Business Loan Calculator Guide: How to Use Calculators to Compare Your Options

Business loan calculators help you estimate payments, compare costs, and make informed decisions before you apply. But using them effectively requires understanding what each type calculates and what inputs to use.

This guide explains how to use the main types of business loan calculators and how to interpret the results.

Why Use a Loan Calculator?

Calculators serve several purposes in your financing decision:

• Estimate Monthly Payments — Know if payments fit your cash flow before applying.
• Compare Total Cost — Two loans with different rates and terms can have very different total costs.
• Understand Affordability — Calculate what loan size your business can support.
• Evaluate Offers — Compare actual offers from lenders using consistent metrics.
• Plan Use of Funds — Ensure the financing cost makes sense relative to the return.

Types of Business Loan Calculators

Different loan products require different calculators:

Using a Term Loan Calculator

Term loan calculators are the most common. Here's how to use them:

• Principal: The amount you're borrowing. Use the actual loan amount after any fees.
• Interest Rate: Use the quoted APR. For variable rates, use current rate.
• Term: Loan length in months or years.
• Payment Frequency: Monthly is most common, but some loans have daily or weekly payments.

The calculator outputs your regular payment amount and total interest over the loan life. Compare total repayment (principal + total interest) across different options.

Using an SBA Loan Calculator

SBA calculators include the government guarantee fee that's unique to SBA loans:

• Loan Amount: Total SBA loan amount.
• Interest Rate: SBA rates are Prime + a spread (2.25% to 4.75% depending on size and term).
• Term: 10 years for working capital, 10 years for equipment, up to 25 years for real estate.
• SBA Guarantee Fee: 2%–3.5% of the guaranteed portion (typically 75% of loan). Usually financed into the loan.

SBA loans have lower rates but factor in the guarantee fee when comparing to non-SBA options.

Using a Line of Credit Calculator

Lines of credit are more complex because you don't borrow a fixed amount:

• Credit Limit: Maximum you can borrow.
• Average Utilization: Estimate what percentage you'll typically have drawn.
• Interest Rate: Usually variable, tied to Prime.
• Draw/Repay Pattern: How often you'll draw funds and how quickly you'll repay.

The key insight is that you only pay interest on what you've borrowed. A $100K line at 12% with 50% average utilization costs roughly $6,000/year in interest — less than a $50K term loan might cost.

Using an MCA Calculator

MCA calculators work differently because MCAs use factor rates, not interest rates:

• Advance Amount: The cash you receive.
• Factor Rate: Multiplier (typically 1.1–1.5) applied to advance to determine total repayment.
• Holdback Percentage: Portion of daily sales withheld for repayment (10–20%).
• Estimated Daily Sales: Used to calculate repayment timeline.

Calculate total repayment: Advance × Factor Rate. For a $50,000 advance with a 1.4 factor rate, you repay $70,000.

Using an Invoice Factoring Calculator

Factoring calculators determine how much cash you'll receive and the effective cost:

• Invoice Amount: Total value of invoices you're factoring.
• Advance Rate: Percentage advanced upfront (typically 80–90%).
• Factoring Fee: Cost per 30 days (typically 1–4%).
• Average Days Outstanding: How long until your customers pay.

Example: A $100,000 invoice with 85% advance rate and 2% per 30-day fee. You receive $85,000 immediately. If the customer pays in 45 days, the fee is 3% ($3,000). You receive the remaining $12,000 when the customer pays.

Comparing Different Loan Types

When comparing across loan types, standardize on these metrics:

• Total Cost of Capital: Total amount you repay minus the amount you borrowed.
• Equivalent APR: For non-interest products (MCAs, factoring), calculate equivalent APR.
• Monthly Payment as % of Revenue: Ensure payments are sustainable.
• Cost per Dollar Borrowed: Divide total cost by principal for easy comparison.

Calculator Limitations

Keep these limitations in mind:

• Estimates Only: Actual terms depend on your application and negotiation.
• Exclude Some Costs: Calculators may not include all fees.
• Assume Fixed Conditions: Variable rates and early payoff can change actual costs.
• Don't Account for Opportunity Cost: The value of having capital now versus later.

Try Our Calculators

Use Liminal's free business loan calculators to estimate payments and compare options:

• SBA Loan Calculator — Estimate SBA 7(a) payments including guarantee fees.
• Term Loan Calculator — Calculate monthly payments for traditional business loans.
• Line of Credit Calculator — Model interest costs based on utilization patterns.
• MCA Calculator — Convert factor rates to APR and understand true costs.
• Invoice Factoring Calculator — Calculate advances and fees for receivables financing.