SBA Loan Calculator
Calculate your estimated monthly payments and total interest for an SBA loan.
Loan Details
Estimated Monthly Payment
$0.00 Total Interest: $0.00Understanding SBA Loans and Your Payments
Small Business Administration (SBA) loans are a popular choice for businesses seeking capital. These loans are partially guaranteed by the SBA, which reduces risk for lenders and often allows for more favorable terms than conventional loans, such as longer repayment periods and lower down payments. Common SBA loan programs include the 7(a) loan program, the 504 loan program, and microloans.
How SBA Loan Payments are Calculated
The calculation for an SBA loan payment is similar to a standard amortizing loan, typically using the fixed-payment, amortizing loan formula. The formula helps determine the consistent monthly payment needed to pay off the loan, including both principal and interest, over its entire term.
The standard formula for calculating the monthly payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
- P = Principal loan amount
- i = Monthly interest rate (Annual rate / 12)
- n = Total number of payments (Loan term in years * 12)
Key SBA Loan Terms to Consider:
- Loan Amount (P): This is the total sum of money you borrow from the lender.
- Annual Interest Rate: The yearly percentage charged by the lender. For SBA loans, this can be fixed or variable, depending on the loan program and lender. Our calculator uses an annual rate to derive the monthly rate.
- Loan Term (in Years): The total duration over which the loan is to be repaid. SBA loans often have longer terms (e.g., 5, 10, 20, or even 25 years) compared to conventional business loans, which can lead to lower monthly payments.
Using This Calculator:
Enter the total Loan Amount, the Annual Interest Rate (as a percentage), and the Loan Term in years. The calculator will then estimate your monthly principal and interest payment and the total interest paid over the life of the loan.
Example:
Let's say you're applying for an SBA 7(a) loan of $300,000 with an annual interest rate of 7.5% over a term of 10 years.
- P = $300,000
- Annual Rate = 7.5%
- Monthly Rate (i) = 7.5% / 12 = 0.075 / 12 = 0.00625
- Loan Term = 10 years
- Total Payments (n) = 10 years * 12 months/year = 120
Using the formula, the estimated monthly payment would be approximately $3,692.42. Over 10 years, the total interest paid would be around $143,090.40.
Note: This calculator provides an estimate. Actual loan terms, fees (like SBA guarantee fees, origination fees), and potential adjustments to interest rates may affect your final payment. It's crucial to consult with your lender for precise figures.