Business loans are a key factor in growing and expanding your business.
Understanding your monthly payments, your total interest paid and your fees, costs outside your loan payment such as closing costs, broker fees, bank fees, and early pay-off penalties can help you select not only the right interest rate but the correct overall loan terms that match your needs. Your monthly payments are influenced by the rate and terms of the loan as well.
Use our business loan calculator to calculate your business loan monthly payments to guide you towards choosing the best loan terms for your business financing needs.
Business Loan Calculator
To find your estimated monthly payments, Input your payment amount, term length of the loan, and interest rate. Our tool will then calculate:
- The cost of your monthly loan payments
- The total cost of the loan
- The total amount of interest paid for the loan
How Do Interest Rates Impact Loans?
Interest rates impact the amount a loan will cost over the lifetime of the loan. The higher the interest rate, the higher the funds will cost in total.
A $1 million loan at an interest rate of 2%, paid off in 60 months will result in interest payments of $51,665.61. The same loan amount at a 5% interest rate with the same 60-month term will cost $132,274.06 in interest. That’s nearly an $80 thousand difference paid in interest.
Loan rates are directly influenced by the Federal Reserve. The rates they set impact the lending rates banks provide. Learn more about how the U.S Treasury department notes impact commercial lending rates here.
The current rates and trends are tracked and updated daily in our rates table below. These rates can help you stay on top of market rate trends and conditions.
What should you consider before applying for a Business Loan?
Finding the right capital for your business’s next opportunity requires planning, research, and preparation. Consider these steps as you begin searching for your next business loan.
- Get organized and prepared
- Maintain good credit
- Choose the right loan type for your business
- Know how much capital you need
- Maintain sufficient cash flow
What are the various funding options for your business?
The type of funding businesses use for their next capital venture varies based on what the capital is intended for, the type of business, and the business’ valuation. At Innovative Capital Corporation, we shop your business’s unique capital needs to our vast network of traditional and alternative lenders to find the best fit for your business.
Lending opportunities are divided by private equity funding and debt funding. Private equity, like the name suggests, is funded by private companies or investors typically through buyouts. Debt funding provides capital for businesses without requiring a stake in the business’ equity.
There are various types of debt financing available.
- Bridge Loan – A short-term loan covers financial costs between two transactions. They are associated with higher interest rates and shorter terms. Typically, they are used during real estate funding.
- Asset-based loan – the borrower’s assets, such as buildings or equipment, are used as collateral rather than a credit score. If the borrower fails to repay the loan, the assets serve as payment to the lender.
- Purchase order financing – companies in need of financing due to increased product demand for purchase orders will receive the capital needed to fund the increased demand.
- Inventory Financing – this loan covers the costs associated with purchasing inventory or supplies. If a company does not have the capital to purchase necessary inventory, they can receive an inventory financing loan to purchase necessary resources for later use.
- Line of credit – this loan mirrors credit card transactions and payments. The company can use up to the approved credit amount, paid back with interest as many times as needed. When the amount is paid back, the credit limit returns for future purchases.
- Hard money loan – similar to an asset-based loan, this loan is secured by property and most commonly used during real estate transactions. For short-term loans you know you can pay quickly, these are a beneficial option despite higher interest rates.
- Traditional Bank Loans – these loans are funded by banks. They are typically more difficult to obtain due to their set regulations. While they have lower interest rates than other lending options, they can be more difficult and take longer to obtain.
Before choosing a loan, consider the monthly loan payments your business can afford, the current market interest rates, the length of time you will need to repay the loan and all of the options you may have for sourcing the capital you need.
Did you know that your business loans are tax-deductible? Learn more about business loan tax deductions in our article here.
