Business Loan Calculator
Understand the true cost of financing for your business. This calculator helps you determine your monthly loan payments and total interest cost, and it also shows you the actual amount of cash you'll receive after upfront fees.
Loan Breakdown
How It's Calculated
The monthly payment is calculated using the standard loan amortization formula, which spreads your repayments evenly across the loan term. However, for business loans, itâs important to understand the Net Disbursed Amountâthe actual funds youâll receive after any lender fees are deducted upfront.
Origination Fee Amount = Loan Amount Ă Fee %
Net Disbursed Amount = Loan Amount - Origination Fee Amount
For example, if you borrow $50,000 with a 3% origination fee, the lender deducts $1,500 upfront, leaving you with $48,500 to use in your business. Despite receiving less than the full loan amount, your monthly payments are still based on the original $50,000 borrowed. This distinction is crucial for accurate cash flow planning.
By understanding both the monthly obligation and the net disbursed funds, you can better assess whether the loan structure meets your businessâs financial needs.
Frequently Asked Questions
What is an origination fee?
An origination fee is a one-time upfront charge by the lender, typically expressed as a percentage of the loan amount. It covers the cost of processing and approving your loan. This fee is usually deducted before the funds are disbursed.
Why is the net disbursed amount lower than the loan amount?
Because the lender takes their origination fee out of your loan proceeds. While you are responsible for repaying the full loan amount plus interest, the cash you receive to operate your business is reduced by that fee.
Does the origination fee affect my monthly payment?
No. Monthly payments are calculated based on the total loan amount borrowed, not the net disbursed amount. This means youâre making payments on the full loanâeven though you received less in hand.
What is the typical origination fee for a business loan?
Origination fees usually range between 1% and 5% of the loan amount, depending on the lender and your businessâs credit profile. Itâs always best to compare offers from multiple lenders to understand the true cost of borrowing.
Can origination fees be negotiated?
Sometimes. Larger or more creditworthy businesses may be able to negotiate lower origination fees. However, many lenders have fixed fee structures. If negotiation isnât possible, consider the fee as part of the overall cost of the loan when comparing options.