Many or all of the products and brands we promote and feature including our ‘Partner Spotlights’ are from our partners who compensate us. However, this does not influence our editorial opinion found in articles, reviews and our ‘Best’ tables. Our opinion is our own. Read more on our methodology here.
We know that one of the trickiest (and most crucial) aspects of running a small business is securing access to capital.
Business loans are one way to access the money you need to grow your small business: from conventional small business loans to start-up loans for newer businesses and loans backed by the UK government.
However, you may find yourself wondering how much your small business can borrow and how much it might cost to repay a small business loan – particularly if you’ve never taken out a commercial loan before.
That’s where our free business loan repayment calculator comes in.
If you already know how much you’d like to borrow, you can use our loan repayment calculator to work out the possible monthly cost of small business loan repayments. On the other hand, you can also use our tool to get a sense of the size of loan your business might be able to afford, based on how much you’d be willing to repay each month.
In each instance, all you need to do is key in some essential information, and our handy calculator will take care of the rest.
This information is an estimate and relies on certain assumptions. It is only intended as a general guide and has not considered your own personal circumstances. The actual rates and maximum borrowing offered by lenders could be different. Please ensure that you carefully check quotes with business finance lenders or brokers before proceeding with any financial product.
What is a small business loan calculator?
A business loan calculator is a tool you can use to estimate how much a business loan might cost your small business in monthly repayments.
When you take out a business loan, you’ll have to repay, over an agreed term, the amount you borrowed plus fees and interest. This is in contrast to small business grant, which typically don’t need to be repaid.
Small business loans are typically repaid monthly, and using a business loan repayment calculator, like the one above, is one way to get a sense of how much a loan might cost you before committing to anything.
You can calculate your possible monthly repayments by inputting the amount you want to borrow, your potential APR and your desired loan term.
Loan calculators like ours can also be used to work out how much your business could afford to borrow.
You can do this by letting us know how much you’ll be willing to repay each month, as well as a possible APR. From there, the calculator can suggest the maximum loan size your business can afford, based on your inputs.
How much will it cost to repay my small business loan?
If you want to use our NerdWallet business loan calculator to work out the cost of your monthly loan repayments, simply input:
- the amount that you want to borrow (in pounds)
- the loan term, i.e. how long you want to take to pay back the loan
- the annual percentage rate (APR) you expect to pay
You can do this by clicking on each empty box and typing in your chosen details. You can then alter each number either by typing in a new one, or by clicking on the plus and minus buttons on either side of the input box.
Once you have your details in place, our business loan calculator will automatically provide you with the:
- predicted monthly cost of the loan, including interest
- predicted total interest you will pay
- predicted total cost of the loan, including interest
You can use all of this information to help you decide whether a small business loan would be right for you and to get a sense of how much it could cost you to repay the loan.
Remember that if you borrow money from a bank or financial institution – regardless of whether it’s a personal loan or a business loan – you will almost certainly end up paying back more than just the amount you borrowed.
The reason for this is that you will be expected to pay interest on top of your repayments. You may also be required to pay various fees.
Interest rates will vary depending on how much you’re planning to borrow, your business credit score, the loan term, your financial situation, and other factors – so make sure you understand exactly how much a loan will cost you before committing to anything.
How much can my small business borrow?
You can also use our business loan calculator to give you an estimate of how much your business could afford to borrow, based on the cost of the monthly loan repayments.
To calculate what you can afford to borrow, simply let us know:
- how much you can afford to pay each month (in pounds)
- how long you want to borrow for
- the APR you expect to pay
The loan repayment calculator will then show you:
- how much you can afford to borrow overall
- the total amount of interest you will pay over the duration of the loan
- the total amount repayable, including interest
If you are looking to get a business loan, it may be a good starting point to work out how much you can realistically afford to pay back on a monthly basis.
That is why using a business loan calculator can be useful, as it will provide you with initial guidance on how much your intended loan could cost and whether the interest and monthly repayments are affordable.
It’s not just up to you to decide your borrowing limit, however. This will ultimately come down to your lender, and it may be influenced by factors including:
- whether you are looking for a secured or unsecured business loan
- the strength of your personal and business credit scores
- what industry you work in
- your revenue and profit
- whether you have any business assets or debts
- whether you can provide a personal guarantee
- what you plan to use the loan for
Why use a business loan calculator?
