Business Loan Calculator — the United States 2025-26
Borrowing for your business? See what it will cost.
Estimate US business loan repayments with USD principal, APR, term, origination fees, monthly fees, and total borrowing cost.
United States Business Loan Notes
US business loans may include APR, origination fees, closing costs, collateral requirements, SBA-style terms, personal guarantees, and servicing fees.
Use the USD version to compare monthly payment, total interest, fee drag, and whether the loan supports working capital, equipment, or expansion.
This page uses US APR, origination-fee, SBA, and USD repayment language rather than Australian establishment-fee or UK arrangement-fee wording.
US setup: this business loan is tuned for dollar-denominated scenarios, American payroll and tax references, state-by-state cost differences, and the finance terms people see in lender, employer, or IRS-facing documents.
The page keeps US language in place where it is relevant, including IRS, federal withholding, FICA, 401(k), sales tax, miles, APR, down payment, paycheck, state tax, and USD totals.
Treat the answer as a United States estimate; before acting, compare it with provider disclosures, state rules, federal guidance, lender underwriting, payroll settings, or advice from a qualified professional.
Uses standard P+I amortisation formula. Interest is 100% tax-deductible for business use. Not financial or tax advice.
Select the question that matches where you are right now.
Your result shows the true cost of the loan — monthly repayment, total interest over the full term, and the APR including fees. The amortisation chart in Standard mode shows how the interest/principal split changes each year.
In the early years, most of each repayment is interest — very little principal is repaid. This is why the tax deduction is largest in Year 1 and shrinks each year. The amortisation chart shows this visually: the interest bar (red) is tall in Year 1 and small by the final year.
A long loan term at a low rate can cost more total interest than a short term at a higher rate. A $100,000 loan at 7% over 10 years costs $38,000 in interest. The same loan at 9% over 5 years costs $23,000 less. Always compare total interest, not just monthly payment or rate.
The APR includes the effect of fees in the effective annual rate. A loan with a 7% headline rate and $3,000 in fees can have a higher APR than an 8% loan with no fees. Always use APRs to compare loans side by side.
Business loan interest is 100% tax-deductible — this significantly reduces your true borrowing cost. Use Detailed mode to enter your tax rate and see the net interest cost after deductions.
The interest portion of each repayment reduces your taxable income. For a company on 25% tax, every $1 of interest costs only $0.75 after the deduction. For a sole proprietor on the 47% marginal rate, $1 of interest costs only $0.53 net. The deduction is claimed in the tax year the interest is paid.
Only the interest component is deductible — not the principal repayment. In the early months of the loan, the interest component is large. By the final months, it is very small. This is why early repayment can reduce your total tax deductions slightly — though the interest saved almost always outweighs this.
If the loan funds an asset purchase (equipment, vehicle), you may also be able to claim the Section 179 deduction — immediately deducting the full asset cost in Year 1. This is a separate and additional deduction to the interest deduction. Check the current threshold at irs.gov, as it changes frequently. The combined benefit of Section 179 plus interest deduction in Year 1 can be very significant for equipment finance.
The three most effective ways to reduce the total cost of a business loan.
Even small additional repayments dramatically reduce total interest. An extra $500/month on a $100,000 loan at 8.5% can pay it off 12–14 months early and save $4,000–$6,000 in interest. Use Detailed mode to calculate your exact savings. Check your loan allows extra repayments without penalty.
The rate you are offered is not always the best available. Use a broker to access 20–40 lenders. Offer more security if possible — property security typically reduces rates by 1–4% compared to unsecured loans. If you have been with your bank for years and have a good track record, ask directly for a better rate — they often oblige rather than lose the relationship.
Shorter term = lower total interest but higher monthly repayments. Longer term = lower monthly repayments but much more total interest. Optimise for the shortest term you can comfortably service — add buffer for business slowdowns. For most SMEs, 3–5 years is the sweet spot for business loans under $500,000.
Before applying, these steps will maximise your chances of approval at the best rate.
Lenders assess Debt Service Coverage Ratio (DSCR = annual net profit ÷ annual loan repayments). Most require 1.25–1.5× minimum. Calculate your DSCR before applying — if it is below 1.25×, either reduce the loan amount, extend the term, or increase profitability before applying.
Commercial finance brokers access 20–40 lenders simultaneously and negotiate on your behalf. For loans above $100,000, brokers are almost always worth using. Their fee is typically paid by the lender (commission), not you. Ask for a finance broker who specialises in SME lending, not just mortgage broking.
Any outstanding IRS debt is a major red flag for lenders. Clear or arrange a payment plan for any tax debts before applying. Lenders check IRS portals directly. Also ensure your federal tax filings (Form 1120 / 1065 / Schedule C) and state tax returns are up to date — a backlog of unfiled returns can be as problematic as an actual debt.
The repayment formula, APR, and how to use the results
The repayment formula
Monthly repayment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ−1]
Where P = loan amount, r = monthly APR (annual rate ÷ 12), n = total number of months.
Example
$100,000 at 8.5% over 60 months: r = 8.5%/12 = 0.708%/month. Monthly repayment = $100,000 × [0.00708 × (1.00708)⁶⁰] ÷ [(1.00708)⁶⁰−1] = $2,057/month. Total repaid: $123,411. Total interest: $23,411.
