How to Size a Business Loan You Can Repay
Borrowing for growth only works if the repayment fits the business month after month. The monthly figure, not just the loan size, is the real test.
What is the Business Loan Calculator?
Business term loans are usually repaid in equal monthly instalments over a fixed term. This calculator uses the standard amortising formula on your loan amount, annual rate and term in years, so you can see the monthly commitment, the total repaid and the interest cost before approaching a lender.
How to use it
- Enter the business loan amount.
- Enter the annual interest rate and the term in years.
- Press Calculate to see the monthly payment and total cost.
Worked example
Loan 50000, rate 9%, term 5 years: monthly payment about 1037.92, total payment about 62275.07, total interest about 12275.07.
How do I know if a business loan payment is affordable?
Compare the monthly payment with the cash your business reliably generates after its regular costs, not with its best month. If the payment leaves a comfortable buffer in an average month, the loan is more likely to be sustainable. If it only fits in a great month, a shorter loan or a smaller amount is safer.
Frequently asked questions
Should the monthly payment fit my cash flow?
Yes. A payment that strains monthly cash flow is risky even if the total cost looks fine, so compare the payment with your regular monthly surplus.
Does this include lender fees?
No. It covers principal and interest only. Arrangement fees, guarantees or other charges would be extra.