Borrowing money is one of the fastest ways to grow a small business, but the number that decides whether the loan actually helps or hurts you is the monthly payment relative to the cash your company already generates. This small business loan calculator estimates your fixed monthly payment on a term loan or SBA 7(a) loan, adds any SBA guarantee or origination fee you choose to finance, and — unlike a generic loan calculator — checks the payment against your real monthly revenue and expenses so you can see your debt-service coverage ratio (DSCR) before you sign.
Adjust the sliders and every figure updates instantly. The result card shows not just what the bank will take out of your account each month, but how much cash is left after that payment and whether lenders will consider the deal underwritten.
How to Use
- Enter the Loan Amount — the principal you want to borrow. Typical uses are working capital, equipment purchases, inventory, or buying out a partner.
- Type your Interest Rate (APR). If you do not have a quoted rate yet, check the national average for SBA 7(a) loans and test a range of ±1% to stress-test your budget.
- Choose the Loan Term. SBA 7(a) working-capital terms commonly run up to 10 years; longer terms lower the payment but raise total interest.
- Set the SBA Guarantee / Origination Fee. SBA 7(a) loans charge a guarantee fee that is often financed into the loan itself, so it raises both the amount you repay and the monthly payment. Enter 0 for a conventional bank term loan or online lender with no fee.
- Add your Monthly Gross Revenue — your average monthly sales before any expenses. This is optional, but it is what turns the calculator from a payment machine into an affordability check.
- Add your Monthly Operating Expenses — rent, payroll, inventory, utilities, and other recurring costs. The difference between revenue and expenses is the cash you have available to service debt.
The result card breaks out the SBA fee, the amount financed, the monthly payment (highlighted), total interest, total repayment, your remaining monthly cash flow after the payment, your DSCR, and the payment as a percentage of revenue. Lenders generally want a DSCR of at least 1.15x–1.25x; below 1.0x your operating cash flow does not even cover the debt.
The Small Business Loan Formula
Your monthly payment comes from the standard amortization formula used by banks, the SBA, and Wall Street Prep:
M = P_financed × r(1 + r)ⁿ / ((1 + r)ⁿ − 1)
Where:
- M is the monthly payment.
- P_financed is the amount financed — the principal plus any SBA guarantee fee you choose to roll into the loan.
- r is the monthly interest rate — the annual APR divided by 12.
- n is the total number of monthly payments — the term in years times 12.
Worked example on a $150,000 SBA 7(a) loan at 6.5% for 5 years with no fee: P_financed is $150,000, the monthly rate is 0.005417, and n = 60. Plugging in gives a monthly payment of $2,934.92, and over 5 years the total interest paid is about $26,095. If you finance a 2% SBA guarantee fee, the amount financed rises to $153,000 and the payment climbs to roughly $2,993.62 — a small difference each month, but one that matters when cash is tight.
If the rate is 0%, the formula divides by zero, so the engine simply splits the amount financed evenly across the number of months: $150,000 over 60 months is $2,500.00 per month.
Why DSCR Matters More Than the Payment Alone
A $2,935 payment sounds fine if your business nets $20,000 a month, but it is dangerous if your net operating cash flow is only $2,500. The debt-service coverage ratio fixes this by comparing the cash your business actually produces to the debt payment:
DSCR = (Monthly Revenue − Monthly Operating Expenses) ÷ Monthly Payment
- DSCR above 1.25 — comfortable; your cash flow covers the payment with a buffer.
- DSCR 1.0–1.25 — tight; lenders may approve, but a slow month could strain payroll.
- DSCR below 1.0 — your business does not generate enough cash to make the payment; lenders will almost certainly decline.
On the $150,000 loan above at $2,935/month, with $35,000 gross revenue and $24,000 operating expenses, your monthly cash flow is $11,000 and the DSCR is about 3.75x — very safe. The payment is only about 8.4% of monthly revenue, a healthy range for most small businesses.
