Calculate your estimated monthly business loan payments.
Your Estimated Monthly Payment
Monthly Payment: –
Total Interest Paid: –
Total Repayment: –
Understanding Your Business Loan Calculation
Securing financing is a crucial step for many businesses, whether for expansion, operational needs, or to navigate challenging periods. A business loan calculator helps you estimate your repayment obligations, making financial planning more robust and transparent. This calculator uses a standard loan amortization formula to determine your monthly payments, the total interest you'll pay over the life of the loan, and the total amount you'll repay.
How the Calculation Works
The formula used to calculate the monthly payment (M) for a loan is derived from the annuity formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly loan payment.
P = The principal loan amount (the total amount of money borrowed).
i = Your monthly interest rate. This is calculated by dividing your Annual Interest Rate by 12 (months) and then by 100 to convert it to a decimal. For example, a 7.5% annual rate is 0.075 / 12 = 0.00625.
n = The total number of payments over the loan's lifetime. This is calculated by multiplying the Loan Term (in Years) by 12 (months). For a 5-year loan, n = 5 * 12 = 60.
Additional Metrics
Once the monthly payment is calculated, we can determine:
Total Interest Paid: This is the sum of all the interest paid over the loan term. It's calculated as (Monthly Payment * Total Number of Payments) - Principal Loan Amount.
Total Repayment: This is the sum of the principal loan amount and all the interest paid. It's calculated as Monthly Payment * Total Number of Payments.
Key Factors to Consider
Loan Amount: The larger the amount borrowed, the higher your monthly payments and total interest will be.
Interest Rate: This is one of the most significant factors. A higher interest rate means you pay more for borrowing the money, directly increasing your monthly payment and total cost.
Loan Term: A longer loan term will result in lower monthly payments but will significantly increase the total interest paid over time. Conversely, a shorter term means higher monthly payments but less total interest.
When to Use This Calculator
This calculator is invaluable for:
Evaluating Loan Offers: Compare different loan proposals from various lenders.
Budgeting: Understand the ongoing financial commitment of a loan.
Loan Application Preparation: Have a realistic idea of what repayment terms you can afford before applying.
Business Planning: Incorporate loan repayment costs into your financial projections.
Remember that this is an estimation tool. Actual loan payments may vary based on the lender's specific terms, fees, and the exact day your payments are processed.
function calculateLoan() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyPaymentSpan = document.getElementById("monthlyPayment");
var totalInterestSpan = document.getElementById("totalInterest");
var totalRepaymentSpan = document.getElementById("totalRepayment");
// Clear previous results
monthlyPaymentSpan.textContent = "-";
totalInterestSpan.textContent = "-";
totalRepaymentSpan.textContent = "-";
// Input validation
if (isNaN(loanAmount) || loanAmount <= 0 ||
isNaN(annualInterestRate) || annualInterestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
var monthlyInterestRate = (annualInterestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
// Calculate monthly payment using the loan amortization formula
var monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
// Calculate total interest and total repayment
var totalInterest = (monthlyPayment * numberOfPayments) – loanAmount;
var totalRepayment = monthlyPayment * numberOfPayments;
// Display results, formatted to two decimal places
monthlyPaymentSpan.textContent = "$" + monthlyPayment.toFixed(2);
totalInterestSpan.textContent = "$" + totalInterest.toFixed(2);
totalRepaymentSpan.textContent = "$" + totalRepayment.toFixed(2);
}