Business loan repayment calculator

How are business loan repayments calculated?

Most business loans with fixed repayments are amortising: each repayment covers the interest charged since the last one, and the rest reduces the balance. Early repayments are mostly interest and later ones mostly principal. The calculator uses the standard formula for a fixed rate with repayments made at the end of each period. Where you add a balloon, the balloon's present value is taken off the loan first, so the regular repayments only pay down the rest.

What do repayments look like on $100,000?

Monthly repayments on a $100,000 business loan, with no balloon and no fees:

Calculated by FundFox. Rates are examples, not offers. Secured loans usually sit toward the lower end of this range and unsecured loans toward the higher end.

How does a balloon change the repayments?

A balloon is a lump sum left owing at the end of the term, common in equipment and vehicle finance. It lowers the regular repayments but increases total interest, because more of the loan stays outstanding for longer. At an assumed 9%, a $200,000 truck over five years costs about $4,152 a month with no balloon, or about $3,621 a month with a 20% balloon. Total interest rises from about $49,100 to about $57,300, and $40,000 is still owing at the end. See truck finance and the chattel mortgage guide for when a balloon makes sense.

Weekly, fortnightly or monthly?

Paying more often reduces total interest slightly, because the balance falls sooner. The bigger effect is on cash flow. Many unsecured business lenders collect weekly or even daily, which suits businesses paid daily, such as cafés and retailers, but can strain a business paid monthly by its customers. Match the repayment frequency to when money arrives.

Why might a lender's figure be different?

• Fees. Establishment, monthly and early payout fees change the true cost. Enter upfront fees above to see their effect.
• Factor rates. Some short-term lenders price a loan as a fixed multiple of the amount borrowed instead of an interest rate. A 1.15 factor over six months, repaid weekly, works out to about 73% a year. Our short-term loans guide explains the conversion.
• Capitalised interest. Some bridging and private loans add interest to the balance instead of collecting it monthly, so there are no repayments until the end.
• Your risk profile. Trading history, security and credit history set the rate a lender actually offers.

What this calculator can't tell you

It can't tell you which lenders will approve you, at what rate, or whether a secured option would cost less. That depends on your trading, security and credit history. If the loan is to pay a tax debt, compare the total against the ATO's general interest charge too. Our guide to ATO payment plans covers the cost of staying on a plan.