SBA 7(a) vs Conventional Bank Loans
SBA 7(a) loans are government-guaranteed term loans that banks issue on the SBA's behalf. They usually offer longer terms (up to 10 years for working capital, 25 for real estate) and lower down-payment requirements, but they carry a one-time SBA guarantee fee — roughly 2–3.5% of the guaranteed portion for loans over $150,000 — and require more paperwork than an online lender. Conventional bank term loans skip the guarantee fee but often demand a shorter term, stronger collateral, and a higher rate. This calculator lets you model both by setting the fee to 0 (conventional) or 2–3.5% (SBA).
Examples
Example 1 — The default SBA 7(a) working-capital loan. A café owner borrows $150,000 at 6.5% for 5 years with a 2% SBA fee. The fee is $3,000, the amount financed is $153,000, and the monthly payment is about $2,994. With $35,000 monthly revenue and $24,000 in expenses, cash flow after debt service is roughly $8,006 per month and the DSCR is about 3.67x — easily approvable.
Example 2 — A tight-margin business. A contractor takes the same $150,000 at 6.5% for 5 years, but runs $60,000 monthly revenue against $56,000 of expenses (heavy payroll and materials). Monthly cash flow is only $4,000 against a $2,935 payment, giving a DSCR of 1.36x — acceptable but thin. The payment eats nearly 4.9% of revenue, and one delayed invoice could create a payroll gap. Stretching to a 7-year term would drop the payment to roughly $2,390 and raise the DSCR to 1.67x.
Example 3 — A larger equipment loan. A manufacturer finances $1,500,000 at 6.5% over 10 years. The monthly payment is about $17,032 and total interest over the decade is roughly $543,864. On $200,000 monthly revenue with $140,000 expenses, cash flow is $60,000 and the DSCR is 3.52x — the kind of cushion lenders look for on six- and seven-figure credit.
FAQ
How is a small business loan monthly payment calculated?
It uses the standard amortization formula M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1), where P is the amount financed (principal plus any financed SBA fee), r is the monthly interest rate (annual APR divided by 12), and n is the number of monthly payments (years times 12). This is the same formula used by banks and the SBA for 7(a) term loans.
What is a good DSCR for a small business loan?
Most lenders look for a DSCR of at least 1.15x–1.25x, meaning your operating cash flow exceeds the debt payment by 15–25%. A DSCR above 1.25x is comfortable; below 1.0x your business does not generate enough cash to cover the payment at all. Enter your revenue and expenses above to see your own ratio.
Are SBA guarantee fees added to the loan?
Often yes. The SBA 7(a) guarantee fee is typically 2–3.5% of the guaranteed portion for loans over $150,000, and many borrowers choose to finance it rather than pay it out of pocket. Financing the fee raises the amount you repay and the monthly payment, which is why this calculator adds it to principal before applying the amortization formula.
What interest rate can I expect on an SBA 7(a) loan?
SBA 7(a) rates are usually Wall Street prime plus a lender spread, commonly prime + 2.0% to prime + 2.75% for loans under $500,000 with terms under 7 years. As of recent months that has landed roughly in the 6%–9% range. Online lenders and equipment-financing deals can run higher, often 10%–25%, so test a range of rates on this page.
How much small business loan can I afford?
A common rule of thumb is to keep the loan payment under 10–15% of your monthly gross revenue and to maintain a DSCR above 1.25x. On $35,000 monthly revenue, a safe payment is around $3,500–$5,250. Use the payment-as-percent-of-revenue and DSCR outputs on this page to size a loan your business can actually service through a slow season.
Is there a penalty for paying off an SBA loan early?
SBA 7(a) loans have a prepayment penalty only if you pay off more than 25% of the balance in the first third of the term, and the penalty steps down over time. Most conventional term loans and online SBA-style products carry no prepayment penalty, but always confirm the note. Prepaying can cut tens of thousands of dollars of interest on a multi-year term loan.
Disclaimer
This small business loan calculator is provided for informational purposes only and does not constitute financial, lending, tax, or investment advice. Estimates are based on the inputs you enter and the standard amortization formula; actual offers, SBA guarantee fees, interest rates, and underwriting criteria vary by lender, credit profile, industry, and program. DSCR figures are approximations based on the revenue and expenses you supply. Always confirm your final payment, fees, and terms directly with a licensed lender or an SBA-approved intermediary before committing to a loan.