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Our free business calculator tool helps you estimate both your monthly payment and the total cost of your loan. Once you enter your loan details, you'll get an estimate in seconds.
Our calculator covers principal, interest, and total cost. It doesn't account for origination fees, prepayment penalties, late fees, or closing costs, which can all change your cost of borrowing.
A lot of business owners ask me what a business loan will really cost per month, so they can plan their finances. Below, I cover how the calculator produces these estimates, what affects your rate and your monthly payment, and the extra costs the calculator may miss.
How Business Loan Payments Work
Most business loans use an amortization schedule. This means that each monthly payment you make covers two things. First, it pays off some of the interest due on your current loan balance. Second, a large portion of your monthly payment goes toward the remaining principal balance on your loan. As your loan balance drops, the lender charges less interest each month. By the final payment, nearly every dollar of your payment goes toward reducing the principal.
Because of this process, most business owners notice that their early payments do little to reduce the principal. Below is a look at how a $100,000 loan at 8% APR over five years plays out. The first three months and the last three months show how the split changes over the life of the loan.
| Month | Payment | Interest | Principal | Remaining balance |
|---|---|---|---|---|
| 1 | $2,028 | $667 | $1,361 | $98,639 |
| 2 | $2,028 | $658 | $1,370 | $97,269 |
| 3 | $2,028 | $648 | $1,379 | $95,890 |
| ... | ... | ... | ... | ... |
| 58 | $2,028 | $40 | $1,988 | $4,011 |
| 59 | $2,028 | $27 | $2,001 | $2,010 |
| 60 | $2,028 | $13 | $2,014 | $0 |
You can see that about one-third of your first monthly payment goes to interest. As you move further into the life of your loan (closer to month 60), the ratio reverses itself. The majority of your monthly payment then goes directly to principal.
Two businesses can borrow similar amounts from a lender yet pay very different total amounts because of different terms. For instance, if two businesses each borrow $100,000 at 8% APR but one chooses 60 months, and the other 180 months, they could save thousands of dollars in interest with the shorter term. If one company borrows from a bank and another from an online lender, their rates may differ significantly even when each borrows the same amount.
What Impacts Your Lending Rate and Monthly Payment
When weighing your eligibility for a small business loan, lenders look at several key criteria.
Credit score
The higher your credit score, the lower the rate you'll qualify for. Most banks look for scores of 700 to 750 for certain commercial loans, while Clarify has worked with borrowers as low as 550.
Time in business
Established companies tend to get lower rates than newer ones. We require at least six months of operation before we can connect you with potential lenders.
Annual revenue
Larger companies generally pose less risk to lenders than smaller ones. Borrowers with stronger annual revenue typically qualify for lower rates. At Clarify, $10,000 or more in monthly revenue qualifies you for many options.
Loan type
Lines of credit and SBA loans often charge different fees than traditional term loans. Matching the loan type to your needs can help cut your costs.
Collateral
If a lender requires collateral, qualified borrowers may get lower rates in exchange. Clarify offers only revenue-based, no-collateral financing.
Lender type
Banks tend to offer lower rates and fees than private online lenders. The trade-off is that banks usually impose stricter qualifications for approval.
I see this trend regularly with my own clients. For instance, a client with a credit score of 720, three years in business, and $50,000 per month in revenue gets a quote that lands at or near the lowest end of the published rate scale. Conversely, a client with a credit score of 580 and only seven months in business may get a quote that lands at or near the upper end. Despite the very different rates quoted, both clients will likely still qualify for a loan. But the financial outcome will look very different for each.
Loan Structures and Why Monthly Payments Differ
The tool at the beginning of this page calculates a standard term loan. A standard term loan has a fixed amount borrowed, a fixed interest rate, and fixed monthly payments over a set number of years. Standard term loans cover a large portion of business financing, but not all of it.