Using a business loan calculator can be a simple and effective way to gauge how much a loan may cost you – both on a monthly basis, in terms of expected repayments, and in the long run, in terms of the total cost of borrowing.
Our business loan calculator can also give you an idea of how the overall cost of borrowing is affected by changes to the size of a loan, the interest rate, and the term length. By assessing how each detail affects the cost per month, you will gain a better understanding of what you can realistically borrow.
What a business loan calculator will not provide you with is the exact interest rates and borrowing limits available to your individual business. These details are highly dependent on your business and financial circumstances and will ultimately be decided by your lender.
However, once you have an idea of the rough cost of borrowing, you can more confidently move on to comparing business loans and starting your application. At this stage, you will then be able to find out how much a loan will cost your business specifically.
What is APR?
APR, or annual percentage rate, is used to reflect the total cost of borrowing over a 12-month period. It will include the interest rate, as well as any fees or charges associated with taking out the business loan. It can be used to more easily compare the cost of borrowing with different providers.
If you see a business loan advertised with ‘representative APR’, that means at least 51% of customers who have successfully applied for a loan have received that rate, or lower. However, it is important to stress that not everyone within that 51% will get the same rate.
What affects the interest rate for business loans
Much like the amount you can borrow with a business loan, the interest rate attached to that loan will be informed by a range of factors. These could include:
- how long you want to borrow for
- your credit history
- how long your business has been up and running
- your business revenue and income
- your business plan and cash flow forecasts
It is important to remember that a business loan calculator is meant to be a learning tool, and that any interest rate you input is speculative.
You will not know the exact interest rate available to you until you have applied for a business loan.
Business Loan Calculator FAQs
Your business will need to be based in the UK to be eligible for most business loans from UK lenders.
Some lenders may allow you to have a capital repayment holiday on your business loan.
A capital repayment holiday is where you freeze your loan repayments for a period of time. Interest will still be added over this period, and the overall term of your business loan will be extended by the length of the payment holiday.
Be aware that if you take a capital repayment holiday, your loan will end up costing you more in the long run as you’ll be paying interest for a longer period of time.
Your credit score will generally not be affected by using an eligibility tool, as these checks are conducted using a so-called “soft” search on your credit history. This means lenders will not be able to see it on your credit report.
Small business loans for start-ups
Generally speaking, financial institutions can be wary of lending to newer businesses without a trading history or established track record.
Banks tend to assume that it’s riskier to lend to a business which is just starting out, compared to a firm which has been trading for a long time.
However, if you run a start up business, you may still be able to access a business loan.
Our guide to the best start up business loans only features lenders willing to lend to new businesses, allowing you to compare business loan options even if you don’t have a long trading history.
Small business loans from the government
The British Business Bank is an independent lender owned by the UK government.
With the stated aim of improving access to finance for small businesses, the British Business Bank runs the Growth Guarantee Scheme, which has replaced the old Recovery Loans Scheme.
The Growth Guarantee Scheme is designed to support UK small businesses as they invest and grow, offering small business loans of up to £2 million with a 70% government-backed guarantee for the lender.
Small businesses can also take advantage of the Bank Referral Scheme, which ensures you will be referred to another, more viable lender if a participating bank rejects your business loan application.
The British Business Bank also offers Start Up Loans for new businesses, with founders able to borrow between £500 and £25,000, payable over one to five years, at a fixed interest rate of 6% per annum. Support and mentorship is available as part of the loan.
Alternatives to small business loans
If you’ve put some details into our business loan calculator and decided that a loan may not be right for your business at this stage, then you could always consider other forms of small business finance.
These include, but are not limited to:
- business overdrafts, which are offered by some banks as a short-term line of credit tied to your business bank account
- business credit cards, which can provide greater financial flexibility as well as allowing you to earn rewards for regular spending, transfer balances, or spend fee-free overseas
- invoice financing, which could allow you to quickly release some of the money tied up in unpaid invoices
- asset finance, which can be used by businesses to cover the cost of critical assets
- small business grants – which can provide your business with up-front capital but which, unlike loans, do not need to be paid back
- crowdfunding, which involves soliciting funding from multiple sources – usually individuals and usually online
Dive even deeper
9 Types of Business Loans
by Rhiannon Philps
How do Limited Company Business Loans Work?
by Holly Bennett