In this guide, we will cover EVERYTHING you need to know when looking at calculating your business loan size, repayments and interest rate.
Are you considering taking out a business loan but not sure what your monthly payments, total interest, and the total cost will be? A business loan calculator can help. In this article, we’ll introduce you to business loan calculators and explain how they work.
We’ll also discuss the accuracy of these calculators, how you can use them to compare different loan options, and any limitations you should be aware of. Finally, we’ll explain how a business loan calculator fits into the loan application process.
By the end of this article, you’ll have a good understanding of how to use a business loan calculator to plan for and compare different loan options. So, keep reading to learn more!
A business loan calculator is a tool that allows you to quickly and easily estimate the terms of a potential business loan.
These calculators can help you determine the total amount you can borrow, the length of the loan term, the monthly payments you will need to make.
They will also likely give you a handy variable interest rate slider or adjustment tool to help you run scenarios on the loan with different interest rates.
Lastly, there will likely be some kind of loan amortization schedule or put simply how the payments will look over time.
Business loan calculators are widely available online and pretty much any website that is pushing small business loans will have one.
They are often very easy to use, making them a convenient resource for anyone considering taking out a business loan but be careful as they give you a simplistic view of a loan.
Business loan calculators can be particularly useful for small business owners or entrepreneurs who are trying to determine how much financing they need to start or grow their businesses.
By inputting information about the loan amount, loan term, and interest rate, a business loan calculator can provide an accurate estimate of the total cost of the loan and the monthly payments required to pay it off.
This can help business owners make informed decisions about whether a particular loan is the right fit for their needs and budget.
There are several different types of business loan calculators that can be useful for different purposes. Some of the most common types of business loan calculators include:
Calculator for loan amount: This type of calculator can help you determine how much you can borrow based on your credit score, business revenue, and other factors. By inputting this information, you can get an idea of how much financing you might be able to secure from a lender.
Calculator for loan term: This type of calculator can help you determine the length of time over which you will pay back your loan. By inputting the loan amount and interest rate, you can see how the loan term affects your monthly payments and total interest paid.
Calculator for loan payments: This type of calculator can help you determine the monthly payments required to pay off a loan. By inputting the loan amount, loan term, and interest rate, you can see how your monthly payments will be affected by different loan terms and interest rates.
Calculator for interest rate: This type of calculator can help you determine the interest rate you will pay on a loan. By inputting the loan amount and loan term, you can see how different interest rates will affect your monthly payments and total interest paid.
Calculator for loan amortization schedule: This type of calculator can help you create a detailed schedule of your loan payments, showing how much of each payment goes towards principal and interest. This can be a useful tool for understanding the total cost of a loan and planning your budget.
Using a business loan calculator is generally very simple. Most calculators have a user-friendly interface that allows you to input the necessary information and get an estimate of your loan terms in just a few clicks. To use a business loan calculator, you will typically need to input the following information:
Loan amount:
This is the total amount of money you want to borrow.
Loan term:
This is the length of time over which you will pay back the loan.
Interest rate:
This is the percentage of the loan amount that you will be required to pay in interest.
Depending on the calculator you are using, you may also need to input additional information such as your credit score, business revenue, or other financial details.
Once you have entered all of the necessary information, the calculator will provide an estimate of your loan terms, including the total cost of the loan, the monthly payments required to pay it off, and the loan’s amortization schedule.
There are several advantages to using a business loan calculator when considering a business loan. Some of the benefits of using a business loan calculator include:
Quick and easy: Business loan calculators are quick and easy to use, allowing you to get an estimate of your loan terms in just a few minutes.
Business loan calculators are widely available online and can be accessed from any device with an internet connection, making them a convenient resource for anyone considering a business loan.
Business loan calculators use complex algorithms to provide accurate estimates of loan terms, helping you make informed decisions about financing.
Customizable:
Many business loan calculators allow you to input custom information about your business and financial situation, giving you a more accurate estimate of your loan terms.
How a business loan calculator can help you make informed decisions about financing
Business loan calculators are a useful tool for anyone considering a business loan.
