{"id":67363,"date":"2026-10-21T10:03:15","date_gmt":"2026-10-21T07:03:15","guid":{"rendered":"https:\/\/wpcalc.com\/en\/?p=67363"},"modified":"2026-10-21T10:03:15","modified_gmt":"2026-10-21T07:03:15","slug":"business-loan-calculator","status":"publish","type":"post","link":"https:\/\/wpcalc.com\/en\/finance\/business-loan-calculator\/","title":{"rendered":"Business Loan Calculator"},"content":{"rendered":"<section class=\"not-prose calculator-box\" aria-labelledby=\"calculator-title\"><div class=\"flex items-baseline sm:items-center justify-between gap-2 sm:gap-3\"><div class=\"flex flex-col sm:flex-row sm:items-center gap-2\"><span class=\"icon icon-calculator text-primary-700! text-base! dark:text-primary-300!\" aria-hidden=\"true\"><\/span><h2 id=\"calculator-title\" class=\"text-lg font-display font-bold\">Estimate Your Business Loan Payment, Cost and DSCR<\/h2><\/div><div class=\"calcdash-favorite group\">\n  <button type=\"button\" class=\"favorite\" id=\"favorite\" data-favorite-id=\"67363\" data-favorite-title=\"Business Loan\" data-favorite-url=\"https:\/\/wpcalc.com\/en\/finance\/business-loan-calculator\/\" data-favorite-excerpt=\"Estimate the payment, total cost and effective APR of a business loan, including amortizing term loans and factor-rate merchant cash advances. Enter the amount, rate or factor, term and fees, and the calculator also shows your DSCR.\" aria-label=\"Add to Favorites\" data-favorite-icon=\"icon icon-loan\">\n    <span class=\"icon icon-shape-star-empty\" aria-hidden=\"true\"><\/span>\n  <\/button>\n  <div class=\"calcdash-favorite__tip\" aria-hidden=\"true\">\n   <span class=\"favorite-tooltip\" id=\"favorite-tooltip\"><\/span>\n  <\/div>\n  <span class=\"sr-only\" role=\"status\" id=\"favorite-status\"><\/span>\n<\/div><\/div><form action=\"https:\/\/wpcalc.com\/en\/finance\/business-loan-calculator\/\" method=\"POST\" class=\"calculator\" id=\"calculator-67363\" data-post=\"67363\"><fieldset class=\"fieldset-input is-2\"><legend class=\"sr-only\">Input Fields<\/legend><div class=\"field\" id=\"input-1\"><label for=\"field-1\">Loan amount<\/label><input type=\"text\" name=\"loan_amount\" id=\"field-1\" aria-describedby=\"calc-unit-1 calc-info-1\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0.01\" value=\"100000\"\/><div class=\"unit\" id=\"calc-unit-1\">$<\/div><small id=\"calc-info-1\">The principal you borrow; the origination fee is deducted from it at closing.<\/small><\/div><div class=\"field\" id=\"input-2\"><label for=\"field-2\">Loan type<\/label><div class=\"grid grid-cols-1\"><select id=\"field-2\" name=\"loan_type\"><option value=\"amort\" selected>Amortizing term loan<\/option><option value=\"factor\">Factor-rate loan (merchant advance)<\/option><\/select><svg class=\"pointer-events-none col-start-1 row-start-1 mr-2 size-5 self-center justify-self-end text-gray-500 sm:size-4\" viewBox=\"0 0 16 16\" fill=\"currentColor\" aria-hidden=\"true\" data-slot=\"icon\">\n              <path fill-rule=\"evenodd\" d=\"M4.22 6.22a.75.75 0 0 1 1.06 0L8 8.94l2.72-2.72a.75.75 0 1 1 1.06 1.06l-3.25 3.25a.75.75 0 0 1-1.06 0L4.22 7.28a.75.75 0 0 1 0-1.06Z\" clip-rule=\"evenodd\" \/>\n            <\/svg><\/div><\/div><div class=\"field\" id=\"input-3\"><label for=\"field-3\">Interest rate (APR)<\/label><input type=\"text\" name=\"interest_rate_apr\" id=\"field-3\" aria-describedby=\"calc-unit-3 calc-info-3\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" max=\"100\" value=\"9.5\"\/><div class=\"unit\" id=\"calc-unit-3\">%<\/div><small id=\"calc-info-3\">Annual rate; used for amortizing term loans only.