Business loan comparison calculator

How the calculation works

Business lenders quote prices in several incompatible ways. The calculator turns each quote into a payment schedule, then measures every offer the same way.

1. Interest rate (amortizing). The standard loan: each payment covers that period's interest and pays down some balance. Payment = amount × r ÷ (1 − (1 + r)⁻ⁿ), where r is the annual rate divided by the number of payments per year (12 monthly, 52 weekly) and n is the number of payments.
2. Flat (simple) interest. Interest = amount × rate × years, charged on the original amount for the whole term even as you repay it, then added to the principal and split evenly across the payments.
3. Total to repay. Common for short-term and daily-payment loans: the payback amount is divided evenly across the payments.
4. Fees. Fees added to the loan increase the balance you repay. Fees deducted upfront reduce the money you actually receive. Either way they're a cost of borrowing.
5. Total cost = everything you repay − the money you receive. Estimated APR = the annual rate at which the payments exactly repay the money you received, using the Regulation Z Appendix J actuarial method. Daily-payment loans are measured in calendar days, 365 to the year.

Worked examples

1. A low rate with a big fee vs. a slightly higher rate

Two lenders offer $100,000 over 60 monthly payments:

Offer B has the lower payment and the lower headline rate, but you receive only $94,000. It costs $2,579.50 more and its APR is over a point higher. The headline rate hides the fee.

2. When the cheapest loan isn't the lowest APR

Add Offer C: $100,000 at 12% with no fee, repaid over 24 months. Its payment is $4,707.35, more than twice Offer A's, and its APR is 12.00%. But because you pay interest for only two years, its total cost is$12,976.33, the lowest of the three. Lowest APR (Offer A) and lowest total cost (Offer C) point in different directions. The right choice depends on whether you can carry the larger payment.

3. Flat interest vs. amortizing interest at the "same" rate

$50,000 for a year, repaid weekly. At 12% amortizing, the weekly payment is $1,021.49 and the total interest $3,117.59: an APR of 12.00%. At 12% flat, interest is $50,000 × 12% × 1 = $6,000, the weekly payment is $1,076.92, and the APR is 22.71%. The same number, quoted flat, costs nearly twice as much.

4. Financed fees vs. fees deducted upfront

Two lenders both offer $100,000 at 7.5% for 60 months with a $2,000 fee, but handle the fee differently. One deducts it from the proceeds, so you receive $98,000 but only repay the original $100,000: payment $2,003.79, APR 8.355%. The other rolls the fee into the balance, so you receive the full $100,000 but repay $102,000: payment $2,043.87, APR 8.338%. The two are close, but not identical, because financing the fee means you also pay interest on it. Either way, always compare against the amount you actually receive.

Term length changes the same fee's impact, too. A $2,000 fee on a $100,000, 7.5% loan adds about 0.86 points of APR over 60 months (8.36% vs. 7.5%), but shortening the term to 36 months pushes the APR to 8.87%, and to 24 months, 9.51%. A fixed-dollar fee is a bigger annual burden the faster you repay it, the same effect as with a factor rate.

Assumptions and limitations

• Rates are fixed for the whole term. For a variable-rate loan, the result is the cost if today's rate never changes.
• Payments are level and on time. Balloon payments, interest-only periods, seasonal schedules and late fees aren't modeled.
• Prepayment penalties and early-payoff savings aren't included. Paying off early changes both the cost and the APR.
• Daily-payment schedules assume funding on a Monday and a payment every weekday, ignoring holidays.
• Monthly periods are treated as equal twelfths of a year, which is how Appendix J treats regular monthly schedules.
• Lines of credit and merchant cash advances are priced differently. Use the MCA calculator for advances quoted with a factor rate.

When this estimate is wrong

The result is wrong when the quote you enter isn't the whole deal. Common gaps are fees mentioned only in the contract (packaging, UCC filing, wire, or "servicing" fees), a first payment due at closing, or a rate that applies only for an introductory period. Ask each lender for the amount you'll actually receive, the full payment schedule and the total repayment amount, and enter those. In states with commercial financing disclosure laws, providers must put much of this in writing before you sign.

Frequently asked questions

Why is the APR higher than the quoted rate?

An origination fee deducted upfront means you pay interest on money you never received. The APR accounts for that, so it's the fairer yardstick between offers with different fees.

Which should I pick, the lowest cost or the lowest APR?

APR compares the price of borrowing per year; total cost compares dollars. A shorter loan often wins on dollars but loses on APR and needs bigger payments. If cash flow is tight, the payment matters as much as either measure.

What is flat interest?

Interest charged on the full original amount for the whole term, even as you pay it down. It makes a rate look lower than the same number on an amortizing loan, roughly half as low.

Are business loans required to show an APR?

Federal Truth in Lending rules cover consumer credit, not business loans. California and New York require an estimated APR on many small commercial offers; other states require cost disclosures without one. See the state summaries.

Can I compare an MCA with a loan here?

Yes. Enter the advance as the loan amount, choose "Total amount to repay" with the payback and number of daily payments, and put any upfront fees in "Fees deducted upfront".

Go deeper: how to compare business loan offers.