By providing accurate estimates of loan terms, these calculators can help you make informed decisions about financing and choose a loan that is the right fit for your business.
Whether you are looking to start a new business, expand an existing one, or finance a specific project, a business loan calculator can help you understand the total cost of a loan and plan your budget accordingly.
It’s important to note that the estimates provided by business loan calculators are just that – estimates.
Actual loan terms may vary based on your credit score, business revenue, and other factors. Additionally, some calculators may not take into account certain fees or other costs that may be associated with a loan.
So, it’s important to use a business loan calculator as a starting point, rather than relying on its estimates as the final word on your loan terms.
If you are considering a business loan, it’s also important to shop around and compare offers from multiple lenders.
Different lenders may offer different interest rates and terms, so it’s important to compare as many options as possible to find the best deal for your business. You can use a business loan calculator to get an idea of the loan terms you might be offered by different lenders, and use that information to negotiate a better deal.
Business loan calculators can be a useful tool for anyone considering a business loan.
By providing estimates of loan terms and helping you compare offers from multiple lenders, these calculators can help you make informed decisions about financing and find a loan that is the right fit for your business.
An amortization schedule is a table or chart that shows the breakdown of loan payments over time. It typically includes the following information:
Here is an example of an amortization schedule for a business loan with a loan amount of $50,000, an interest rate of 5%, and a loan term of 5 years (60 months):
| Month | Payment Amount | Principle | Interest | Remaining Balance |
|---|---|---|---|---|
| 1 | $857.23 | $672.50 | $184.73 | $49,327.50 |
| 2 | $857.23 | $675.37 | $181.86 | $48,652.13 |
| 3 | $857.23 | $678.26 | $178.97 | $47,973.87 |
| 4 | $857.23 | $681.17 | $176.06 | $47,292.70 |
| 5 | $857.23 | $684.09 | $173.14 | $46,608.61 |
| … | … | … | … | … |
| 57 | $857.23 | $847.86 | $9.37 | $3,634.15 |
| 58 | $857.23 | $849.97 | $7.26 | $2,784.18 |
| 59 | $857.23 | $852.09 | $5.14 | $1,932.09 |
| 60 | $857.23 | $854.22 | $3.01 | $1,077.87 |
In this example, the monthly payment amount is $857.23, which includes both principal and interest. The principal is the amount of each payment that goes towards paying off the loan, while the interest is the amount that goes towards paying the interest on the loan. The remaining balance is the amount of the loan that has not yet been paid off.
As you can see, the amount of principal and interest included in each payment changes over time. In the early months of the loan, a larger portion of the payment goes towards interest, while in the later months, a larger portion goes towards paying off the principal. This is known as an amortizing loan, as the balance is gradually paid off over time.
An amortization schedule can be a useful tool for understanding the total cost of a loan and planning your budget. By seeing how the principal and interest payments change over time, you can get a better understanding of how much you will need to pay each month and when the loan will be paid off.
The purpose of a business loan calculator is to provide an estimate of the terms of a potential business loan. These calculators allow you to input information about the loan amount, loan term, and interest rate, and receive an estimate of the total cost of the loan, the monthly payments required to pay it off, and the loan’s amortization schedule.
Business loan calculators can be a useful tool for small business owners or entrepreneurs who are considering taking out a loan to start or grow their businesses. By providing accurate estimates of loan terms, these calculators can help business owners make informed decisions about financing and choose a loan that is the right fit for their needs and budget.
Business loan calculators can also be helpful for comparing offers from multiple lenders. By using a business loan calculator to estimate the terms of loans from different lenders, you can compare the total cost, monthly payments, and other terms of each loan and choose the one that is the best fit for your business.
When looking at business loan calculators make sure to compare different loan calculators and their methodologies.
Critically look at the business loan calculator formats and their loan breakdown outputs as these differ greatly between lenders.
What makes business loans easy to use and what should they out put as a result?
The output of these calculators should include all the relevant loan factors and the way they can impact the amount of money you can borrow for your business.
