SBA Loan Calculator: Payments, Rates & Qualifications

How to Read Your SBA Loan Calculator Results

• Loan amount: The first, and most important, input into the calculator is the loan amount. This amount represents the amount of the loan for which you are applying. For the best results, this should be as accurate as possible. SBA 7(a) and Express loans are available in amounts up to $5 million.
• Monthly payment: The primary output of the SBA loan calculator is the monthly payment. It is important to review this number to ensure you feel comfortable with this amount for a monthly payment. The monthly payment is impacted by the interest rate you get on the loan, as well as the loan amount and length of the term.
• Debt service coverage ratio (DSCR): The debt service coverage ratio compares your annual net operating income to the annual debt service of the new loan. With SBA 7(a) loans, you typically need to have a DSCR of greater than 1.25x. If your results indicate that your DSCR is below 1.25x, your ability to repay the loan may come into question.
• Next steps: Once you have reviewed the results of the SBA loan calculator, you can use this information to help you decide whether or not you want to apply for an SBA loan. To make the application process easier, we recommend working with an experienced SBA lender.

How the SBA Loan Calculator Works

Our SBA loan calculator lets you input your loan term, desired loan amount, expected interest rate, and annual net operating income. You can then view the monthly payment for an SBA 7(a) loan and your debt service coverage ratio (DSCR), which is a financial calculation used by lenders in determining whether to approve you for a loan. The calculator will also generate a projected amortization schedule based on the loan information that you provided.

This SBA loan calculator is specifically designed for SBA 7(a) loans and SBA Express loans, the SBA’s most popular working capital loan programs. The SBA itself does not make the loan, but instead partially guarantees loans for a lender. This guarantee enables these lenders to make loans to small businesses at lower interest rates and with longer repayment terms. Some lenders also require smaller down payments and lower collateral for SBA 7(a) loans.

Please do not use this calculator for calculating interest rates or payments on CDC SBA 504 loans or other SBA loan products. The calculator is not set up to accurately project payment information for an SBA 504 loan due to the fact that an SBA 504 loan is comprised of two separate loans. If you need to calculate payments for an SBA 504 loan, many CDCs can provide those calculations for you. The inputs you enter should relate specifically to an SBA 7(a) loan or an SBA Express Loan.

Small Business Loan Calculator Inputs

There are four basic pieces of information you will enter into the calculator. Inputting accurate figures into the SBA loan calculator will provide you with more reliable outputs. You will need to enter the amount of the SBA loan, the repayment term of the loan (in years), the expected interest rate, and the annual net operating income (including owner’s salary).

The information you will need to enter into the calculator is:

• Loan amount: In this field, enter the amount of the loan that you are applying for (in whole dollars). It’s important to make sure you can afford the loan amount before applying for an SBA loan. Our calculator allows you to see how your monthly payment and DSCR change with differing loan amounts
• Term (in years): This is the estimated repayment term of the loan for which you are applying. In general, loan terms are 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. SBA loan terms are explained further later in this article.
• Expected interest rate: SBA loan rates range from 7.50% to 10.00%. 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; higher interest rates yield higher payments. Additionally, a higher or lower payment amount will impact the calculation of your DSCR.
• Annual net operating income (plus owner’s salary): Annual net operating income is equal to annual business revenues minus operating expenses (except taxes, interest payments, depreciation, and amortization). Your annual net operating income is used as the basis for determining your debt service coverage ratio.

The calculator allows you to choose up to 25 years on the term of your loan, even though the SBA 7(a) loans for working capital are typically between five to 10 years. Keep in mind that SBA loans with longer terms are typically reserved for large loan amounts ($350,000 and up) and to finance commercial real estate.

Small Business Loan Calculator Outputs

After you have entered all necessary inputs, the calculator will generate two calculated fields and display the interest rate that you entered. The two calculations are the estimated monthly loan payment on the SBA loan and your debt service coverage ratio. Additionally, you will be provided with a link to an estimated amortization schedule that will break down principal and interest payments over the term of the loan.

The outputs generated by the SBA 7(a) loan calculator are:

• Monthly payment: Based on the loan amount, repayment term, and interest rate you input, the SBA loan payment calculator provides an estimated monthly payment amount for the SBA loan. This payment amount is also included in the calculation of your debt service coverage ratio.
• Debt service coverage ratio: The value for the debt service coverage ratio generated by the SBA loan calculator is equal to the annual net operating income that was input divided by the annualized monthly payment. SBA lenders typically are looking for a DSCR of 1.25x or greater.
• 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 the how interest rates and terms affect your payments.

The information provided by the SBA 7(a) loan calculator should give you a solid starting point to help you decide whether or not an SBA loan would be a good financing choice for your business. This is because the SBA loan calculator provides basic information to help you understand the size of an SBA loan you can afford, such as your estimated monthly payments and DSCR.

What’s Not Included in the SBA Loan Calculator

Our SBA loan calculator is a great tool for estimating your monthly loan payment amount and estimated debt service coverage ratio. However, it is not an all-inclusive calculator. Our calculator does not take into account fees associated with SBA loans, nor does it predict whether or not you will qualify for an SBA loan.

