Short answer: A $50,000 loan at 10% over 60 months costs $1,062.35 a month, with $13,741 of interest and $1,500 of fees: a true APR of 11.32%. With $3,000 of monthly profit, the payment is covered 2.82×. Structuring the business first? LLC vs. S-Corp: When Does an S-Corp Actually Save You Money?.
Check our math
Here is the result above, step by step, using the numbers already filled in.
- Monthly interest rate10% ÷ 12 = 0.833%
- Monthly payment$50,000 × 0.833% ÷ (1 − (1 + 0.833%)^−60) = $1,062.35
- Total interest$1,062.35 × 60 − $50,000 = $13,741
- Upfront fees$50,000 × 3% = $1,500
- Cash you actually receive$50,000 − $1,500 = $48,500
- True APR including feesthe rate at which 60 payments of $1,062.35 repay $48,500 = 11.32%
- Payment coverage$3,000 ÷ $1,062.35 = 2.82×
How this calculator works
The payment comes from the standard formula for a fixed-rate loan with equal monthly payments. Interest is the total of the payments minus what you borrowed. Fees, often an origination fee taken out of the loan, are added to get the full cost of borrowing.
Longer terms lower the payment but raise the total interest. The table below shows the trade-off for the same loan amount: stretching the term helps monthly cash flow, while a shorter term costs less overall.
The true APR counts those fees by asking what rate would make your payments equal the cash you actually received. It's the fair way to compare a loan with a low rate and high fees against one with a higher rate and no fees.
Payment coverage is your monthly profit before the payment divided by the payment. Many lenders look for at least 1.25: profit a quarter higher than the payment, so one slow month doesn't put you behind. Terms vary by lender; SBA 7(a) loans, for example, can run up to 10 years for working capital (SBA).
Monthly payment on $50,000 by rate and term
| Interest rate | 24 months | 60 months | 120 months |
|---|---|---|---|
| 6% | $2,216.03 | $966.64 | $555.10 |
| 8% | $2,261.36 | $1,013.82 | $606.64 |
| 10% | $2,307.25 | $1,062.35 | $660.75 |
| 12% | $2,353.67 | $1,112.22 | $717.35 |
| 15% | $2,424.33 | $1,189.50 | $806.67 |
| 20% | $2,544.79 | $1,324.69 | $966.28 |
| 25% | $2,668.58 | $1,467.57 | $1,137.46 |
| 30% | $2,795.64 | $1,617.67 | $1,318.09 |
Fixed rate, equal monthly payments, fees not included in the payment.
Worked examples
Long-term loan for equipment and working capital
$150,000 at 11% over 10 years with a 3% fee, and $4,000 of monthly profit before the payment.
| Result | |
|---|---|
| Monthly payment | $2,066.25 |
| True APR | 11.75% |
| Coverage | 1.94× (Profit covers the payment comfortably) |
Short, expensive online loan
$25,000 at 28% over 18 months with a 5% fee, and $2,500 of monthly profit.
| Result | |
|---|---|
| Monthly payment | $1,716.82 |
| Total cost of borrowing | $7,153 |
| Coverage | 1.46× (Profit covers the payment comfortably) |
Using your result
Ask every lender for the APR, term, fees and payment schedule in writing, then enter each offer here to compare them on the same basis. A lower payment over a longer term usually costs more interest in total.
Before you sign, check what the loan is for. Borrowing for equipment or a project that brings in more profit than the payment can pay for itself; borrowing to cover ongoing losses usually just delays the problem.
If coverage is tight, borrow less, extend the term, or wait until profit grows. Run the cash runway calculator with the new payment added to expenses to see how it changes your cushion. For short gaps, compare a line of credit.
What it doesn't cover
- It assumes a fixed rate and equal monthly payments. Variable rates, balloon payments and daily or weekly payments aren't modeled.
- Merchant cash advances quote a factor rate (like 1.3) instead of an APR and can cost far more than the number suggests.
- Prepayment penalties aren't included.
- Interest on a business loan is generally deductible; the tax saving isn't shown.
Read more
Frequently asked questions
What's the monthly payment on a $50,000 business loan?
About $1,062.35 at 10% over 60 months. See the table for other rates and terms.
What's the payment on a $25,000 loan?
About $531.18 a month at 10% over 60 months.
What is a true APR?
The interest rate that accounts for upfront fees, based on the cash you actually receive. It's higher than the quoted rate whenever there are fees.
What's a good debt service coverage ratio?
Many lenders look for 1.25 or more: monthly profit at least 25% higher than the loan payment.
Is business loan interest tax deductible?
Generally yes, when the money is used for the business. Principal payments are not deductible. Keep the loan in the business's name and account so the use is clear.
How much can I afford to borrow?
Work backward from the payment your profit can cover with room to spare. At a coverage of 1.25, $3,000 of monthly profit supports a payment of about $2,400 a month.
Is a longer term always better?
It lowers the payment but raises total interest. In the table, $50,000 at 10% costs $2,307.25 a month over 24 months and $660.75 over 120, with far more interest on the long loan.
What documents do lenders usually ask for?
Recent business bank statements, a profit-and-loss statement, tax returns, and details on any existing debt. Clean books make approval faster.
Is a factor rate the same as an interest rate?
No. A factor rate like 1.3 means you repay $1.30 for every dollar, often over a few months, which can work out to an APR far higher than 30%. Ask for the APR.
Sources
Reviewed against IRS sources: October 2026 · Updated October 2026 · By the NetTakeHome team. Estimates for planning, not tax, legal or financial advice.