<\/small><\/div><div class=\"field has-term\" id=\"input-4\" hidden><label for=\"field-4\">Factor rate<\/label><div class=\"term\">\u00d7<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"factor_rate\" id=\"field-4\" aria-describedby=\"calc-info-4\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"1.05\" max=\"3\" value=\"1.25\"\/><small id=\"calc-info-4\">Total repayment = loan amount \u00d7 this factor. Typical range 1.1\u20131.5.<\/small><\/div><div class=\"field\" id=\"input-5\"><label for=\"field-5\">Term<\/label><div class=\"field-group\"><input type=\"text\" name=\"term\" id=\"field-5\" aria-describedby=\"calc-info-5\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0.25\" value=\"5\"\/><div class=\"grid grid-cols-1\"><select id=\"field-6\" name=\"as\" aria-label=\"As\"><option value=\"yr\" selected>years<\/option><option value=\"mo\">months<\/option><\/select><svg class=\"pointer-events-none col-start-1 row-start-1 mr-2 size-5 self-center justify-self-end text-gray-500 sm:size-4\" viewBox=\"0 0 16 16\" fill=\"currentColor\" aria-hidden=\"true\" data-slot=\"icon\">\n              <path fill-rule=\"evenodd\" d=\"M4.22 6.22a.75.75 0 0 1 1.06 0L8 8.94l2.72-2.72a.75.75 0 1 1 1.06 1.06l-3.25 3.25a.75.75 0 0 1-1.06 0L4.22 7.28a.75.75 0 0 1 0-1.06Z\" clip-rule=\"evenodd\" \/>\n            <\/svg><\/div><\/div><small id=\"calc-info-5\">Factor-rate advances usually run only 3\u201318 months.<\/small><\/div><div class=\"field\" id=\"input-6\"><label for=\"field-7\">Payment frequency<\/label><div class=\"grid grid-cols-1\"><select id=\"field-7\" name=\"payment_frequency\"><option value=\"12\" selected>Monthly<\/option><option value=\"26\">Every 2 weeks<\/option><option value=\"52\">Weekly<\/option><option value=\"260\">Daily (business days)<\/option><\/select><svg class=\"pointer-events-none col-start-1 row-start-1 mr-2 size-5 self-center justify-self-end text-gray-500 sm:size-4\" viewBox=\"0 0 16 16\" fill=\"currentColor\" aria-hidden=\"true\" data-slot=\"icon\">\n              <path fill-rule=\"evenodd\" d=\"M4.22 6.22a.75.75 0 0 1 1.06 0L8 8.94l2.72-2.72a.75.75 0 1 1 1.06 1.06l-3.25 3.25a.75.75 0 0 1-1.06 0L4.22 7.28a.75.75 0 0 1 0-1.06Z\" clip-rule=\"evenodd\" \/>\n            <\/svg><\/div><\/div><div class=\"field\" id=\"input-7\"><label for=\"field-8\">Origination fee<\/label><input type=\"text\" name=\"origination_fee\" id=\"field-8\" aria-describedby=\"calc-unit-8 calc-info-8\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" max=\"15\" value=\"2\"\/><div class=\"unit\" id=\"calc-unit-8\">% of amount<\/div><small id=\"calc-info-8\">One-time fee deducted from the loan proceeds at closing.<\/small><\/div><div class=\"is-single field\" id=\"input-8\"><span class=\"font-semibold\">Debt Service Coverage (optional)<\/span><\/div><div class=\"field\" id=\"input-9\"><label for=\"field-10\">Annual net operating income<\/label><input type=\"text\" name=\"annual_net_operating_income\" id=\"field-10\" aria-describedby=\"calc-unit-10 calc-info-10\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" value=\"40000\"\/><div class=\"unit\" id=\"calc-unit-10\">$ per yr<\/div><small id=\"calc-info-10\">Business income after operating expenses but before debt payments. Enter 0 to skip the DSCR.<\/small><\/div><\/fieldset><div class=\"buttons\"><button type=\"submit\" data-text=\"Re-Calculate\" id=\"calculate-button\" data-post=\"67363\">Calculate<\/button><button type=\"reset\">Reset<\/button><\/div><div class=\"field is-checkbox hidden!\" id=\"field-auto-calc\"><input type=\"checkbox\" id=\"auto-calc\"><label for=\"auto-calc\">Calculate automatically<\/label><small>If enabled, the result will update automatically when you change any value.