Business Loans Calculator

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YEARREMAINING BALANCEMONTHLY REPAYMENTINTEREST PAIDENDING BALANCE
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How to use the Business Loan Calculator

To use the business loan calculator, you’ll need to enter some details about your loan. These are explained below:

  • Loan Amount — The amount of money you will be borrowing from a lender under a business loan agreement.
  • Interest Rate — This is fixed interest rate the lender will apply to your business loan. A fixed interest rate will allow you to accurately assess your estimated repayments.
  • Establishment Fees — Establishment fees are the upfront fees charged by the lender when creating the business loan agreement.
  • Loan Term — The length of your business loan as dictated by your business loan agreement. The loan term is important as it will be used in repayment calculations to determine the amount of interest you will pay over time.

Once you have filled in your business loan details, simply click ‘See My Repayments’ to view an estimated repayment amount. You can then select Monthly, Fortnightly, or Weekly repayments to see what your repayment amount will be at various frequencies.

Business Loan Repayment Formula

The business loan calculator uses amortisation calculation to determine your repayment amounts. Amortisation provides a more accurate representation of repayments as it is used to assess the amount of interest you will pay over a set period.

A business loan is generally offered for a fixed rate over a fixed term. A fixed rate is an interest rate that remains constant for the term of your loan, as opposed to a variable interest rate, which may change due to various economic influences.

Your business loan repayments will need to cover both the interest and principal amount of your loan. When you first make repayments on your business loan, a larger portion of the repayment amount will be used to cover the interest over the principal. This is because your repayments will be based on the total amount of money still loaned to you by the lender.

When expressed a mathematical formula, the repayment calculation can seem somewhat complex. However, once you understand how interest is calculated on a loan amount over time, you may even be able to perform the calculations yourself.

The simple formula for calculating Loan Repayments is: Loan Amount / Discount Factor

Where many people struggle with these calculations is in finding the discount factor, which is calculated by dividing the interest rate of your loan by the number of payments per year (12 for monthly, 26 for fortnightly, or 52 for weekly) to first obtain the Periodic Interest Rate.

The formula is expressed as: (((1 + i) ^n) - 1) / (i (1 + i)^n)

  • n = the number of repayments
  • i = the annual interest rate

To show how this complex formula can be easily understood, we’ve presented a simple example below.

Example of Monthly Business Loan Repayments

Business loan amountRepayments (5% interest)Repayments (7.5% interest)Repayments (10% interest)
$10,000$188.71$200.38$212.47
$20,000$377.42$400.76$424.94
$30,000$566.14$601.14$637.41
$40,000$754.85$801.52$849.88
$50,000$943.56$1,001.90$1,062.35
$60,000$1,132.27$1,202.28$1,274.82
$70,000$1,320.99$1,402.66$1,487.29
$80,000$1,509.70$1,603.04$1,699.76
$90,000$1,698.41$1,803.42$1,912.23

Business loan repayment examples are calculated using monthly repayments with a fixed interest rate on a 5-year term. They do not include any fees that may be charged by a lender in addition to interest.

Business Loan Calculator – repayment example

In the example below, we’ll use a $30,000 loan with a fixed 9% interest rate, repaid monthly over 3 years:

  • n = 36 (12 repayments per year for 3 years)
  • i = 0.0075 (where the interest rate (9%) is divided by the number of annual payments (12) to provide a decimal representation of the interest rate)
  • Using the discount factor formula above, we can calculate the discount factor: ((((1+0.0075)^36) - 1) / (0.0075(1+0.0075)^36)) = 31.4468
  • The discount factor is then calculated as 31.4468
  • We then take our loan amount ($30,000) and apply the Loan Repayment Formula, dividing the loan amount by the discount factor. This will provide your monthly repayments: 30,000 / 31.4468 = 953.99
  • Your monthly repayments on this loan will be $953.99

If you want to quickly calculate your repayments without creating your own spreadsheet with the above calculations, you can use our free business loan calculator.

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