Business Loan Calculator
Monthly payment, cash received after fees, total cost and true APR for amortising, interest-only or factor-rate business finance, plus debt service coverage ratio and the maximum loan your cash flow supports.
| Cash you receive after fees | — |
|---|---|
| Total interest / finance cost | — |
| Total cost of borrowing (interest + fees) | — |
| Total repaid | — |
| True APR (fees included) | — |
| Annual debt service | — |
| Debt service coverage ratio (DSCR) | — |
| Maximum loan your cash flow supports at 1.25× DSCR | — |
In short
Compare business loans on true APR (fees included) and check DSCR = annual cash flow ÷ annual debt payments, which lenders want at 1.25× or more. 150,000 at 9.5% over 7 years with a 3% fee costs 2,452 a month at an 11.4% APR; the same amount as a 9-month merchant cash advance at a 1.25 factor costs 37,500 — an APR above 70%.
Who this is for: Small-business owners comparing term loans, interest-only finance and merchant cash advances, and checking DSCR before applying.
Reading a business loan offer
| Product | Typical terms | Watch for |
|---|---|---|
| Bank / SBA-style term loan | 5–10 years (25 for property), 7–12%, 2–3.5% guarantee fee | Personal guarantee, collateral, DSCR ≥ 1.25 |
| Online term loan | 1–5 years, 10–30%, 1–5% origination | Weekly payments, prepayment terms |
| Equipment finance | Matches asset life, 6–15% | Balloon, residual ownership |
| Merchant cash advance | Factor 1.1–1.5 over 3–18 months | APR often 40–150%; daily remittances |
| Line of credit | Revolving, interest-only on drawn amount | Annual fee, rate resets |
- DSCR is the number lenders decide on: operating cash flow divided by all annual debt payments. 1.25× means 25% headroom; below 1.0 the business cannot service the debt from operations.
- True APR folds fees and the payment schedule into one comparable rate; a factor rate has no interest rate at all, so APR is the only way to compare it with a loan.
- The maximum-loan line works backwards from your cash flow at 1.25× — a quick way to know what size of loan is realistic before applying.
See also: Loan APR Calculator — True Cost with Fees, Break-Even Calculator.
Assumptions
- Amortising: level payment; interest-only: balance × rate ÷ 12 with the principal repaid in the final month; factor: total = amount × factor spread evenly over the term.
- True APR = effective annual IRR of the payment stream against cash received after fees.
- DSCR = cash flow ÷ (annual loan payments + other debt); maximum loan = present value of the payment that gives 1.25× DSCR.
Worked example
Payment 2,452 a month; you receive 144,000 after 6,000 of fees; total interest about 55,900, total cost 61,900; true APR about 11.4%. Annual debt service 29,400 + 8,000 other = 37,400 → DSCR 1.60×, comfortably above 1.25. At 1.25× the cash flow would support a loan of up to about 204,000. The same 150,000 as a 9-month advance at a 1.25 factor would cost 37,500 — an APR above 70% before any fees.
Frequently asked questions
What is a good DSCR for a business loan?
1.25× is the usual minimum for banks and government-backed loans; 1.5× or more gets better terms. Below 1.15 most lenders decline.
How do I convert a factor rate to APR?
Enter the advance, the factor and the months; the calculator computes the internal rate of return of the repayment schedule — typically several times the naive (factor − 1) figure.
Are business loan fees tax-deductible?
Interest and most fees are deductible business expenses in most countries; check local rules for guarantee fees spread over the term.
Does this work for Islamic / murabaha business finance?
Yes for the arithmetic — enter the profit rate as the rate; the schedule and total cost are the same, and DSCR applies equally.
How much business loan can I afford?
Divide your annual cash flow available for debt by 1.25, subtract existing debt payments, and the calculator converts that monthly amount into a loan size for your rate and term.
Is a merchant cash advance a loan?
Legally often not, which is why it carries a factor rate rather than an APR; converted to APR, most MCAs cost 40–150% a year.
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