<\/small><\/div><div class=\"fieldset-result is-hidden\" aria-labelledby=\"result-title\" aria-live=\"polite\" role=\"region\"> <h3 class=\"result-title bg-gradient-to-r from-primary-50 to-gray-50 dark:from-primary-900 dark:to-gray-800\" id=\"result-title\"><span class=\"icon icon-s-pulse\" aria-hidden=\"true\"><\/span> Business Loan Results<\/h3><div class=\"result-box\"><div class=\"field-result\" id=\"output-1\"><span class=\"field-title\"><span>Payment per period<\/span><\/span><span class=\"field-value\" id=\"result-1\" data-unit=\"$\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-2\"><span class=\"field-title\"><span>Number of payments<\/span><\/span><span class=\"field-value\" id=\"result-2\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-3\"><span class=\"field-title\"><span>Total repayment<\/span><\/span><span class=\"field-value\" id=\"result-3\" data-unit=\"$\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-4\"><span class=\"field-title\"><span>Total cost of funds<\/span><\/span><span class=\"field-value\" id=\"result-4\" data-unit=\"$\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-5\"><span class=\"field-title\"><span>Effective APR (incl. fee)<\/span><\/span><span class=\"field-value\" id=\"result-5\" data-unit=\"%\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-6\"><span class=\"field-title\"><span>Annual debt service<\/span><\/span><span class=\"field-value\" id=\"result-6\" data-unit=\"$\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result\" id=\"output-7\"><span class=\"field-title\"><span>DSCR (NOI \u00f7 debt service)<\/span><\/span><span class=\"field-value\" id=\"result-7\" data-unit=\"\u00d7\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result is-column\" id=\"output-8\"><span class=\"field-title\"><span>Loan Cost Details<\/span><\/span><span class=\"field-value\" id=\"result-8\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><\/div><div class=\"result-actions\"><button type=\"button\" class=\"copy-link\"><svg viewBox=\"0 0 20 20\" fill=\"currentColor\" aria-hidden=\"true\"><path d=\"M12.232 4.232a2.5 2.5 0 0 1 3.536 3.536l-1.225 1.224a.75.75 0 0 0 1.061 1.06l1.224-1.224a4 4 0 0 0-5.656-5.656l-3 3a4 4 0 0 0 .225 5.865.75.75 0 0 0 .977-1.138 2.5 2.5 0 0 1-.142-3.667l3-3Z\"\/><path d=\"M11.603 7.963a.75.75 0 0 0-.977 1.138 2.5 2.5 0 0 1 .142 3.667l-3 3a2.5 2.5 0 0 1-3.536-3.536l1.225-1.224a.75.75 0 0 0-1.061-1.06l-1.224 1.224a4 4 0 1 0 5.656 5.656l3-3a4 4 0 0 0-.225-5.865Z\"\/><\/svg><span class=\"copy-link__text\">Copy link to this calculation<\/span><\/button><span class=\"sr-only\" role=\"status\" id=\"copy-link-status\"><\/span><\/div><\/div><a href=\"#respond\" class=\"hidden transition-opacity duration-300 opacity-0 w-50 text-sm justify-center items-center gap-2 px-4 py-2 rounded bg-gray-200 text-gray-700 hover:bg-gray-300\" id=\"leave-comment\"><span class=\"icon icon-comments\" aria-hidden=\"true\"><\/span>Leave a Comment<\/a><\/form><\/section><section id=\"calc-reactions\" class=\"not-prose hidden my-12 bg-gradient-to-r from-primary-50 to-gray-50 border border-indigo-100 rounded-xl px-6 py-4 shadow-sm\" data-post=\"67363\" aria-live=\"polite\" aria-labelledby=\"calc-reactions-title\"><p id=\"calc-reactions-title\" class=\"text-sm text-gray-500 text-center mb-2\">How did this result make you feel?<\/p><div role=\"group\" aria-labelledby=\"calc-reactions-title\" class=\"grid grid-cols-3 sm:flex sm:flex-row sm:justify-around gap-4 sm:items-center sm:flex-wrap\"><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"like\"><span class=\"reaction-count\" data-reaction-count=\"like\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude00 <\/span><span class=\"reaction-description font-medium\">Like <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"helpful\"><span class=\"reaction-count\" data-reaction-count=\"helpful\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\udca1 <\/span><span class=\"reaction-description font-medium\">Helpful <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"confused\"><span class=\"reaction-count\" data-reaction-count=\"confused\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude15 <\/span><span class=\"reaction-description font-medium\">Confused <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"disappointed\"><span class=\"reaction-count\" data-reaction-count=\"disappointed\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude1e <\/span><span class=\"reaction-description font-medium\">Disappointed <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"inaccurate\"><span class=\"reaction-count\" data-reaction-count=\"inaccurate\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\u274c <\/span><span class=\"reaction-description font-medium\">Inaccurate <\/span><\/button><\/div><div id=\"reaction-message\" class=\"hidden mt-8 rounded-md border border-primary-100 bg-white\/50 backdrop-blur-sm px-4 py-2 text-sm text-center shadow-sm\"><\/div><\/section><div class=\"calcdash-ad not-prose calcdash-ad--calc_result calcdash-ad--in-article\"><ins class=\"adsbygoogle\" style=\"display:block\" data-ad-client=\"ca-pub-1721569815777345\" data-ad-slot=\"6317458308\" data-ad-layout=\"in-article\" data-ad-format=\"fluid\"><\/ins><script>(adsbygoogle = window.adsbygoogle || []).push({});<\/script><\/div>\n<style id=\"wpcoderpro-inline-1\">.formula-box {\r\n\tborder-bottom: none !important;\r\n}<\/style><section class=\"formula-box\" aria-labelledby=\"formula-title\">\r\n\t<div id=\"formula-title\" class=\"not-prose font-display mb-4\"><span class=\"icon icon-formula\" aria-hidden=\"true\"><\/span><h2>Business Loan Formula<\/h2><\/div>\r\n\t<figure class=\"not-prose formula\">\r\n\t\t<figcaption class=\"formula-title\">Formula<\/figcaption>\r\n\t\t<div class=\"text-base text-gray-800\" id=\"formula\">\n\\[ P = \\frac{L \\cdot r}{1 - (1 + r)^{-n}}, \\quad r = \\frac{APR}{m} \\\\ R = L \\cdot k \\\\ DSCR = \\frac{NOI}{P \\cdot m} \\]\n<\/div>\r\n\t<\/figure>\r\n\t<\/p>\n<p><strong>Where:<\/strong><\/p>\n<ul>\n<li>\\(P\\) \u2014 payment per period<\/li>\n<li>\\(L\\) \u2014 loan amount (principal)<\/li>\n<li>\\(r\\) \u2014 interest rate per period<\/li>\n<li>\\(n\\) \u2014 total number of payments<\/li>\n<li>\\(m\\) \u2014 payments per year (12, 26, 52 or 260)<\/li>\n<li>\\(R\\) \u2014 total repayment of a factor-rate loan<\/li>\n<li>\\(k\\) \u2014 factor rate (e.g. 1.25 \u00d7)<\/li>\n<li>\\(DSCR\\) \u2014 debt service coverage ratio<\/li>\n<li>\\(NOI\\) \u2014 annual net operating income<\/li>\n<\/ul>\n<p>The first formula is the standard annuity payment for an amortizing term loan. The second gives the fixed total repayment of a factor-rate merchant cash advance, which charges no interest rate but a multiplier on the principal. The third expresses how comfortably the business's income covers its annual debt payments.<\/p>\n<p>\r\n<\/section>\n<style id=\"wpcoderpro-inline-459\">.calculation-box {\r\n\tborder-bottom: none !important;\r\n}<\/style><section id=\"calculation\" class=\"calculation-box\" aria-labelledby=\"calculation-title\">\r\n\t<div id=\"calculation-title\" class=\"not-prose font-display\"><span class=\"icon icon-unordered-list\" aria-hidden=\"true\"><\/span><h2>Business Loan \u2013 Calculation Example<\/h2><\/div>\r\n\r\n<\/p>\n<p><strong>Example:<\/strong> a business takes a $100,000 amortizing term loan at 9.5% APR for 5 years (60 months) with monthly payments and a 2% origination fee, with annual net operating income of $40,000.