The formula
Business term loans amortize: every payment covers that month's interest plus some principal, so the balance — and the interest portion — falls every month. The payment is the standard annuity formula:
payment = principal × r ÷ (1 − (1 + r)−months)
APR incl. fees: the rate that equates the payments to (principal − fees)
Worked example
A $100,000 loan at 10.5% for 10 years (a typical SBA 7(a) shape) with $2,500 in packaging and guaranty fees: the monthly payment is $1,349.35, total interest over the term is $61,922.00, and the total cost including fees is $64,422.00. Because the $2,500 came off the funds you actually received, the effective APR is 11.11% — about half a point above the sticker rate. On shorter loans the same fee distorts far more: fees hurt most when the term is short.
Typical shapes by loan type
The presets seed the calculator with typical published ranges (they are indicative, not offers — source: SBA funding programs and lender-published ranges, last reviewed 2026-08-22):
| Type | Typical rate | Typical term | Notes |
|---|---|---|---|
| SBA 7(a) loan | ~10.5% | 120 months | Government-guaranteed; rates capped at base + spread; slower to close |
| Bank term loan | ~9.0% | 60 months | Best rates; strongest underwriting requirements |
| Online term loan | ~20.0% | 36 months | Fast funding; rates well above bank loans |
| Equipment loan | ~12.0% | 60 months | Secured by the equipment itself |
| Line of credit (drawn) | ~15.0% | 24 months | Pay interest only on what you draw |
Reading a loan offer: three numbers that matter
The payment tells you whether cash flow survives the loan. Total interest tells you what the money costs in absolute terms. The fee-adjusted APR is the only number that lets you compare offers with different rates, fees and terms on equal footing — and it's the number to put beside a merchant cash advance's converted APR when a fast-cash offer is on the table. A "9.9% loan" with 4 points of fees over 24 months is really a ~14% APR loan.
Frequently asked questions
Why is my quoted rate different from the APR here?
The quoted (note) rate prices the interest only. APR also spreads the upfront fees over the term against the money you actually received. If you enter zero fees, the APR equals the note rate.
Does this handle interest-only or balloon loans?
No — it models fully amortizing loans, which covers most term loans, SBA 7(a) and equipment finance. Lines of credit are approximated by treating the drawn balance as a term loan for your expected payoff period.
Are SBA loan rates fixed?
SBA 7(a) rates are negotiated with the lender under an SBA cap (a base rate plus a size-dependent spread) and are commonly variable. Enter the current all-in rate you've been quoted.
Which fees should I include?
Anything deducted at closing or paid to get the loan: origination or packaging fees, the SBA guaranty fee if passed through, broker fees and documentation fees. Ongoing account fees aren't modeled.
Can I pay off a business loan early?
Usually yes, but check for a prepayment penalty. With an amortizing loan, paying early saves the interest you haven't been charged yet. Upfront fees are not refunded, so paying off early increases the effective APR on the money you borrowed.
How much is the origination fee on a $10,000 business loan?
Origination fees commonly run from about 1% to 5% of the loan, so $100 to $500 on $10,000. The fee is usually taken out of the proceeds, so you receive less than $10,000 but repay the full amount, which is why the APR here is higher than the note rate.
What is the difference between a secured and an unsecured business loan?
A secured loan is backed by collateral such as equipment, property or receivables, which the lender can claim if you default, so it usually carries a lower rate. An unsecured loan has no specific collateral, costs more, and often requires a personal guarantee.