How business loan interest works
This estimate assumes a fixed annual nominal rate and equal monthly repayments that reduce the balance. The monthly rate is the annual rate divided by 12. Each month's interest is calculated on the balance then outstanding; as that balance falls, more of each level payment repays principal.
Loan contracts can use different conventions, including daily accrual, fees, variable rates, flat/add-on interest or non-monthly payments. Those terms can change the cost. This calculator does not model them, so use the lender's repayment schedule and disclosure for a quote-specific figure.
Worked example
For a £50,000 loan at a fixed 8% annual nominal rate over 5 years, the estimated monthly repayment is £1,013.82. Total interest is £10,829.18, including £3,693.83 across the first 12 monthly payments. At the same rate over 10 years, the monthly repayment falls to £606.64 while total interest increases to £22,796.56. These are estimates before fees and assume monthly repayments.
What this estimate includes
The result covers the entered principal, rate and term only. It does not include fees, tax treatment, approval or affordability. Tax rules depend on the country and business circumstances; this calculator does not determine whether interest is deductible.
Inputs for the business loan interest calculator
Amount to borrow
The amount the business wants to borrow.
Interest rate (per year)
Enter the fixed annual nominal rate from the offer, before fees. The displayed value is only an example; an APR that includes fees is not the same rate.
Term
How many years you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Business loan interest calculator questions
How much interest will a £50,000 business loan cost?
At 8% over 5 years, £10,829.18. Enter your own figures above.
Does this calculate business-loan tax relief?
No. Tax treatment depends on the country, business and loan use. This calculator estimates interest only and does not decide whether it is deductible.
Why do I pay more interest at the start?
Interest is charged on the balance you owe, which is highest at the start. As you repay, the balance falls and so does the interest.
Does this include fees?
No. Fees are excluded. Add them separately when comparing the lender's full repayment offer.