How To Calculate Business Loan Payments

Taking out a loan is a big financial move for any business. Make sure the ROI is worth it by learning how to calculate business loan payments.

WRITTEN & RESEARCHED BY
Erica Seppala
Editor & Senior Staff Writer

Dec 16, 2025

UPDATED

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Key Takeaways

To estimate your monthly loan payments, gather key details like the interest rate, fees, loan amount, and repayment period.
Use the APR of the loan to get a more accurate estimate of the overall cost of borrowing.
Beyond the basic loan payments, consider additional lender fees, hidden costs, and prepayment penalties.

A business loan can provide quick access to capital, but borrowing costs can add up over time. Knowing how to calculate your business loan payments helps you decide whether the return on investment is worth the expense.

Find out how to calculate your monthly business loan payment so you know what to expect before accepting funding.

Table of Contents

What To Consider Before Getting A Business Loan
What You Need To Calculate Your Business Loan Payment
How To Calculate A Monthly Business Loan Payment
How To Use Effective APR To Calculate Your Business Loan Payments
The Bottom Line On Calculating Business Loan Payments

What To Consider Before Getting A Business Loan

Before applying for a business loan, make sure your finances can support additional debt. Start by asking:

What problem will this loan solve?
Are there other ways to solve it without borrowing?
Can expenses be reduced instead of taking on new financing?

You should also consider your short- and long-term business goals. Review your business plan and decide whether taking on debt supports your overall strategy.

What You Need To Calculate Your Business Loan Payment

If a business loan still makes sense for your finances, the next step is calculating your monthly payment to see whether the loan supports your growth goals.

To do that, you’ll need:

The loan’s interest rate
Any lender fees
The amount you plan to borrow
The repayment term

These details vary by lender and loan type, so confirm the numbers before calculating your payment.

How To Calculate A Monthly Business Loan Payment

Follow these steps to estimate your monthly business loan payment.

Step 1: Research Small Business Lenders

Before calculating payments, identify lenders and loan options that fit your business. When researching lenders, look at:

Loan types offered
Maximum borrowing amounts
Estimated interest rates or APR ranges
Borrower requirements, such as credit score and revenue

Once you’ve narrowed your options, gather the details you’ll need to calculate payments, including interest rates, repayment terms, and lender fees. You can usually find this information on lender websites or by contacting the lender directly. You can start with our list of the best loans for small businesses.

Keep in mind that rates, terms, and fees vary based on your credit profile and the lender’s underwriting criteria. Any payment estimate you calculate now is preliminary — final terms won’t be confirmed until you apply.

Step 2: Calculate The APR Of Your Business Loan

APR represents the annual cost of a loan, including interest and certain fees. It’s useful for comparing loan offers and estimating overall cost.

To estimate APR, you’ll need:

The loan amount
The interest rate
Any upfront or ongoing lender fees

APR formulas can be complex, and lenders may calculate them differently depending on the loan type. Many lenders provide estimated APR ranges. You can also simplify the process with our calculators for traditional term loans, short-term loans, and merchant cash advances.

While APR is helpful for comparisons, it’s not always ideal for calculating exact monthly payments, especially for loans with variable rates or fixed fees.

Step 3: Add In Additional Lender Fees

Some fees affect your loan payment directly, while others are charged separately.

Origination, underwriting, or closing fees are often deducted from your loan proceeds or charged up front.
Maintenance or servicing fees may be charged monthly or periodically throughout the loan term.

Even if fees are included in APR, confirm when and how they’re charged so you understand your true monthly cost. Your lender can provide a breakdown of how these fees are applied.

How To Use Effective APR To Calculate Your Business Loan Payments

Using APR to calculate monthly payments works best for traditional, long-term loans. It’s not reliable for:

Variable-rate loans
Loans with complex or hidden fees
Loans that are prepaid or refinanced
Merchant cash advances
Short-term loans

For short-term loans and merchant cash advances, lenders often use effective APR — an estimated rate that reflects the total cost of borrowing over time. While you can calculate this manually, using a calculator is typically faster and more accurate for comparing options.

Keep in mind that these types of financing usually carry much higher effective APRs than traditional long-term loans.

The Bottom Line On Calculating Business Loan Payments

There’s no perfect way to estimate monthly business loan payments, but a well-informed estimate is usually enough to make a smart borrowing decision.

Ask potential lenders to clearly disclose the interest rate, APR, repayment term, and any fees not included in the loan amount. With that information, you can reasonably estimate your monthly payment and total borrowing cost.

Be sure to factor in additional fees and any prepayment penalties, and confirm that your business can comfortably handle the monthly payment before applying.

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Erica Seppala

Editor & Senior Staff Writer at Merchant Maverick

Erica has been writing about small business finance and technology since 2008. She joined Merchant Maverick in 2018 and specializes in researching and reviewing business software, financial products, and other topics to help small businesses manage and grow their operations. Her expertise has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll, a graduate of Limestone University, and currently resides in Greenville, South Carolina.

View Erica Seppala's professional experience on LinkedIn.