How to use the business loan calculator
Enter the amount you want to borrow and the number of monthly repayments. Then choose the rate type exactly as it appears in the quote. An annual interest rate, a monthly rate and a flat annual rate are not interchangeable.
Add any mandatory arrangement, completion or broker fees included in the offer. Choose whether they are added to the loan or paid upfront. Add a second quote to compare payments, interest, fees and total borrowing cost without treating a lower headline rate as the whole answer.
The starting figures are illustrative inputs, not rates available from a lender. Nothing entered in this calculator is submitted as a finance enquiry or used to check your credit file.
- Loan amount: £1,000 to £2 million; repayment term: 1 to 120 whole months.
- Use the contractual interest rate, not a representative APR that already incorporates fees.
- Include a mandatory fee once only. Adding it again to an inclusive quote would double-count it.
Compare interest rates, flat rates and factor rates
Reducing-balance interest is charged on the outstanding balance, which falls as repayments are made. This calculator treats an annual quote as a nominal rate divided by 12, and a monthly quote as the rate for each monthly period. For a nominal daily quote, it uses daily rate × 365 ÷ 12. Actual daily accrual and calendar-based lender schedules can differ.
Whole-term yield means total interest as a percentage of the amount financed across the entire term. It is not an annual rate. A factor of 1.20 means £1.20 repaid for each £1 financed, before any additional fees: a 20% whole-term cost, not 20% APR.
An annual flat rate is calculated against the original amount financed throughout the term rather than a declining balance. At 10% flat per year over three years, interest is 30% of that starting balance. The equivalent reducing-balance rate is higher than the 10% headline suggests.
What is the total cost of a business loan?
Total borrowing cost is interest plus mandatory fees. Total repayable is the sum of the monthly repayments and any mandatory fee paid upfront. These are different from the monthly payment, which can look small simply because the term is longer.
If a £500 fee is added to a £25,000 loan, the amount financed is £25,500 and interest is charged on that larger balance under this model. If the same fee is paid upfront, the monthly repayments are based on £25,000, but net proceeds after the initial fee are £24,500.
The effective annual cost estimate takes account of the net advance, mandatory fees and the timing of equal monthly repayments. It is calculated from those cash flows and annualised with compounding. It is not a regulated or representative APR calculation and does not certify any lender’s offer.
- Compare the same amount and term when isolating differences in price.
- If amounts or terms differ, consider both usable funding and the full cost; a smaller total does not automatically mean a better quote.
- Check early-settlement charges, personal guarantees, security, late fees and variable-rate conditions separately.
Business loan repayment example
As an illustration, £10,000 borrowed over 12 months at 12% nominal annual reducing-balance interest, with no fees, has an estimated monthly repayment of £888.49. Total repayments are about £10,661.85, including £661.85 interest.
The same £10,000 over 12 months at 12% annual flat interest has £1,200 interest, £11,200 total repayments and an estimated monthly payment of £933.33. The two 12% headlines describe different costs.
These are worked examples, not advertised lending rates or an eligibility assessment. Displayed figures are rounded; the lender’s final instalment and calculation method can differ.
What this repayment calculator includes—and what it does not
Estimates assume a fixed rate, equal end-of-month repayments and a first payment one month after funding. Calculations retain precision until display. Where a fee is financed, the selected pricing method is applied to the balance including that fee.
The tool does not model payment holidays, balloon payments, changing interest rates, early repayments, missed-payment charges or revenue-linked collection dates. It does not test whether your business can afford the repayments, qualify for a loan or obtain a particular rate.
Use the result to frame questions for a lender and compare the repayment schedule in the actual agreement. For affordability, also allow for existing debts, seasonal sales, tax obligations and a cash reserve.
A few things worth knowing
Common questions
How are monthly business loan repayments calculated?
For reducing-balance interest, the calculator uses the standard monthly annuity formula: payment equals amount financed × monthly rate ÷ [1 − (1 + monthly rate) to the power of minus the number of months]. At zero interest, the amount financed is divided equally across the months. Flat, factor and whole-term yield quotes are converted into a total and divided into equal monthly repayments.
Is a flat business loan rate the same as APR?
No. A flat rate applies to the original balance over the term. APR reflects an annualised cost based on the timing of repayments and applicable charges. A flat rate can look lower than its equivalent reducing-balance rate. This tool shows estimated rate equivalents and an effective annual cost estimate, not a regulated or representative APR.
Does this calculator include arrangement and broker fees?
You can enter a mandatory fee as a fixed pound amount or a percentage of the original loan amount. If you have several compulsory fees, combine them without double-counting. The model either adds the fee to the financed balance or treats it as an upfront cost.
Can I compare two business loan quotes?
Yes. Add a second quote and enter its amount, term, rate type and mandatory fees. For a like-for-like price comparison, use the same amount and term. Different amounts or terms can produce lower payments or totals without necessarily being a better deal.
Does using the calculator affect my credit score?
No. Calculations run in your browser without a credit search, company lookup or finance application. They do not establish eligibility or approval, and calculator inputs are not submitted as an enquiry.
Can I calculate unsecured business loan repayments?
Yes, if the quote has fixed pricing and equal monthly payments. The repayment arithmetic does not depend on whether the loan is secured or unsecured. Check the agreement separately for collateral, a personal guarantee and other conditions.