This article is part of a larger series on Business Financing.
Our Small Business Administration (SBA) loan calculator is designed for SBA 7(a) and SBA Express Loans. Upon inputting the loan term, desired loan amount, expected interest rate, and annual net operating income, the calculator will generate an estimated monthly payment and a projected amortization schedule.
Note: Please don’t use this calculator for calculating interest rates or payments on SBA 504 loans. The SBA 504 loan consists of two separate loans, and our calculator isn’t set up to accurately calculate this loan product. If you need to calculate payments for an SBA 504 loan, many community development corporations can provide those calculations for you.
SBA Loan Payment Calculator Inputs
When using our SBA loan calculator, there are four essential pieces of information you’ll need to enter:
- Loan amount: The first and most important input into the calculator is the loan amount for which you’re applying. This should be as accurate as possible. SBA Express loans are available in amounts up to $350,000 and 7(a) loans in amounts up to $5 million.
- Term (in years): This is the estimated repayment term of the loan for which you’re applying. Loan terms are generally up to 10 years for working capital and up to 25 years for real estate. The longer the repayment term is for your loan, the lower the monthly payments will be.
- Expected interest rate: The calculator will only accept interest rates up to the maximum SBA loan interest rate. The interest rate on your loan impacts your payment amount; a higher interest rate yields a higher payment.
- Annual business income: Input the gross revenue that your business generates annually. Make sure to include your salary. For best results, use an average of the past two years, as most lenders use an average instead of a single year.
How To Read Your SBA Loan Calculator Results
- Monthly payment: The primary output of the SBA loan calculator is the monthly payment. It’s important to review this number to ensure that you can afford the amount and that you feel comfortable with a payment of this size. The monthly payment is impacted by the interest rate on the loan as well as the loan amount and length of the term.
- Debt service coverage ratio (DSCR): The DSCR is a metric that compares your business debt to income. A DSCR of at least 1.25 is preferred by lenders. Note that our DSCR output only includes your SBA loan and doesn’t include any other business debt you may have.
- Amortization schedule: The SBA loan calculator generates an estimated amortization schedule based on the information entered. The amortization schedule breaks down each monthly payment into principal and interest over the course of the loan. This allows you to see how interest rates and terms affect your payments.
Do you need an SBA loan? Lendio connects you to more than 75 loan providers, offering SBA loans and also non-SBA financing. Their competitive marketplace can get you pre-qualified in a matter of days with a quick application online, providing you with choices on the best financing options available for your business.
What’s Not Included in the SBA Loan Payment Calculator
Our SBA loan calculator is a great tool for estimating your monthly SBA 7(a) or Express loan payment. However, it isn’t an all-inclusive calculator. Our calculator doesn’t take into account the fees associated with SBA loans. These fees include costs for lender origination, SBA loan guarantee, loan packaging, and closing the loan. Some fees may be able to be rolled into your total loan amount, while others may require that you pay them upfront. Additionally, our SBA loan calculator doesn’t provide information to help you determine if you qualify for the SBA 7(a) or SBA Express loan programs should you wish to apply.
SBA Loan Payment Factors
We’ve briefly discussed the various inputs and outputs of the SBA loan calculator, how it works, and the items that the calculator doesn’t address. With those basics established, we can delve deeper into how each of these facets plays a part in the calculations. It’s important to understand how much an SBA loan is going to cost each month and over the life of the loan before you make a financing decision.
SBA loan costs and monthly loan payments are typically affected by the following.
1. Loan Amount & Terms
In general, interest rates are lower for larger loan amounts and shorter repayment periods. SBA loans have a maximum loan amount of $5 million and maximum repayment terms of 10 years for working capital and 25 years for real estate.
2. SBA Loan Interest Rates
The government sets maximum SBA interest rates that lenders can charge on SBA 7(a) loans. The maximum interest rates are determined by the length of the loan term and the size of the loan amount being borrowed. The interest rate on 7(a) loans can be fixed or variable. With a variable rate, the interest rate you’re charged changes with market interest rates. If market rates rise, the loan’s interest rate and payments will also rise. This change in interest rate is typically gradual, occurring over the course of several years.
Keep in mind that the interest rate is different from the annual percentage rate (APR) of the loan. Additional borrower costs that are rolled into the loan, such as the SBA guarantee fee, packaging fee, and closing costs, will increase the APR.
3. SBA Loan Fees
The largest SBA loan fee is usually the guarantee fee. Initially paid by the lender, the fee is almost always passed on to the borrower at closing and typically is rolled into the whole loan.
The guarantee fee is based on the size and term of your loan and can be as high as 3.75% on loan amounts over $1 million.
In most cases, SBA loans offer the most affordable option for small business owners seeking financing. The SBA business loan calculator will help you estimate the monthly payment for an SBA 7(a) loan for either working capital or commercial real estate and provide you with an amortization schedule for your loan.