Who should use a business loan calculator to determine their interest rate, repayment amounts and total loan value.
The easiest way to determine your borrowing power for a business loan is to use the simple interest calculation.
This will give you a rough idea of the amount of money you can expect to pay back over the initial amount over the lifetime of the loan.
A business loan calculator can be a useful tool for any business owner or entrepreneur who is considering taking out a loan for their business. It can help you determine how much you can borrow, what your monthly payments will be, and how long it will take you to pay off the loan. This can be helpful in making informed decisions about financing options and budgeting for your business.
Some specific groups of people who may find a business loan calculator useful include:
Overall, a business loan calculator can be a valuable tool for anyone who is considering borrowing money for their business and wants to understand the potential financial impact of that decision.
How do you use a business loan calculator to determine your borrowing power
There are two different types of calculators.
A calculator that provides a comparison interest rate.A calculator that provides a variable interest rate input field.
This allows the borrower to test a few different loan scenarios with different interest rates.
How to get a business loan to start a business?
How much can I borrow for a business loan?
The business loan repayment formula
[(1+r)n] – 1] / [r(1+r)n]
where “r” is the interest rate and “n” is the number of payments per year.
How do the lenders calculate and amortise a loan?
Divide the total amount of the loan by the discount factor to determine your monthly payment.
If you take out a business loan of $275,000 at 19.875% interest for 3 years (36 payments, made monthly).
Enter these values into the calculator and click “Calculate” to produce an amortised schedule of monthly loan payments.
You can see that the payment amount stays the same over the course of the loan repayment period.
With each payment, the principal owed is reduced and this results in a decreasing interest due.
The payment amount is the same over the life of the loan but the way the payment is applied changes:
The portion of the payment applied toward the principal increases over time, and the portion applied to interest decreases because you owe less principal.
Know the best time to use a business loan calculator to save you money on repayment amounts or loan periods.
When should I use a business loan calculator?
The best time to use a business loan calculator is when you want to review the money to be paid on the value of the loan.
This can happen a 3 different points during a loan’s life cycle.
Pre-approval
The most common use of a business loan calculator is as a planning tool.
This is used by a borrower when trying to determine how much money they can borrow. This is called borrowing power.
Pre-approval calculations are simple in nature and rarely include full amortisation schedules as they are used as a guide before applying for a business loan.
Post Approval
At the point of loan approval, there is a loan negotiation phase.
This is where the lender will notify you of the amount they are willing to lend you and the interest rate they will place against the loan.
This is the best time to seek additional quotes from other lenders to make sure you get the best possible interest rate.
Refinancing
When a loan is being refinanced as either an extension of an existing loan or to consolidate business debts a business loan calculator is used to determine the refinanced business loan amount.
Where is the best place to use or view a business loan calculator?
Where can I use a business loan calculator to make an informed decision when borrowing money as a business?
There are 5 different places where you can access a business loan calculator.
– Mortgage Broker Company
– Mobile Mortgage Broker
– Marketplace
– Online Comparison Site
– Excel or Google Docs Spreadsheet
Why is using a business loan calculator important when determining your borrowing power?
Business loan calculators are the best way to get a fast and accurate idea of your borrowing power.
They are the best place to start when looking at securing business finance.
When looking into business loans it is important to understand the mechanics of how they work the interest rates, penalties, fees and any associated interest rates that may impact the final annual interest rate applied to your loan.
When comparing business lines it’s important to determine the difference between the advertised interest rate and the annual interest rate that you’ll be paying against the loan. Keep in mind here that it is different between different products as well so don’t get stuck agreeing to a term loan that is different to say a line of credit.
For example, if you have a line of credit business loan it will be different to a term deposit business loan you might also incur different rates and all fees between the different types of business loan products.
Business finance is a great way to enable better business cash flow. Often you will be asked by the lender to provide a reason for your business loan.
This could include things like growth and expansion marketing spending, buying inventory, buying business equipment and other products related to the services you offer.
The main thing that you need to consider when comparing different business loans is the eligibility criteria.
