Small Business Term Loan Calculator

Term loans, also sometimes called installment loans, are a very common type of financing used by businesses for growth or working capital purposes. Borrowers should carefully consider a term loan offer before accepting. That’s where this calculator comes in.

Use this calculator to estimate loan metrics, including the APR, the cents on the dollar cost (how much you pay in fees per dollar borrowed), and the repayment amount per payment period.

What Is A Business Term Loan?

A term loan is the most common type of business loan; merchants borrow a sum of money and repay via fixed, periodic payments over a predetermined amount of time.

Term loans go by many different names, depending on their ultimate purposes and certain characteristics. The following types of financing are (usually) in the form of term loans:

  • Installment loan
  • Medium-term loan
  • Long-term loan
  • Microloan
  • Real estate loan
  • Franchise loan
  • Equipment loan
  • SBA loan
  • Business acquisition loan

Unsure whether you have a term loan on your hands? Here’s an easy way to tell:

If your loan has an interest rate, chances are it’s a term loan.

For comparison’s sake, financial products such as short-term loans and merchant cash advances use factor rates rather than interest rates. Factor rates necessitate different calculations (head over to our article on Short-Term Loans or our Merchant Cash Advance Calculator for more information on those products).

Term loans have a few other defining characteristics:

  • Term length: The term length—the amount of time between when you borrow funds and must repay them in full—can vary by quite a bit. That said, most installment loans will have term lengths over one year, and might be as long as 25 years. This distinguishes them from other types of loans, which usually range in length from between three to 18 months.
  • Repayments: Repayments are fixed, which means you pay the same amount each payment period. Term loans are most commonly repaid on a monthly basis, but some are repaid bi-monthly (twice a month) or weekly.

Head over to our Guide to Term Loans for more information on this financial product.

How To Use The Business Term Loan Calculator

This calculator is designed to estimate loan metrics so you can understand potential offers and compare loans on an even playing field.

Between interest rates, fees, term lengths, and other values, loan offers can be difficult to understand and compare. Any reputable lender will give you most, if not all, of this information before you accept an offer, but you can use this calculator if for some reason you don’t have access to that information. Keep in mind, however, that the numbers produced by this calculator are estimates; any numbers you get from your lender will be more accurate to your specific situation.

Lost? Here is a quick glossary of the terms and concepts you’re likely to encounter when using Merchant Maverick’s Business Term Loan Calculator:

Calculator Input

  • Loan amount: The amount of money you are borrowing, including the origination fee (a fee deducted by the lender before they send the money to you). This value is expressed as a dollar amount.
  • Interest rate: The interest rate assigned to the loan. This value is expressed as a percentage.
  • Repayment frequency: How frequent you have to make repayments. Payment frequency can be monthly, bi-monthly (twice per month), or weekly.
  • Origination fee: A fee deducted from the borrowing amount by the lender before the loan is disbursed to you. This number is expressed as a percentage.
  • Number of payments: The number of payments you have to make, total. The amount of payments you make will depend on the payment frequency and the term length. Depending on the payment frequency, here are the number of payments you would have to make in one year:
    • Monthly: 12 payments per year
    • Bi-monthly: 24 payments per year
    • Weekly: 52 payments per year
  • Periodic maintenance fee: An additional fee charged for maintaining your account. This is not a standard fee, but we’ve included it just in case. This number is expressed as a dollar value.

Calculator Output

  • Total repayment: The total amount you’ll have to repay, including the loan amount, the origination fee, the interest charges, and any maintenance fees.
  • Financing cost: The total amount you have to pay in fees for borrowing. This number is comprised of interest charges, origination fee, and maintenance fees, but does not include the loan amount.
  • Payment per period: The amount you will have to pay each payment period.
  • APR: Short for annual percentage rate, this number expresses the rate of borrowing over the course of a year, inclusive of the interest rate, origination fee, and maintenance fee.
  • Cents on the dollar: The amount paid in fees for each dollar borrowed.

Evaluating & Comparing Loan Offers

This calculator provides all the information you need to easily understand and compare loan offers. From this calculator, you will find out the payment per period, the total repayment, the total financing cost, the cents on the dollar, and the estimated APR.

Using this information, you can understand your periodic payments plus the true rate and total cost of borrowing.

Periodic Payments

The payment per period will tell you how much you have to pay each payment period, whether you have to pay on a weekly, bi-weekly, or monthly basis. With this number, you will be able to tell whether your business can sustain repayments.

True Rate Of Borrowing

All borrowers know that the lower interest rate, the better. But you might not know that your true borrowing rate can be higher than the interest rate leads you to believe; lenders can drive up the cost of the loan by including fees, such as origination or maintenance fees.

The APR, short for annual percentage rate, is used to show the true rate of borrowing, including the interest rate as well as extra fees that are charged during the lending process. This number can tell you what you’re really paying for your loan on an annual basis.

The APR is especially useful for comparing loan offers. If you have multiple loans with similar interest rates, the APR will show you which one actually has a higher rate of borrowing.

Head over to our Beginner’s Guide to APR for a more thorough explanation on the annual percentage rate.

Total Cost Of Borrowing

The total repayment, financing cost, and cents on the dollar are used to understand the total cost of borrowing. Even if you think you understand the periodic payments and the true rate of borrowing, lenders can hide exactly how much you are paying for the money by failing to disclose the total cost of borrowing. You might be paying more than you think.

The total repayment tells you how much you’ll repay, including the original borrowing amount and all interest charges and fees. The financing cost takes a step back and simply tells you how much you’re paying in interest charges and fees for borrowing.

The most useful metric, especially for comparing offers, is the cents on the dollar cost. Like the financing cost, this number tells you how much you’re paying in interest charges and fees, but it also tells you how much you’re paying in fees per dollar borrowed. This number can be useful for comparing loans with different borrowing amounts and fees, or for simply understanding the total cost of borrowing.

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