Can Your Business Actually Afford This Loan?
Can your business afford this loan?
Business Loan Calculator
Monthly Payment · DSCR · Effective APR · Amortization · Rate Sensitivity
Results update in real time as you adjust any input.
Loan Details
SBA: 6–9% · Bank: 6–12% · Online: 9–25%+
36 = 3yr · 60 = 5yr · 84 = 7yr · 120 = 10yr
Typical: 0–3% · Ask lenders to waive or reduce
Business Financials (for DSCR)
Results are estimates only and do not constitute financial, tax, or legal advice. Always consult a qualified professional before making financial decisions.
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Taking on debt to grow a business can be one of the best investments you make — or one of the fastest ways to kill a profitable company. The difference lies in whether your business generates enough cash flow to comfortably service the debt while still covering operations, payroll, and unexpected costs. That's what this calculator helps you determine. Lenders evaluate business loans using the Debt Service Coverage Ratio (DSCR): your net operating income divided by total annual debt payments. A DSCR below 1.0 means your business doesn't generate enough cash to cover its debt — which means default risk. Most lenders require a DSCR of at least 1.25, meaning you earn 25% more than needed to service the debt. Banks typically want 1.35 or higher. This calculator goes beyond just computing your monthly payment. It shows your true all-in cost including fees, calculates your DSCR based on your business income, flags whether lenders are likely to approve the loan, and models a break-even revenue threshold — the minimum monthly revenue your business needs to sustain this loan alongside existing obligations. Use it before applying so you can negotiate from a position of clarity.
- →Evaluating whether to take on a business loan before applying
- →Calculating monthly payment and total interest on an SBA or commercial loan
- →Understanding your DSCR and whether it meets lender minimums
- →Modeling what revenue level your business needs to support new debt
- →Comparing loan offers with different terms, rates, and origination fees
Marco's landscaping business earns $18,000/month in net operating income. He's considering a $120,000 equipment loan at 7.5% over 60 months. Monthly payment: $2,402. Annual debt service: $28,824. DSCR: 18,000 × 12 / 28,824 = 7.49 — well above the 1.25 threshold. Total interest: $24,120. Marco proceeds with the loan, confident the equipment will increase revenue by more than the monthly payment.
What is DSCR and what is a good ratio?
Debt Service Coverage Ratio = Net Operating Income / Total Annual Debt Payments. A ratio of 1.0 means you exactly cover payments with no cushion. Most lenders require 1.25+; banks typically want 1.35+. Higher is better — it means you have comfortable headroom above your debt obligations.
What's the difference between an SBA loan and a conventional business loan?
SBA loans are partially guaranteed by the federal government, allowing lenders to offer lower rates and longer terms to businesses that might not qualify for conventional loans. They're slower to close and require more documentation, but often have the best terms available for small businesses.
What fees should I expect on a business loan?
Common fees include origination fees (0.5–3% of loan amount), SBA guarantee fees (0.5–3.5%), packaging fees, and prepayment penalties. Always calculate the APR including all fees — not just the stated interest rate.
How does loan term affect my business's cash flow?
Longer terms mean lower monthly payments but higher total interest. A $100,000 loan at 8% over 5 years costs $24,320 in interest; over 10 years it costs $49,800 in interest — more than double. Choose the shortest term your cash flow can comfortably support.