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Business Loan Calculator Guide
Work out what business finance actually costs — including the factor-rate products that are deliberately hard to compare against a normal loan.
Interest rate: $100,000 at 9% over 5 years = $2,075.84/month, $24,550 total interest.
Factor rate: 1.3 on $50,000 means you repay $65,000 — $15,000 regardless of how fast you pay, about 51% nominal APR over 12 months.
Factor Rates Are Not Interest Rates
This is the single most expensive misunderstanding in small business finance, and it is not an accident.
"Factor rate 1.3" sounds like 30%. It isn't. Interest accrues on a declining balance — as you repay, you owe less, so you're charged less. A factor rate is fixed at the start on the full amount: you owe $15,000 on that $50,000 whether you repay over twelve months or three.
Repay a 1.3 factor over 12 months and that's roughly a 51% nominal APR — or about 65% effective once you compound it. Over 6 months it's higher still, because paying it back faster makes the annualised rate worse. That inverts every instinct you have about debt.
Both figures appear above. Nominal is the convention lenders and regulators quote; effective is what the money actually costs you once compounding is counted. Neither is 30%.
Watch the Payment Frequency
Merchant cash advances typically take payments daily or weekly, often as a percentage of card takings. A monthly figure makes them look comparable to a term loan; the reality is money leaving the account every single day.
That's a cash flow pattern, not just a price. Businesses that could service a monthly payment comfortably sometimes fail on a daily one, purely on timing.
Fees Come Off the Top
A 3% origination fee on $100,000 means $97,000 lands in your account — but you repay interest on $100,000. Your effective rate is higher than quoted, and this calculator shows the cash you'd actually receive so the gap is visible.
Personal Guarantees Are the Real Term
Most small business lending requires one. Sign it and the limited company stops protecting you: if the business fails, the debt is yours personally — house, savings, everything.
That's frequently the most important clause in the agreement and the least discussed. Read it before the rate.
Compare on Total Cost, Nothing Else
Lenders present business finance in whatever unit makes it look cheapest — factor rates, weekly payments, "simple interest", fees quoted separately. The only comparison that survives contact with reality is: how much cash do I get, and how much do I repay in total? Two numbers. Everything else is presentation.
Related: loan payment calculator, break-even calculator, burn rate calculator.
These results are estimates for education and planning, not financial advice. Actual returns, rates, and terms vary — check with a qualified professional before making decisions.
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