The most significant factor that is missing from our SBA loan calculator are the fees associated with SBA loans. These fees include lender origination fees, SBA loan guarantee fees, loan packaging fees, and closing costs. 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 does not provide information to help you determine if you meet the qualification requirements for the SBA 7(a) or SBA Express loan programs. Prior to applying for an SBA loan, you should review the qualification requirements to ensure your business is eligible to receive SBA loan funds.

We have briefly discussed the various inputs and outputs of the SBA loan calculator, how it works, and the concerns that the calculator does not address. With those basics established, we can delve deeper into how each of these facets plays a part in the calculations.

SBA Loan Costs & Monthly Payment Factors

The primary inputs in our SBA loan calculator are the loan amount, repayment term, and interest rate. These items affect the total cost of the loan and the monthly payment. Understanding how much an SBA loan is going to cost (in terms of total cost and monthly payment) is important before you make a financing decision. While our SBA loan calculator does not include financing fees, it’s important to understand what fees you’ll pay, as these go into the total cost of the loan.

SBA loan costs and monthly loan payments are typically affected by the following:

1. Loan Amount & Term

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 SBA sets the maximum interest rates that lenders can charge on SBA 7(a) loans. The maximum interest rates are determined by the length of the loan term (number of years) and the size of the loan amount being borrowed.

Keep in mind that the interest rate is different from the annual percentage rate (APR) of the loan. Additional borrower costs, such as the SBA guarantee fee, packaging fee, and closing costs, will increase the APR. However, these fees are paid upfront before the loan is disbursed to you, so they don’t affect the size of the monthly SBA payments.

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 is typically rolled into the whole loan.

The amount you’re charged as a guarantee fee is based on the size and term of your loan. You’re generally charged a 2% fee on loans up to $150,000, a 3% fee on loans between $150,000 and $700,000, 3.5% on loans above $700,000, and an additional 0.25% on any amounts above $1 million.

For a more in-depth explanation and full examples of how this works, read our article on SBA guarantee fees. In order to estimate the monthly SBA loan payment, our calculator assumes the loan will be fully paid off in equal monthly payments throughout the life of the loan.

Current SBA Loan Rates

The SBA loan rates vary over time (most SBA 7(a) loans are pegged to the Fed’s prime rate). The SBA sets a maximum rate that lenders are allowed to charge borrowers, based on loan size and term, which currently ranges from 7.50% to 10.00%.

The interest rate is one of the primary inputs in our SBA loan calculator since it affects the size of the loan you can get. You’ll typically be required to have a DSCR of at least 1.25x to qualify. The higher the interest rate, the higher the monthly payment, which means you need to have more cash flow to meet the DSCR requirements.

The current maximum SBA 7(a) rates are:

Maximum SBA 7(a) Loan Rates as of September 2019

The rates above contain the current prime rate (5.00%) plus a markup rate between 2.00% and 4.75%, depending on how much you’re borrowing and the length of the loan term. For more information on the current rates and how they’re calculated, visit our article on SBA loan rates.

SBA 7(a) Debt Service Coverage Ratio Requirements

The debt service coverage ratio (DSCR) is a financial ratio used by SBA lenders to determine if you can afford a loan. It’s calculated by dividing your business’ annual net operating income (plus owner’s salary) by your annual debt payments. Generally, SBA lenders prefer borrowers with a DSCR over 1.25x. For this reason, it’s one of the most important outputs in our SBA loan calculator.

For example, suppose your net operating income is $100,000, your salary as the owner is $20,000, and you want a 10-year, $500,000 SBA loan at an interest rate of 10.25%. Your annual loan payments will be approximately $80,124 (monthly loan payment of $6,677 multiplied by 12 months). Dividing $120,000 by this number results in a DSCR of 1.50x.

By ensuring your DSCR is above 1.25x, lenders can be confident that minor changes to your business’ revenues or expenses won’t result in a default on your SBA loan. If, when working with the SBA loan calculator, your DSCR results in a number under 1.25x, you’re probably requesting more money than an SBA lender would be willing to loan you.

SBA 7(a) Loan Qualifications

An SBA loan is difficult to qualify for, carrying similar qualification requirements to a traditional bank loan. You will need a credit score of at least 680 and at least two years of business operations. Your business needs to be profitable, generating at least $120,000 in annual revenues, and trending upward. While our SBA loan calculator doesn’t include SBA loan qualification requirements, it’s important to consider if you meet these requirements before you apply.

To get an SBA 7(a) loan, you will generally have to meet these five requirements:

• Credit score: At least 680 (check your score for free)
• Time in business: At least two years
• Annual revenues: At least $120,000, and trending up
• Positive cash flow: Be able to demonstrate profitability
• Minimum loan amount: At least $30,000

Most SBA loans are issued to existing businesses, but those who want to fund a startup or buy a new business may also be able to qualify for an SBA loan. In most cases, startups will need to be much stronger borrowers and have collateral sufficient to cover the loan.