This set of criteria will provide an accurate way for the lenders to assess your borrowing capacity as a small business while most lenders will require an ABN and six months of training as trading as a minimum.
While having a good quality credit score both as a business and an individual directly or stakeholder within that business is also important.
When you are the director or stakeholder within a business it is also important to consider the speed with which you pay back the loan.
The longer the loan term likely the higher the fee involved in borrowing the money.
Many lenders let you apply online.
This is a great time saver for small businesses as it allows you to get a quick snapshot in a very streamlined application process.
Understand Different Business Loan Repayments
Make sure you understand the repayments that will need to be made.
Make sure to also check the frequency of those repayments this could include weekly fortnightly or monthly repayments.
The repayment frequency will also impact the amount of money you pay back because interest accrues daily.
Which is the business loan calculator that will give us the best results and ultimately give me the most accurate calculation.
Which is the best business loan calculator?
There is no single best business loan calculator or best business loan interest rate.
It is highly specific to your business situation.
These include business factors like loan size, and credit tier.
At Cockatoo we provide you a simple calculator to work out estimated repayments and total loan size.
If you require a more comprehensive breakdown get in touch with one of our business specialists today.
Will you be required to use a business loan calculator before taking out a business loan.
No, but if you would like a basic calculation of a potential business loan scenario to work out how much you can borrow we suggest taking the time to complete one.
Yes, not knowing the interest rate can result in you entering into a financial contract that you are unable to service if there is a change in your business activity.
Yes, not knowing the amount means the lender can not give you an accurate quote of the loan value.
It will also prevent them from being able to offer you an interest rate as interest rates are influenced by loan values.
Will I need to know the loan term?
Short-term business loans and long-term business loans vary greatly.
Having a specific timeframe in mind will allow the lender to offer you a tailored solution.
Can you just apply for a business loan and avoid having to do any loan calculations.
Yes, you can apply for a business loan without needing to do the calculations.
Business loan calculators will provide you a guide to weekly, fortnightly or repayments.
They will not give you the exact amounts that you will pay as the lender’s credit policy will impact the interest rate that is selected and offered to the borrower.
You cannot apply for a loan in the name of someone you are not.
You can however start the process of applying for a business loan if you are an owner or director of the company or registered entity that is seeking finance.
Registered Company
If you have a registered company you are not allowed to use a business loan for personal debts.
Sole Trader
As a sole trader, it is possible to use a business loan for personal expenses.
The simplest way to apply for a business loan is with a simple online application that will asses your business’s situation against predefined credit criteria.
While the criteria can be different for every lender there is often a core set of requirements that they will not compromise on these include.
– ABN
– 6 Months or more in business
– Monthly turnover greater than $10,000 per month
– Business owner
– Permanent resident or Australian citizen
A business loan calculator is a tool that allows you to estimate the monthly payments, total interest, and total cost of a business loan. To use a business loan calculator, you will need to input information such as the loan amount, interest rate, and loan term. The calculator will then use this information to generate an estimate of the monthly payments, total interest, and total cost of the loan.
Business loan calculators can provide a good estimate of the monthly payments, total interest, and total cost of a business loan. However, it’s important to note that these estimates are just that – estimates. The actual terms of your loan may vary based on a variety of factors, including your credit score, the lender you choose, and the specific terms and conditions of the loan.
Yes, you can use a business loan calculator to compare different loan options. By inputting the loan amount, interest rate, and loan term for each loan option, you can see how the monthly payments, total interest, and total cost of each loan compare to one another. This can help you choose the loan that best meets your needs and budget.
Business loan calculators do not take into account all of the variables that can impact the terms of a business loan. For example, they may not consider your credit score, the lender you choose, or any fees or additional costs associated with the loan. Additionally, some calculators may not allow you to input variables such as variable interest rates or balloon payments, which can make them less accurate for certain types of loans.
No, a business loan calculator is not a tool for applying for a loan. It is simply a tool for estimating the terms of a business loan. To apply for a loan, you will need to complete a loan application with a lender and provide any required documentation.