<\/p>\n<p>\\[ r = \\frac{0.095}{12} = 0.0079167 \\]<br \/>\n\\[ P = \\frac{100000 \\times 0.0079167}{1 - (1 + 0.0079167)^{-60}} = 2{,}100.19 \\]<br \/>\n\\[ \\text{Total repayment} = 2{,}100.19 \\times 60 = 126{,}011.40 \\]<br \/>\n\\[ DSCR = \\frac{40{,}000}{2{,}100.19 \\times 12} = 1.59 \\]\n<\/p>\n<p><strong>Result:<\/strong> the monthly payment is $2,100.19, total repayment is $126,011.40, and the total cost of funds is $26,011.40. Because the 2% fee ($2,000) reduces the net proceeds to $98,000, the effective APR works out to about 10.37%. Annual debt service is $25,202.28, giving a DSCR of 1.59 \u2014 comfortably above the 1.25 most commercial lenders require.<\/p>\n<p>\n\r\n<\/section>\n<h2>How to use the calculator<\/h2>\n<ol>\n<li>Enter the <strong>Loan amount<\/strong> \u2014 the principal the lender advances before the origination fee is deducted.<\/li>\n<li>Pick the <strong>Loan type<\/strong>: \"Amortizing term loan\" or \"Factor-rate loan (merchant advance)\". The input fields switch automatically between the <strong>Interest rate (APR)<\/strong> and the <strong>Factor rate<\/strong>.<\/li>\n<li>For a term loan, enter the <strong>Interest rate (APR)<\/strong>; for a merchant advance, enter the <strong>Factor rate<\/strong> (typically 1.1\u20131.5).<\/li>\n<li>Set the <strong>Term<\/strong> in years or months using the \"As\" selector. Factor-rate advances usually run only 3\u201318 months.<\/li>\n<li>Choose the <strong>Payment frequency<\/strong>: monthly, every 2 weeks, weekly, or daily on business days (the standard merchant-cash-advance convention of 260 days per year).<\/li>\n<li>Enter the <strong>Origination fee<\/strong> as a percentage of the loan amount.<\/li>\n<li>Optionally enter your <strong>Annual net operating income<\/strong> \u2014 business income after operating expenses but before debt payments. Enter 0 if you want to skip the DSCR.<\/li>\n<li>Read the results: payment per period, number of payments, total repayment, total cost of funds, effective APR including the fee, annual debt service, and DSCR \u2014 plus a year-by-year amortization schedule for term loans or an itemized cost breakdown for factor-rate loans.<\/li>\n<\/ol>\n<h2>What a business loan calculator tells you<\/h2>\n<p>A business loan calculator turns a lender's quoted terms into the numbers that actually matter to your cash flow: how much comes out of your account each period, how much you repay in total, and what the money really costs once fees are included. Small differences in rate, term or fees compound into large differences over the life of the loan, so running several scenarios before signing is one of the cheapest forms of due diligence available.<\/p>\n<p>The calculator handles the two most common structures in business lending. An <strong>amortizing term loan<\/strong> charges interest on the outstanding balance, and each payment combines interest and principal so the loan reaches zero exactly at the end of the term. A <strong>factor-rate loan<\/strong> \u2014 the structure used by merchant cash advances \u2014 charges no interest rate at all; instead you repay a fixed total equal to the loan amount multiplied by the factor rate, spread evenly over the term. Factor rates look deceptively small (1.25 \u00d7 sounds like \"25%\"), but the equivalent APR depends heavily on how short the term is: the same 1.25 factor over 6 months is dramatically more expensive than over 24 months, which is why short advances routinely imply 60\u2013200% APRs.<\/p>\n<p>The <strong>effective APR including the fee<\/strong> is the most honest cost metric shown. An origination fee reduces the cash you actually receive at closing, so the calculator solves for the rate that equates the net proceeds with the payment stream. This lets you compare a 9.5% loan with a 2% fee against a 10% loan with no fee on equal footing.