When buying a business, the business you’re purchasing will typically need to be profitable and have good revenue trends because it’s difficult to get SBA funding for a turnaround or startup business.

If you meet the qualifications above, you can prequalify for an SBA loan from SmartBiz within a few minutes by filling out an online application. SmartBiz is the fastest SBA loan provider we’ve reviewed, with the ability to get you funded for up to $350,000 in as quickly as 30 days.

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SBA Loan Application Documentation

After using the SBA loan calculator to determine if you can afford the loan you have considered, it’s time to start preparing for the loan application process. Before applying for an SBA loan, you’ll want to prepare the necessary documentation, as this can help expedite the completion of your application. SBA loan applications are document-intensive, and you’ll likely be asked for more documentation throughout the process.

The documents you can expect most lenders to request to complete your application are:

• Last three years of tax returns (business and personal)
• Year-to-date profit and loss (P&L) statement
• Year-to-date balance sheet
• Business plan and three years of financial projections
• Business certificate or license
• Owner resume
• Business lease
• Personal asset and liabilities list

Applying for an SBA loan can take a long time (45 to 120 days or more), and it takes a significant amount of documentation. While the information above will get you started, if you’re ready to apply, you’ll need more information to successfully navigate the application process. For more information about how to apply for an SBA loan, you can read our in-depth guide.

SBA Loan Amortization Schedule

Once you have applied and been approved for an SBA loan, you need to pay attention to the amortization schedule. This is because it will show you what your monthly payments are going to be, and will help you understand the total cost of your loan. Our calculator provides an estimated amortization schedule based on your loan inputs.

An amortization schedule is a table that shows a breakdown of this monthly payment, including how much interest and principal you paid each month and what your remaining balance is. The amortization schedule shows these numbers for every month over the full life of the loan.

When a loan is “fully amortized,” it means that loan payments are the same each month and consist of both principal and interest. For example, if you amortize a loan for $100,000 over 10 years, then you would pay 120 equal monthly installments of $1,060.66. This means that over time, the proportion of monthly interest you pay declines and the amount of principal you repay increases.

It’s important to know what your SBA loan amortization schedule looks like so you’ll know during any given month how much you have left to pay off. It’s also a good idea to check an amortization schedule before you sign the loan agreement to fully understand your payment obligations. You don’t want to end up paying on a loan for longer than you expect, and you don’t want to find out halfway through the loan term that your payments are increasing.

Pros & Cons of SBA Loans

Our SBA loan calculator will help you determine how much an SBA loan will cost, but it is also important to consider whether or not an SBA is right for your business. Some advantages of SBA loans include that they offer longer repayment terms and lower interest rates than other lending sources, and they are available to startup businesses. Disadvantages of SBA loans include the lengthy application process, stringent qualifications, and the amount of time it takes to receive funding.

Pros of SBA Loans

The advantages of SBA loans are:

• Repayment terms are longer than many small business loans: With terms of up to 10 years for working capital and up to 25 years for real estate, SBA loans offer some of the longest repayment terms available for small business loans. The extended repayment term allows for lower monthly payments, making SBA loans more affordable than short-term loan options.
• Interest rates are lower than common alternatives: Interest rates on SBA loans range from 7.75% to 10.25%. This is often much lower than rates offered by online lenders for similar loan amounts, where APRs can be upward of 30%.
• Time in business requirements do not apply: While many lenders, both online and traditional, have time in business requirements that preclude many startups, SBA loans do not have this requirement. This makes them accessible to new businesses.

Cons of SBA Loans

Some of the disadvantages of SBA loans are:

• The application can be daunting: SBA loans have a lengthy application process, and require you to provide a significant amount of business documentation. The amount of paperwork can seem overwhelming. However, choosing an experienced SBA lender can make the process go more smoothly.
• Qualifying can be difficult: Compared to the qualification requirements for many online lenders, the eligibility requirements for an SBA loan can seem difficult to meet. This is especially true if you have issues with your credit resulting in a credit score of less than 680. However, there are lenders that accept lower credit scores for business loans.
• It takes a long time to receive funding: If you need funds quickly, an SBA loan likely isn’t going to meet your needs. It generally takes 30 days or more to receive SBA loan funding. If you need funding quickly, a fast business loan from an alternative lender may be a better choice for your business

If you can qualify for an SBA loan, and are able to wait to receive the funds, the end result will be a small business loan with some of the most favorable interest rates and repayment terms. If you need faster funding, or are unable to qualify for an SBA loan, you may be more interested in reviewing online lenders who can provide fast business loans.

Bottom Line

In most cases, SBA loans are the most affordable loan for small business owners. The SBA business loan calculator will help you estimate the monthly payment and DSCR for an SBA 7(a) loan for either working capital or commercial real estate.

If, after using the SBA loan calculator, you want to apply for an SBA loan, we recommend applying with SmartBiz. They can prequalify you in minutes with only a soft credit pull. Plus, their application process is streamlined and they have cut funding times from three to four months to four to five weeks.

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