Business Loan Calculator
Calculate business loan payments, analyze cash flow impact, and compare lending options
Business Loan Calculator
Calculate business loan payments, analyze cash flow impact, and compare lending options
Loan Details
Business Information
Loan Qualification Tips
• Credit Score: Maintain a score above 680 for better rates
• Cash Flow: Demonstrate consistent positive cash flow
• Debt Service Coverage: Aim for 1.25x or higher
• Down Payment: 10-30% down payment typically required
• Business Plan: Have a solid business plan and financial projections
• Collateral: Valuable assets can secure better terms
Loan Types Explained
• Term Loan: Fixed payment, traditional business loan
• SBA Loan: Government-backed, lower rates, longer terms
• Equipment Financing: Asset-based, competitive rates
• Line of Credit: Flexible access to funds as needed
• Commercial Real Estate: Property purchase or refinancing
Understanding Business Loans
Business loans provide the capital needed to start, expand, or maintain your business operations. Understanding the terms, qualification requirements, and impact on cash flow is crucial for making informed financing decisions.
Types of Business Loans
- Term Loans: Traditional fixed-payment loans with set terms
- SBA Loans: Government-backed loans with favorable terms
- Equipment Financing: Asset-based loans for equipment purchases
- Lines of Credit: Flexible access to funds as needed
- Commercial Real Estate: Property purchase or refinancing loans
Qualification Factors
Lenders evaluate several key factors when approving business loans:
- Business credit score and history
- Annual revenue and cash flow
- Debt service coverage ratio
- Collateral and down payment
- Business plan and financial projections
- Industry risk and time in business
Business Loan Formulas
Monthly Payment Formula
Payment = P × [r(1+r)^n] / [(1+r)^n - 1]
Where P = Principal, r = Monthly rate, n = Number of payments
Debt Service Coverage Ratio
DSCR = Net Operating Income / Total Debt Service
Should be 1.25 or higher for qualification
Loan-to-Value Ratio
LTV = Loan Amount / Asset Value
Typically should not exceed 80%
Interest Coverage Ratio
ICR = EBIT / Interest Expense
Measures ability to pay interest obligations
Loan Application Tips
Prepare Your Documentation
- • Business and personal tax returns (3 years)
- • Financial statements and cash flow projections
- • Business plan and purpose of loan
- • Personal financial statement
- • Legal documents (licenses, articles of incorporation)
- • Bank statements and accounts receivable aging
Improve Your Chances
- • Maintain strong business credit score
- • Show consistent revenue growth
- • Reduce existing debt obligations
- • Provide detailed use of funds
- • Consider providing collateral
- • Build relationships with lenders
Frequently Asked Questions
What credit score do I need for a business loan?
Most lenders require a business credit score of 680+ for favorable terms. SBA loans may accept scores as low as 620, while alternative lenders may work with lower scores but at higher interest rates.
How much can I borrow for my business?
Loan amounts typically range from $25,000 to $500,000 for term loans, though larger amounts are available for real estate. The amount depends on your revenue, cash flow, collateral, and creditworthiness.
What's the difference between secured and unsecured business loans?
Secured loans require collateral (equipment, real estate, inventory) and typically offer lower rates. Unsecured loans don't require collateral but have higher rates and stricter qualification requirements.
How long does it take to get approved for a business loan?
Approval times vary by lender and loan type. Online lenders may approve within days, traditional banks may take 2-4 weeks, and SBA loans can take 30-90 days due to additional documentation requirements.