Comparison rate
The APR includes the effect of fees in the effective annual rate. Always use the APR to compare loans — a 7% loan with $3,000 in fees may be more expensive than an 8% loan with no fees. This calculator approximates the APR from the actual costs.
| Loan amount | Rate | Term | Monthly | Total interest |
|---|---|---|---|---|
| $50,000 | 8.5% | 3 yr | $1,578 | $6,800 |
| $100,000 | 8.5% | 5 yr | $2,057 | $23,411 |
| $250,000 | 9% | 7 yr | $4,009 | $86,760 |
| $500,000 | 8% | 10 yr | $6,066 | $227,920 |
Term loans, equipment finance, lines of credit, and unsecured loans
| Loan type | Typical rate 2025-26 | Best for |
|---|---|---|
| Secured term loan (bank) | 7%–11% per year | Expansion, property, large capex |
| Unsecured business loan | 12%–25%+ per year | Fast cash, no security available |
| Equipment finance | 5%–9% per year | Vehicles, machinery, technology |
| Line of credit/overdraft | 8%–15% per year | Working capital, seasonal needs |
| Invoice finance | 1%–3%/month | Unlocking debtor cash |
| Government SME loan | Varies | SBFE-backed, lower rate for eligible |
Major bank vs fintech lenders
Major banks (CBA, NAB, ANZ, Westpac) offer the lowest rates but require more documentation, longer approval times (2–6 weeks), and often require property security. Fintech lenders (Prospa, Capify, Moula, Lumi) approve faster (24–72 hours) and require less security, but charge significantly higher rates. For large amounts or long terms, the interest cost difference is substantial — a $200,000 loan at 9% vs 18% over 5 years costs an extra $58,000 in interest.
DSCR requirements
Most lenders require a Debt Service Coverage Ratio of at least 1.25–1.5× for business loans. DSCR = annual net profit ÷ annual loan repayments. For a $100,000 loan at $2,057/month ($24,684/year), you need net profit of at least $30,855–$37,026/year (1.25–1.5× cover).
Claiming interest, Section 179 deduction, and maximising your tax benefit
What is deductible
Interest payments on business loans are 100% tax-deductible for business owners and companies, provided the loan is used for income-producing business purposes. The principal repayment is NOT deductible — only the interest component of each payment reduces your taxable income.
How the deduction decreases over time
For a $100,000 loan at 8.5%, Year 1 interest is approximately $8,247 — a deduction worth $2,062 at 25% company tax. By Year 5, interest is only $815 for that year. The tax benefit is front-loaded in a P+I loan.
| Year | Interest paid | Tax deduction (25%) | Net interest cost |
|---|---|---|---|
| Year 1 | $8,247 | $2,062 | $6,185 |
| Year 2 | $6,810 | $1,703 | $5,108 |
| Year 3 | $5,242 | $1,311 | $3,932 |
| Year 5 | $815 | $204 | $611 |
Section 179 deduction (separate benefit)
If the loan funds the purchase of a depreciating asset (equipment, vehicle, technology), eligible small businesses can claim the full purchase cost as an immediate deduction under the Section 179 deduction — separate from the interest deduction. Check the current IRS threshold at irs.gov, as this changes frequently.
What lenders assess, documentation needed, and tips for approval
What lenders assess
- DSCR: Net profit ÷ annual loan repayments — need 1.25–1.5× minimum
- Trading history: Most banks require 2+ years; fintechs 6–12 months
- Revenue: Minimum $100k–$250k annual turnover for most secured loans
- Credit history: Business and personal credit checked
- Security: Property significantly improves approval and reduces rate
- IRS compliance: No outstanding tax debts — lenders check via IRS portal
Documents typically required
- 2 years of business financial statements (P&L, balance sheet)
- 2 years of business tax returns
- 6–12 months of business bank statements
- Most recent business tax return (1120, 1065, or Schedule C)
- Personal ID and personal financial statements
- Purpose of loan documentation
Using a broker
A commercial finance broker can access 20–40 lenders simultaneously and often negotiates better rates and terms than going direct. Broker fees are typically paid by the lender (commission). For loans above $100,000, using a broker is almost always worthwhile.
Frequently asked Frequently asked questions
What is the typical business loan APR in United States 2025?
In 2025-26, secured business loan rates from major banks range from approximately 7%–11% per year Unsecured loans from fintech lenders typically charge 12%–25%+ per year Equipment finance rates are often 5%–9% per year because the asset provides security. The rate you receive depends on your credit history, business revenue, trading history, and the security you can offer.
Is business loan interest tax-deductible in the United States?
Yes — interest on business loans is 100% tax-deductible for business owners and companies, provided the funds are used for income-producing business purposes. The principal repayment is not deductible. Keep loan agreements and documentation showing the business purpose. The interest deduction is largest in the early years of the loan when the interest component is highest.
How do I calculate business loan repayments?
Monthly repayment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ−1], where P = principal, r = monthly rate (annual rate ÷ 12), n = total months. For $100,000 at 8.5% over 60 months: $2,057/month. Total interest over the life of the loan: $23,411. This calculator does this automatically — enter your figures above.
Can a sole proprietor get a business loan in the United States?
Yes — sole proprietors with an EIN can apply for business loans. Most lenders require 12–24 months of trading history, business bank statements, the most recent Schedule C, and state sales tax filings where applicable. Amounts up to $150,000 are often available unsecured for established sole proprietors. For larger amounts or lower rates, property security is usually required.
Where these figures come from
Business figures on this page are drawn from the IRS (business tax), the US Small Business Administration (loan & program rules), and the Federal Reserve (commercial interest-rate data).
- Federal corporate & business tax — IRS — Businesses.
- Self-employment tax (15.3%) — IRS — Self-Employment Tax.
- Pass-through & QBI deduction — IRS — Qualified Business Income Deduction.
- Small-business loans & SBA 7(a) — SBA — US Small Business Administration.
- Commercial lending rate data — Federal Reserve — H.15 Selected Interest Rates.
Last checked: April 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.