What this calculator answers
A business loan at 7.5% for five years is a monthly payment, but also a fee, a financed balance and a total cost you will not see until you add them up. This page puts the four numbers side by side with the standard amortization math banks use.
$50,000 at 7.5% for 60 months with a 2% financed origination fee:
- Financed balance: $51,000 ($50,000 + $1,000 fee)
- Monthly payment: $1,021.94
- Total interest: $10,316.12
- Total cost of the loan: $11,316.12 over the $50,000 you receive
Paying the same $1,000 fee in cash at closing would keep the total cost near $10,114 instead of $11,316: financing the fee adds roughly $200 of interest on top of the fee itself.
Formula
PMT = P × [r (1 + r)^n] / [(1 + r)^n − 1]
P = balance you repay (loan amount + financed fee) r = annual rate / 100 / 12 n = number of monthly payments
Total interest = PMT × n − P Total cost = PMT × n − cash received
Worked example
- P = 51,000 · r = 0.075 / 12 = 0.00625 · n = 60
- (1.00625)^60 ≈ 1.4533
- PMT = 51,000 × (0.00625 × 1.4533) / 0.4533 ≈ $1,021.94
- Total repaid = 1,021.94 × 60 = $61,316.12 from $50,000 received
- Interest = 61,316.12 − 51,000 = $10,316.12 · the rest, $1,000, is the financed fee
Where SBA 7(a) terms fit
SBA 7(a) loans run up to $5 million, with maturities of 10 years or less unless the loan finances real estate or equipment with a longer useful life, and up to 25 years including extensions for real estate (13 CFR 120.212, summarized by the SBA). The guaranty fee is charged upfront on the guaranteed portion and lenders commonly finance it into the loan, which is exactly the fee field in this calculator.
What the number leaves out
This is a fixed-rate model. It does not price variable rates (common in SBA 7(a)), interest-only or deferred periods, monthly servicing charges, prepayment penalties, insurance, appraisals, closing costs or taxes. Compare the result with your lender's disclosure before committing.
Related tools
Compare a consumer instalment loan with personal loan, check the payment against your cash flow with debt-to-income ratio, or see the cost of turning several debts into one loan with the debt consolidation calculator.
$50,000 at 7.5% for 60 months with a 2% financed origination fee: the financed balance is $51,000, the payment $1,021.94, total interest $10,316.12 and the total cost $11,316.12 over the $50,000 received.
Because the fee joins the balance and earns interest too. In that example, a $1,000 financed fee raises the total cost by about $1,200: the fee plus roughly $200 of interest on it.
A longer term lowers the payment and raises total interest. A $250,000 loan at 9.5% for 10 years with a 3% financed fee costs $3,331.99 a month and $149,838.45 in total; halving the term raises the payment and lowers the total cost. Compare both before deciding.