This term loan calculator works out the monthly payment, total interest and total repaid on a business term loan from the amount, annual rate and term you enter, with five years (60 months) as the starting point. Driftland Advances, a small-business funding broker in Conway, Arkansas, offers it to Faulkner County owners as illustrative arithmetic, not an offer.
What to enter
- Loan amount: the principal you would borrow, after any down payment.
- Interest rate: the yearly rate quoted in an offer, or any figure worth testing.
- Term: how many monthly payments. Use 60 for five years, 36 or 84 to compare.
The calculator assumes equal monthly payments on a fully amortizing loan and returns three figures: the monthly payment, the total interest, and the total repaid, which is every payment added together.
An arithmetic check
Purely to test the method, take a hypothetical amount of $30,000, a rate of zero and 60 months. Each payment is $500 and the total repaid is $30,000, with no interest. Any positive rate raises all three numbers. These figures are illustrative and are not a quote.
Working out the interest on a business loan by hand
On an amortizing loan, each month's interest equals the outstanding balance times the annual rate divided by 12. The rest of the payment reduces the balance. Because the balance is largest at the start, early payments are mostly interest and later ones mostly principal. To see the interest in your first payment, multiply the amount by the annual rate and divide by 12; the calculator does the rest of the schedule for you.
What you need to work out by hand
- Fees. Origination and documentation fees sit outside the calculation. Add them to the total repaid to see the full cost.
- Balloon payments. If an offer amortizes over a longer period than its term, the calculator will not show the final lump sum. Ask the partner for it.
- Weekly or daily payments. The calculator uses monthly payments only.
- Variable rates. The result holds only while the rate stays where you entered it.
- Leases and advances. It does not model either. A merchant cash advance is not a loan and is priced with a factor rate.
Why five years
Five years is a common horizon for equipment and build-out loans, roughly the working life of a lot of business equipment. A contractor pricing a machine or a practice planning a new operatory in Faulkner County, where 384 construction and 317 ambulatory health care employers operated in 2023 (U.S. Census Bureau, County Business Patterns 2023), will often compare a five-year payment against shorter terms. Term loans and equipment financing explain the structures, and the guide library has more.
Illustrative arithmetic only. Only lending partners can quote real rates and terms.
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