The maths, with your numbers
What paying extra would do
Business loans are usually simple interest, so anything above the payment comes straight off the balance. Check your agreement for a prepayment penalty first.
How the balance falls
The same loan over different terms
| Term | Payment | Total interest | Total repaid |
|---|
SBA 7(a) maturities top out at 10 years for working capital and equipment, and 25 years for real estate.
SBA 7(a) guaranty fee
The SBA charges an upfront fee on the part of the loan it guarantees, not on the whole loan. Lenders pass it on to you.
7(a) loans are capped at $5 million, so a loan this size would not qualify.
Factor rate to APR
Merchant cash advances and some short-term lenders quote a factor rate instead of an interest rate. A factor of 1.30 on $50,000 means you repay $65,000, however quickly you repay it. That is not an APR, and the difference is usually enormous.
Amortization schedule
Where each payment on the term loan goes.
Business borrowing comes in two shapes. One is an ordinary amortizing loan: a rate, a term, a fixed payment. The other is priced as a flat cost, usually a factor rate on a cash advance, and looks cheap until you work out what it costs per year. This page handles both, and the SBA fee that sits on top of the first.
Term loans and SBA 7(a)
An SBA 7(a) loan is an ordinary bank loan with a government guarantee behind it, which is why the rules are public. The programme's limits, from the SBA itself:
- Maximum loan: $5 million ($500,000 for SBA Express).
- Guarantee: 85% of loans up to $150,000, 75% above that.
- Maximum maturity: 25 years for real estate, 10 years for equipment, 10 years for working capital.
- Maximum rate: a base rate (Prime, SOFR plus 3%, or the SBA peg rate) plus a spread that depends on the loan size and term. Smaller and shorter loans are allowed a wider spread.
Rate caps and fees are revised, so check the current figures with your lender or on sba.gov before you rely on them. The fee calculator above uses the schedule in force for the 2026 fiscal year.
The fees that do not show up in the rate
- SBA guaranty fee, charged upfront on the guaranteed portion (calculated above).
- Lender service fee, an annual 0.55% of the guaranteed balance, usually absorbed by the lender.
- Packaging or broker fees, which are not regulated and can run to thousands of dollars.
- Closing costs: appraisal, title, filing, legal.
Add them to the loan amount in the calculator if they are being financed, or treat them as an origination fee if they come out of the proceeds. Either way the APR is what matters.
Factor rates, and why they flatter the lender
A factor rate is a multiplier, not a rate over time. Repay a 1.3 factor advance in six months rather than twelve and you still pay the same 30%, so the effective annual cost doubles. That is the opposite of how a loan works, and it is why the same advance can be quoted as “30 cents on the dollar” and work out at three figures in APR terms.
The Federal Trade Commission has flagged exactly this in small business financing: estimated APRs in the triple digits, factor rates quoted without a time period, daily debits that hit cash flow, and missing reconciliation when sales fall. The FTC has taken action against merchant cash advance providers over these practices.
There is also a disclosure gap. Commercial credit is not covered by the consumer lending rules that force an APR onto every quote, and the federal small business lending data rule, as revised in 2026, excludes merchant cash advances altogether. Several states now require APR-style disclosure on small business financing, but at the federal level you have to work it out yourself, which is what the tool above does.
How we estimate the APR
We take the total repayment, split it into equal payments over the term you enter, and find the rate at which those payments have the same value today as the money you receive. Business days are counted as 252 a year. It is an estimate, because real advances take a percentage of daily card sales rather than a fixed amount, but it is the right order of magnitude and far closer than the factor rate alone.
Comparing two offers properly
- Convert everything to an APR, including fees. A flat cost is not an interest rate.
- Ask for the total dollar cost of the finance, not just the payment.
- Check the payment frequency. Daily and weekly debits are not the same as a monthly payment, even at the same headline cost.
- Ask what happens if you repay early. On a term loan that usually saves interest; on a factor-rate advance it usually saves nothing.
- Check for a prepayment penalty, a personal guarantee and a confession of judgment.
Quick answers
How do I calculate a business loan payment?
Enter the amount, rate and term above. The payment formula is the same as any amortizing loan, and the page shows the working, the total interest and the full schedule.
What is the SBA guaranty fee?
An upfront fee charged on the guaranteed portion of a 7(a) loan. For the 2026 fiscal year it runs from 2% on small loans to 3.75% on the guaranteed amount above $1 million, with 0.25% on maturities of a year or less.
What is a factor rate?
A flat multiplier on the money advanced: 1.3 on $50,000 means repaying $65,000. It is not an interest rate, because it does not change with how long you take. Use the converter above to see the APR equivalent.
Is a merchant cash advance cheaper than a loan?
Rarely. A short repayment period makes a modest-looking factor rate expensive in APR terms, often well into three figures. Compare the APR, not the factor.
What is the maximum SBA 7(a) loan?
$5 million, or $500,000 under SBA Express. Maturities go up to 25 years for real estate and 10 years for equipment and working capital.
Sources
- US Small Business Administration, 7(a) terms, conditions and eligibility (loan size, guarantee percentages, maturities, rate spreads)
- SBA Information Notice 5000-872051, 7(a) fees for fiscal year 2026
- FTC staff perspective, “Small business financing”; FTC action against merchant cash advance providers (2022)
- Small Business Lending under the Equal Credit Opportunity Act (Regulation B), revised final rule, 1 May 2026 (merchant cash advances excluded)