Business Loan Calculator: Payment, Total Cost and True APR
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A $100,000 business loan at 11% for 36 months costs about $3,274 a month. With a 2% fee, the true APR is about 12.4%. Advances quote a factor rate instead of APR, which hides the real annual cost.
Funding of $100,000 over 36 months costs $17,859 in interest and $2,000 in fees. You receive $98,000 and repay $117,859, in 36 payments of $3,273.87. That works out to a true APR of 12.40%.
- Principal$100,000.0085%
- Interest$17,859.3815%
Show the steps
- Payments: 36 (36 months, monthly).
- Payment = $100,000.00 × i ÷ (1 − (1 + i)^−36), i = 0.9167% = $3,273.87.
- You receive $100,000.00 − $2,000.00 fees = $98,000.00.
- True APR: find the rate where 36 payments of $3,273.87 are worth $98,000.00 today. That rate is 1.0335% per payment, or 12.402% a year.
True APR with fees
Net proceeds = Σ payment ÷ (1 + i)^t, t = 1 … n
APR = i × payments per year
- Compare lenders by true APR, not by interest rate, factor rate or payment alone.
- SBA loans and bank lines of credit often cost much less than online advances, but take longer to get.
Estimates for planning and learning, not financial, tax, legal or medical advice. Check figures with your lender, tax preparer or doctor before you act.
About this calculator
Business financing can cost very different amounts for the same quoted number. A bank loan quotes an APR. An online advance quotes a factor rate like 1.30, which means you repay 30% more than you receive, whatever the term.
This calculator converts both into one comparable figure, the true APR, after counting origination fees taken from the proceeds. It also shows the payment, total repaid and cost of borrowing.
How to use it
- Choose a term loan with an interest rate, or an advance with a factor rate.
- Enter the amount funded, the term and how often you pay.
- Enter the interest rate or factor rate, and any fees.
- Compare the true APR, payment and total cost with other offers.
Reading the true APR
The true APR is the yearly rate that makes your payments worth exactly what you actually received. It counts fees and the repayment schedule, so it is the best figure for comparing loans with different terms and fees.
Factor rates
A 1.30 factor rate on $100,000 means you repay $130,000. Paid back over 12 months, that is a true APR above 50%. Over 36 months it is lower but still much higher than the 30% suggests.
Sources
Quick check: test yourself
A $200,000 advance has a factor rate of 1.25. How much do you repay in total?
Correct answer: $250,000. $200,000 × 1.25 = $250,000.
Fees paid from the loan proceeds make the true APR…
Correct answer: Higher than the stated rate. You borrow the full amount but receive less.
Is a factor rate the same as an APR?
Correct answer: No. A factor rate ignores the repayment period, so it does not show the annual cost.
Pick an answer for each question.
Common questions
How do I calculate a business loan payment?
Use the standard loan formula with the amount, rate per period and number of payments.
What is a factor rate?
A multiplier on the amount funded that gives the total you repay. 1.30 means 30% more.
What is true APR?
The annual rate that includes interest and fees, based on how much you actually receive.
Are origination fees included?
Yes. They are taken from the proceeds and raise the true APR.
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