Business Loan Calculator

SBA 7(a) is the flagship Small Business Administration program: the federal government guarantees 75 to 85 percent of the loan against default, which lets banks accept lower rates (typically WSJ Prime plus 3 to 6.5 percent) and longer terms (7 to 10 years for working capital, up to 25 for real estate) than they would on the same business unsecured. A conventional term loan is a regular bank or online-lender product priced on the lender's own credit standards, with shorter terms (3 to 7 years) and higher rates because the lender bears all the default risk. The trade-off is approval speed and paperwork: SBA can take 60 to 90 days and asks for a 10-year financial history, while a term loan can fund in 1 to 2 weeks on lighter docs.

An MCA is not a loan. The provider buys a slice of your future credit-card sales at a discount. You receive a lump sum today (the advance), and you agree to repay a fixed total (advance times the factor rate, typically 1.10 to 1.50) by handing over a daily percentage of card sales (the holdback, usually 5 to 20 percent) until the full amount is paid. Because the repayment window is short (commonly 6 to 12 months) and you owe the entire factor amount regardless of how fast you pay, the effective APR routinely lands at 40 to 150 percent. The faster you generate card sales, the faster you pay, and the higher the annualized cost climbs. Speed is the enemy here, the opposite of an amortizing loan.

Because the factor multiplies the principal directly. A 100,000 dollar MCA at 1.30 means you repay 130,000 dollars no matter what: 6 months of repayment, 12 months, 18 months, the total is the same. By contrast, a 30 percent APR amortizing loan only charges interest on the unpaid balance, so total interest shrinks the faster you pay it down. On the same 100,000 dollars over 9 months, a 30 percent APR loan costs roughly 14,000 dollars in interest; the 1.30 MCA costs 30,000. Annualized, that 30,000 dollars over 9 months is about 45 percent APR, but a quicker payback can push it past 70 percent. MCAs only make sense when the use of funds produces returns above the factor cost inside the payback window.

A line of credit is revolving: the lender approves a maximum credit limit, and you draw what you need when you need it. Interest accrues only on the drawn balance, not the full line, so an unused line costs nothing in interest (a small annual maintenance fee is common). A lump-sum term loan disburses the entire principal at closing and starts charging interest on day one, whether you spend the money or not. Lines work well for cyclical working capital, unpredictable inventory swings, or short-term bridges between receivables. Term loans work well for one-time investments with a known cost, like buying equipment or opening a second location.

The SBA charges a one-time guaranty fee on every 7(a) loan, calculated as a percentage of the guaranteed portion of the loan (not the full loan amount). The standard fee runs around 3 percent for loans up to roughly 700,000 dollars and steps up for larger loans. The fee is financed into the loan itself, so you do not write a check at closing, but it does increase your monthly payment slightly and lifts your effective APR above the stated rate. Loans of 150,000 dollars or less have the fee fully waived under the long-standing SBA fee schedule, which is why SBA 7(a) is especially attractive for small working-capital draws. This calculator zeroes out the fee automatically when the loan amount is under 150,000.