Small Business Loan Calculator
Before taking out a loan to start or grow a business, it is important to have the necessary information required to make decisions that could help or hinder your financial success. Know how much you need, the monthly payments and duration required.
Not sure what a suitable interest rate for your business would be?
The Akaunting business loan calculator will help you get a better picture of the cost required to start up your own business enterprise. Adjust the terms and add extra repayments to see how much of an impact this could have on your estimate payback amount.
Loan details
You can see how much your loan will cost-
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Monthly Payment
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Average Monthly Interest
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Total Interest
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Number of Months
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Total Borrowing Cost
Frequently asked questions
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The company needs to record the amount owed to its Chart of Accounts. The loan is recorded by increasing its cash and increasing a liability account such as Notes Payable or Loans Payable. If the loan term exceeds the financial year, the account's type needs to be Non-Current Liability. The loan amount is recorded as the principal and the total interest to be paid.
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The principal is the initial amount that is borrowed from the lender. When you make monthly payments for the loan, the amount of your payment goes to cover the interest charges first; then the rest is applied to your principal.
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Extra payments are the amount that is added to the monthly payment. Choosing to pay down additional amounts is an excellent way to reduce the amount of interest that accrues each month. So, you may be able to reduce the number of months and the total borrowing cost.
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Interest rates vary depending on lending institutions and country. To find low-interest business loans, it's important to do a good research. However, the following factors can affect the rates you get:
- Credit worthiness: this includes your credit score, income, savings, and other financial metrics.
- Collateral: Items that reduces the lender's risks such as inventory or property.
- The lender: Interest rates could vary based on the lender. Banks typically have low rates but with tough qualifications. while online lenders have more accommodating requirements but cost more:
- Loan Size: This considers the amount of money you are asking for. In most cases, if you are asking for an amount below are certain limit, the interest rates may slightly be higher.
- The loan type: There are different types of small business loans and rates vary by product. Usually, the best best deals are those backed by the government. In some situations, an adjustable rate provides a lower interest rate than with a fixed rate. However, you run the risk of the rate increasing significantly later on.
- Available documentation: Having certain documents (bank statements, taxes, retirement accounts, etc.) as your assets, could help ease the risk factors for a lender and help lower the rate.
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The terms (amount of time you have to repay a loan and the accumulated interest) of a loan usually depend on the lender. You have to decide on short-term or long-term loans, comparing the costs and terms of each loan carefully. Although products and terms vary by lender, on average, loans often require repayment in 1-3 years for short-term and 3-25 years for long-term loans. The loan repayment schedule will depend on several factors, including loan type, the reason for the loan, your qualifications, and the lender's policies.
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Small business loan cost depends on several factors, including the amount, interest rate, repayment schedule, type of loan product, and the lender. A small business loan amount from an online lender can range from as low as $2,500 to as high as $500,000. Interest rates can vary as well—from as low as 7% to as high as 80%. Therefore, the financing you qualify for and the amount it ultimately costs depends on what kind of business loan you're applying for and how qualified your business is.