A loan backed by the U.S. Small Business Administration (SBA) can be the least expensive way to get capital for many small businesses. They typically offer small businesses lower interest rates and longer terms than other financing options. Our SBA loan calculator will help you see just how affordable your SBA loan can be.
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.
- 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 Payment 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. 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 community development corporations 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 Payment Calculator Inputs
There are three 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), and the expected interest rate.
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.
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.
Expected Interest Rate
SBA loan rates range from 7.25% to 9.75%, and are based on the prime 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; higher interest rates yield higher payments.
Small Business Loan Calculator Outputs
After you have entered all necessary inputs, the calculator will generate the estimated monthly payment amount for your loan and display the interest rate that you entered. 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. 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.
Amortization Schedule
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.
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.
What’s Not Included in the SBA Loan Payment Calculator
Our SBA loan calculator is a great tool for estimating your monthly SBA loan payment amount. 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.
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 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 (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.
SBA Loan Rates
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. 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. The higher the interest rate, the higher the monthly payment.
The calculations for the maximum SBA 7(a) loan rates are:
Maximum SBA 7(a) Loan Rates
| Loan Size | Standard 7(a) (Repayment Term Less Than 7 Years) | Standard 7(a) (Repayment Term 7 Years or Greater) |
|---|---|---|
Less than $25,000 | Prime rate + 4.25% | Prime rate + 4.75% |
| $25,000 - $50,000 | Prime rate + 3.25% | Prime rate + 3.75% |
| Over $50,000 | Prime rate + 2.25% | Prime rate + 2.75% |
Interest rates on SBA 7(a) loans can be fixed or variable. With a variable rate, the interest rate you are charged changes with market interest rates. If market rates rise, the interest rate and payments on the loan will rise. With a variable rate loan, this change in interest rate is gradual, occurring over the course of several years.
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 are 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 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 that can provide fast business loans.
Bottom Line
In most cases, SBA loans offer the most affordable financing for small business owners. 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.
If, after using the SBA loan calculator, you want to apply for an SBA loan, SmartBiz can prequalify you in minutes with only a soft credit pull. With its streamlined application process, SmartBiz can often provide SBA loan funding in as quickly as 30 days.
Rick S
how are you calculating Annual Business Owners Income that you use in your ratio?
Jeff White
Hi Rick!
Thanks for your question. We are using the Annual Business Owners Income as part of the calculation, but the calculator does not actually calculate it. That is one of the input fields that you must enter in order to get an accurate calculation. So you should be typing in your actual annual income, including your salary, so that the calculator can work properly. This number would include any financial incentive or payment you receive from the business that you would claim as income on your personal tax return. Most small business loans take the business owner’s credit profile into consideration for a potential approval so it’s important that you include all of your income so you can maximize your ability to get past the approval process. Good luck!
Best
Jeff
Rodney Ellison
I am trying to buy a business I thay wait help me and I have a good credit score and I have not been late on any off my payments I have always keep my payments a head so don’t waste your time because they want let you have any money at all by the way my name is Rodney Ellison owner of Ellison mobile home transport LLC have been in business for over 20 years
Ian Atkins
Hi Rodney,
Thanks for sharing. Getting an SBA loan to buy a business can be tough. Keep in mind, there are two parties that an SBA lender is evaluating when someone want to buy a business. Even if you are a very strong borrower, the business you’re looking at could be presenting problems. That business’s financial history, the industry it’s in, or how the previous owner’s kept their books could all present issues to a lender that would prevent them from making a loan. Check out this article for more detail on getting a loan to buy a business.
If you have a good credit score (680+) with no bankruptcies or tax liens, 10% cash down payment, collateral, and your business is profitable then you may be the business you’re looking to buy that’s holding things up. In these circumstances, sometimes it’s worth looking for other similar businesses to buy or consider obtain a loan to simply expand into that space.
Best,
Ian
James
So if you are a start-up buying an existing business that has been around for 30+ years, does the 2-year business operating requirement still apply?
Thanks
Ian Atkins
Hi James,
SBA loans are available for startups that are buying a business.
Keep in mind, the lenders will have higher standards for a startup buying a business vs. an established business buying a competitor (or other business).
Check out this article for more details on getting a loan to buy a business.
Best,
Ian
hemant
I bought a gas station in 2012 I got a loan on 300,000 for 7% interest. i prophet it all 4 year now I want to refinance at lower interest. my income with salary is $50,000 and i owe 204308.35. i have a good credit score I don’t care paying the same amount. how low you think I can get my interest rate
Priyanka Prakash
Hi Hemant,
Is your current loan an SBA 7(a) loan? 7 percent is a good interest rate. Given your current income and the fact that you have a good credit score (it should ideally be over 650 and the higher the better), you may be able to refinance into an SBA loan with a 6 % interest rate. While that difference may not sound like much, the cost savings can be significant in the long run. We recommend applying for a new loan with SmartBiz, our recommended SBA provider for loans under $350K.
Best of luck,
Priyanka Prakash
Vince
Your “Simple Debt Service Ratio Formula” reads as follows:
(Monthly Loan Payments x 12) / Annual Business Owners Income Including Owners Salary
I believe you meant:
Annual Business Owners Income Including Owners Salary/(Monthly Loan Payments x 12)
Thanks for the article
Marc Prosser
Thanks for pointing this out. We will make the correction! Best regards, Marc