How to use the Business Loan Calculator
- Enter the loan amount your use-of-funds statement justifies.
- Enter the quoted rate — SBA 7(a) loans are typically prime plus a spread.
- Set the term; equipment and working capital loans run 5–10 years, real estate up to 25.
- Add the guarantee or packaging fee percentage, then check the payment against monthly free cash flow.
How the calculation works
Lenders underwrite on debt service coverage ratio: NOI divided by annual debt service, with 1.25× as the common minimum. The payment this calculator produces is the denominator of that test, so multiply it by 15 to see the annual operating income a bank will want to see.
SBA guarantee fees scale with loan size and term and are usually financed into the loan rather than paid at closing. Financing them raises the amount owed slightly, which is reflected here rather than hidden.
Variable-rate business loans reprice with prime. If the quoted rate floats, run this twice — once at the current rate and once two points higher — to confirm the business still covers the payment if rates rise.
Payment = [(L × (1 + fee)) × r] ÷ [1 − (1 + r)⁻ⁿ]; DSCR = NOI ÷ (payment × 12)Source: U.S. Small Business Administration SOP 50 10 for 7(a) loan terms and guarantee fee schedules.
Worked example
$120,000 at 9.5% over 7 years with a 2% guarantee fee.
- The fee finances $2,400, bringing the loan to $122,400.
- 84 payments at a 0.7917% monthly rate.
- Monthly payment is approximately $2,003.
Annual debt service near $24,000, so a bank would want roughly $30,000 of operating income to hit 1.25× coverage.
Frequently asked questions
What credit score do lenders want?+
SBA lenders generally look for 680+ personally, plus two years of operating history and a business credit file.
Is a personal guarantee required?+
Almost always for small business loans, and SBA loans require one from anyone owning 20% or more.
Term loan or line of credit?+
Term loans suit fixed assets with predictable payback; lines of credit suit fluctuating working capital needs.
Last reviewed September 1, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.