Business Loan Calculator

The monthly payment is calculated using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the principal loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of payments. This formula ensures each payment covers both interest on the remaining balance and a portion of the principal.

An amortization schedule is a detailed table showing each payment over the life of a loan. For every period it breaks down how much of your payment goes toward interest versus principal, and shows the remaining balance. Early payments are mostly interest, while later payments are mostly principal.

Extra payments go directly toward reducing your outstanding principal. Since interest is calculated on the remaining balance, lowering the principal faster means you pay less interest over the life of the loan. Even small additional monthly payments can save significant amounts and shorten the loan term considerably.

A fixed interest rate stays the same for the entire loan term, giving you predictable payments. A variable (or floating) rate can change periodically based on a benchmark rate such as the prime lending rate. Variable rates may start lower but carry the risk of increasing over time. This calculator uses a fixed rate for its projections.

Yes, this calculator supports monthly, quarterly and annual payment frequencies. Choosing a more frequent payment schedule (e.g. monthly instead of quarterly) generally results in lower total interest because you reduce the principal sooner. However, each individual payment will be smaller with more frequent schedules.