost of your loan will depend on the interest rate given, as well as any additional fees tied into the loan product. For instance, you may have to pay extra to pay off a loan early.
There are numerous factors which can influence the price of a business loan, including:
- Macro-economic factors: The interest rates on business loans are often influenced by social and economic factors in the wider world. If interest rates are higher in the country where you’re accessing your loan, the amount you’ll pay back will increase too.
- Creditworthiness and trustworthiness: Business loan providers will often assess the standing of your business, your credit score, and the creditworthiness of your company before offering you a loan. If you have a good history of paying back money you’ve borrowed in the past, you may be able to access better terms.
- Loan types: As mentioned above, different types of loans often come with unique pros and cons to consider. A secured loan may offer you better terms (lower interest rates, and higher limits), in exchange for something your borrower can claim if you default on your loan.
- Financial standing: When applying for a business loan, you’ll often be asked to share information about your business, such as profit and loss statements, average revenue, and projected income. This will help lenders to determine how risky your business is.
- Type of business and industry: The industry you operate in and the type of business you run can also influence the terms you can access when borrowing money. Lenders generally prefer to work with businesses in industries that are poised to remain strong or expand in the future. If you’re a relatively new company in a volatile industry, your terms may not be as good.
How to Choose a Business Loan Using Our Calculator
As mentioned above, the business loan calculator we’ve created here will give you a behind the scenes insight into how much you’ll pay for a loan, both over the lifespan of your lending agreement, and on a monthly basis. Using this calculator, you can compare the terms, interest rates and other factors associated with different loans to find the most valuable option for your business.
Keep in mind, while many business loan providers will offer the information you need to leverage this loan calculator on their websites and product pages, some will require you to reach out for a personalized quote. You can still use this calculator to assess the overall cost of a personalized loan product before you sign a contract agreeing to the loan.