Here's how the most common business loans compare.
| Loan type | Rate | Term | Payment | Time to fund |
|---|---|---|---|---|
| Term loan | 6% to 12% APR | 6 months to 10 years | Fixed weekly or monthly | 24 to 72 hours |
| Business line of credit | 6% to 14% APR | Revolving, 6 to 36 months | Weekly or monthly, interest only on the amount drawn | 24 to 48 hours |
| SBA loan | Starting at 6.75% APR | 10 to 25 years | Fixed monthly, longest terms in the market | 30 to 60 days |
| Equipment financing | 6% to 45% APR | 12 to 72 months | Fixed monthly, secured by the equipment | 24 to 48 hours |
| Merchant cash advance (MCA) | Factor rate 1.08 to 1.45 (e.g., 1.3 on $50,000 = $65,000 total repaid) | No fixed term | Daily, weekly, or % of card sales | 24 hours |
Standard term loans are exactly what the calculator at the top of this page accurately models. You borrow a certain amount, make regular monthly payments until you've repaid the full amount, and the math is fairly easy. You can also calculate amounts for other loans (like SBA loans or equipment loans).
How Interest Rates and Factor Rates Differ
A lot of people think interest rates and factor rates are the same thing. They're not. Understanding the differences can save you real money.
An interest rate represents the cost to borrow the principal, expressed as a percentage. If you borrow $100,000 at a 10% annual interest rate, you'll pay $10,000 in interest in the first year.
Annual percentage rate (APR) includes both the interest rate to borrow the principal and any fees from taking out the loan. APR is also a percentage. Looking at APR instead of just an interest rate gives you a clearer view of the total cost of borrowing.
For example, two loans with the same interest rate can have very different APRs once you include origination fees, closing costs, and other charges. Whether you're comparing several offers or just reviewing one funding option, always compare loans by APR, not interest rate alone.
Factor rate applies to merchant cash advances and some short-term loans. Factor rate uses a decimal rather than a percentage. A factor rate of 1.3 means you'll repay 1.3 times the original principal. Unlike traditional loans where you repay both interest and principal monthly, a factor rate has no concept of paying down principal. The total is set the moment you sign.
| Term | What it measures | Example |
|---|---|---|
| Interest rate | Cost of principal only | 10% on $100,000 = $10,000 over one year |
| APR | Interest plus fees | 10% interest plus $2,000 in fees ≈ 12% APR |
| Factor rate | Total fixed payback | 1.3 on $100,000 = $130,000 total |
Always ask for the APR when comparing loan offers. A loan can be marketed as "8% interest" and have $5,000 in fees, but its effective APR could be around 11%. The interest rate alone hides that.
To get the true cost of a loan, add any origination fee and expected closing costs to whatever the calculator reports. Then compare that total to the reported APR. If the reported APR didn't include origination fees and closing costs, you weren't getting an accurate picture of what the loan really costs.
How To Lower Your Monthly Payment
If you find the number from the calculator too high for your business to handle, you have several ways to bring it down. None of these options are free, but each one can make the math work.
Extend the loan term
A longer loan term equates to a smaller monthly payment. For example, stretching a $100,000 loan from three years to seven years could cut your monthly payment in half. The trade-off is you'd pay significantly more in interest over the life of the loan.
Improve your credit before applying
Even a 30-point increase can put you in a lower rate tier. If you have time, work to lower your outstanding credit card balances, dispute any errors on your credit report, and avoid taking on new credit for a few months.
Offer collateral if you have it
Secured loans nearly always come with lower rates than unsecured ones. Both equipment financing and SBA loans use collateralized structures that can help you qualify for lower rates. Clarify offers revenue-based, no-collateral financing only, so this option applies if you're shopping outside our network.
Shop multiple lenders
Rates vary from lender to lender, so the only way to know what your business will actually pay is to compare offers. Clarify Capital can save you the legwork; we work with a network of more than 75 lenders and pull quotes on your behalf, so you see multiple offers from a single application instead of filling out paperwork at multiple banks.
Consider an SBA loan
SBA loans carry some of the lowest rates available, and the longer terms reduce monthly payments. Approval typically takes 30 to 60 days, so this isn't the right option for borrowers who need funding quickly.