<\/p>\n<p>The <strong>DSCR (debt service coverage ratio)<\/strong> measures whether the business can afford the loan: annual net operating income divided by annual debt payments. A DSCR of 1.59 means the business earns $1.59 of income for every $1 of debt service. Most commercial lenders want at least 1.25; below 1.0 the business cannot cover its payments from operations at all. If your DSCR is thin, our <a href=\"https:\/\/wpcalc.com\/en\/finance\/debt-coverage-ratio\/\">debt coverage ratio calculator<\/a> goes deeper into this metric.<\/p>\n<h2>Assumptions, limitations and practical tips<\/h2>\n<ul>\n<li>Payments are assumed level and never missed. Real business loans may have variable rates, seasonal adjustments, prepayment penalties or balloon payments, none of which are modeled here.<\/li>\n<li>The quoted APR for amortizing loans is a nominal annual rate divided by the payment frequency; it is not compounded to an APY. To compare yields on equivalent footing, see the <a href=\"https:\/\/wpcalc.com\/en\/finance\/annual-percentage-yield\/\">annual percentage yield calculator<\/a>.<\/li>\n<li>Daily payments use 260 business days per year, the standard merchant-cash-advance convention. \"Every 2 weeks\" gives 26 payments per year \u2014 effectively 13 monthly payments \u2014 which pays the loan down faster than monthly at the same quoted rate.<\/li>\n<li>Net operating income must be <em>before<\/em> debt payments but <em>after<\/em> all operating expenses. Mixing in owner salaries or existing loan payments will skew the DSCR.<\/li>\n<li>Lenders quote the origination fee on the loan amount, not the net proceeds \u2014 a real cost difference when comparing offers. Closing costs of other kinds can be estimated with the <a href=\"https:\/\/wpcalc.com\/en\/finance\/closing-cost-calculator\/\">closing costs calculator<\/a>.<\/li>\n<li>Factor-rate loans almost never allow early-payoff savings: the total repayment is fixed regardless of how quickly you pay. If you expect to prepay, an amortizing term loan is usually much cheaper.<\/li>\n<\/ul>\n<h2>Comparing loan offers<\/h2>\n<p>When shopping for a business loan, compare offers on effective APR including all fees \u2014 not on the headline rate or factor rate \u2014 and on annual debt service relative to your income. A consumer <a href=\"https:\/\/wpcalc.com\/en\/finance\/personal-loan-calculator\/\">personal loan calculator<\/a> uses the same payment math if you are weighing a personal loan separately. Run each offer through this calculator with identical payment frequency and term so the comparison is apples-to-apples, then check the DSCR for the least favorable offer to make sure the business survives the worst terms you are considering.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Estimate the payment, total cost and effective APR of a business loan, including amortizing term loans and factor-rate merchant cash advances. Enter the amount, rate or factor, term and fees, and the calculator also shows your DSCR.<\/p>\n","protected":false},"author":3168,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[30],"class_list":["post-67363","post","type-post","status-publish","format-standard","hentry","category-finance","tag-mortgage"],"acf":[],"_links":{"self":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/67363","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/users\/3168"}],"replies":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/comments?post=67363"}],"version-history":[{"count":1,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/67363\/revisions"}],"predecessor-version":[{"id":67364,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/67363\/revisions\/67364"}],"wp:attachment":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/media?parent=67363"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/categories?post=67363"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/tags?post=67363"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}