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Business Loan True Cost Calculator

APR doesn't tell the whole story. See the total interest, fees, and real cost of a business loan — and compare two offers side by side before you sign anything.

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Loan Details
Total amount borrowed
$
Annual percentage rate
%
Total repayment period
mo
Fees & Additional Costs
% of loan amount charged upfront
%
Fixed fees charged at closing
$
Recurring yearly maintenance fee
$
% of remaining balance if paid early
%
Monthly Payment
$0
per month
Total Interest Paid
$0
over loan term
True Total Cost
$0
principal + interest + fees
Total Fees
$0
all-in fee cost
Effective APR
0%
including all fees
Cost Per $1 Borrowed
$0
total cost / loan amount
Principal vs. Interest Over Time
🔍 Where Your Money Goes
Principal Repaid
$0
0% of total
Interest Cost
$0
0% of total
Fees
$0
0% of total
Loan B — Second Offer
$
%
mo
%
$
$
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Amortization Schedule
Period Payment Principal Interest Balance

📊 Break-Even Calculator

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Compare Business Loan Offers From Multiple Lenders

The best way to minimize your true loan cost is to compare multiple offers. These platforms let you check rates without affecting your credit score.

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Compare SBA loans, term loans, and lines of credit from multiple lenders in one place. Free to use — they earn from lenders, not you.
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Lendio
Marketplace connecting small businesses with 75+ lenders. Fill out one application and receive multiple offers to compare side by side.
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Why APR Understates the True Cost of a Business Loan

APR is a useful starting point — but it's an incomplete picture of what a business loan will actually cost you. Origination fees, closing costs, annual maintenance fees, and prepayment penalties all add to the total cost of borrowing in ways that APR alone doesn't fully capture. Two loans with identical APRs can have meaningfully different true costs depending on their fee structures and terms.

The Factor Rate Trap in Merchant Cash Advances

Merchant cash advances and some short-term business loans are priced using a factor rate rather than an APR — something like 1.25 or 1.40 rather than a percentage. A factor rate of 1.35 on a $100,000 advance means you repay $135,000 total. That sounds straightforward, but when converted to an equivalent APR over a typical repayment period of 6–12 months, factor rate products frequently carry effective APRs of 40–150%. Always convert factor rates to APR before comparing against traditional loan products.

Shorter Terms Mean Higher Payments but Less Total Interest

A common mistake is choosing a longer loan term to get a lower monthly payment without recognizing the total interest cost increase. A $150,000 loan at 8.5% over 5 years costs roughly $34,000 in interest. The same loan over 7 years costs around $48,000 — $14,000 more in interest for the privilege of a lower monthly payment. The amortization schedule in this calculator shows you exactly how this plays out month by month for your specific loan.

How to Actually Compare Two Loan Offers

The most reliable comparison metric is total cost of borrowing — the sum of all principal repaid, all interest paid, and all fees over the life of the loan. Two loans that look similar on APR can diverge significantly when fees are factored in. Use the loan comparison feature in this calculator to enter both offers and see the true total cost side by side before making a decision.

Frequently Asked Questions

It depends on the loan type and your creditworthiness. SBA loans typically carry rates of 6–11% and are considered the gold standard for small business borrowing. Conventional bank term loans run 6–13% for well-qualified borrowers. Online lenders typically charge 10–30%. Merchant cash advances and short-term loans can carry effective rates of 40–150% when converted to APR. As a rule of thumb, anything under 10% APR is competitive, 10–20% is moderate, and above 25% should be scrutinized carefully.
An origination fee is a one-time charge by the lender for processing the loan, typically expressed as a percentage of the loan amount (usually 0.5–3%). On a $150,000 loan with a 2% origination fee, you pay $3,000 upfront — but often it's deducted from the loan proceeds, meaning you receive $147,000 but repay $150,000. This effectively increases your APR beyond the stated rate, which is why this calculator adds fees into the true cost calculation.
It depends on whether the loan has a prepayment penalty and what your alternatives are for that capital. If there's no prepayment penalty and you have excess cash, early payoff saves you all remaining interest. If there's a prepayment penalty, calculate whether the interest savings outweigh the penalty cost. Also consider opportunity cost — if you can deploy that capital at a return higher than the loan's interest rate, it may be better to keep the loan and invest the cash. This calculator shows the prepayment penalty amount so you can make an informed decision.
A term loan gives you a lump sum upfront that you repay on a fixed schedule over a set period. A line of credit gives you access to a pool of funds you can draw from and repay repeatedly, only paying interest on what you've drawn. Term loans are better for one-time large purchases like equipment. Lines of credit are better for managing cash flow fluctuations or covering short-term gaps. Lines of credit typically carry higher interest rates than term loans but offer more flexibility.
SBA loans are conventional bank loans partially guaranteed by the Small Business Administration, which allows lenders to offer lower rates and longer terms than they could otherwise. SBA 7(a) loans — the most common type — offer up to $5 million with terms up to 25 years for real estate and 10 years for equipment or working capital. The tradeoff is a lengthy application process (typically 60–90 days), substantial documentation requirements, and SBA guarantee fees of 0.5–3.75% depending on loan size and term. For businesses that qualify, SBA loans usually offer the best combination of rate, term, and loan size available.

CalcWonk tools are built for business owners who want real numbers, not ballpark guesses. Always calculate total cost before signing a loan agreement.