Refinance later
If you take a loan now because of credit or revenue concerns with your business, you can likely refinance once your business profile strengthens. Many of my clients start with a higher-rate loan and refinance into better terms within 12 to 18 months.
Minimum Qualifications
$10,000 in monthly revenue
Your business must earn at least $10K per month in a business bank account.
500+ credit score
You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.
Minimum six months in business
Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.
Have a business bank account
Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.
Compare Real Offers
Numbers on a calculator are useful, but they're not the same as a real offer. If you want to see what's actually possible based on your business profile, apply today. We work with over 75 lenders, and we'll match you with options that fit. Most applications take about two minutes, and qualified borrowers can see funding as fast as same-day.
Frequently Asked Questions About Business Loans
Here are some of the most common questions that I hear from clients about paying back business loans.
What Annual Revenue Do You Need To Qualify for a $500,000 Business Loan?
Most lenders want to see annual revenue at least equal to the requested loan amount, which makes $500,000 a year the most common revenue threshold for this loan size. Stronger lenders look for revenue at one and a half to two times the desired loan amount. They also evaluate debt service coverage, which measures how well your business's net earnings can cover the loan payment. A commonly cited metric is the debt service coverage ratio (DSCR). A DSCR of 1.25 is a frequent goal for borrowers, meaning your business has enough net income to repay the loan while keeping a 25% cushion.
Do You Have To Put 20% Down for a Business Loan?
No. Conventional bank loans and SBA loans generally require down payments ranging from 10% to 20%. However, online lenders and revenue-based financing typically don't. Clarify offers no-down-payment options through our lender network. The trade-off is that lenders requesting a down payment typically offer lower rates in exchange.
What Is the Monthly Payment on a $1,000,000 Business Loan?
It depends on the loan's APR and term. Over a 10-year term at 8% APR, your monthly payment would be about $12,133. At 10% APR over a 10-year term, your monthly payment would be about $13,215. At 8% APR over five years, it jumps to about $20,275. Use the calculator at the top of this page to model your specific scenario. Your Clarify advisor can show you specific payment scenarios based on your qualifications.
How Hard Is It To Get a $1,000,000 Business Loan?
It's possible, but it comes down to having strong finances. For a $1,000,000 business loan, lenders would typically look for:
Annual revenue of at least $1,000,000
Two or more years of operating history
Credit score of 680 or higher
Clean financial statements
SBA 7(a) loans are a common path for businesses seeking larger loan amounts (up to $5 million). Online lenders also fund up to $5 million for qualified applicants, though rates and terms can vary widely.
What Is the Difference Between Fixed and Variable Rate Business Loans?
A fixed rate stays the same throughout the duration of the loan. That lets you budget accurately for future expenses since your monthly payment never changes. A variable rate changes based on the same benchmark that influences bank interest rates (the prime rate). Variable rates typically start lower than fixed rates, but they can move upward over time, which makes your monthly payments unpredictable. Term loans are typically fixed, while lines of credit are usually variable.
How Do You Calculate the Total Cost of a Business Loan?
Use the calculator at the top of this page. Your total cost is your monthly payment multiplied by the total number of payments, plus any origination fees and closing costs. A $100,000 loan with a $2,028 monthly payment over 60 months adds up to $121,680 in total payments. Add a 3% origination fee ($3,000), and your actual total cost becomes $124,680.
Is My Information Secure When I Apply With Clarify?
Yes. Clarify follows SOC 2 security principles to protect your data from the moment you apply through the end of the loan process. All communications are encrypted, and access to your personal and financial information is limited to the staff working directly on your application. Checking your options will not affect your credit score.
Michael Baynes
Co-founder, Clarify
Michael has over 15 years of experience in the business finance industry working directly with entrepreneurs. He co-founded Clarify Capital with the mission to cut through the noise in the finance industry by providing fast funding and clear answers. He holds dual degrees in Accounting and Finance from the Kelley School of Business at Indiana University. More about the Clarify team →
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