Answer
What is the monthly payment on a business loan?
Worked payment tables at common amounts and terms, plus the fee effect that makes the quoted rate misleading.
At the current median SBA 7(a) rate of 10.25% over ten years, a $100,000 loan runs about $1,346 a month, $250,000 about $3,364, and $500,000 about $6,729. Shorter terms raise the payment sharply; fees taken from proceeds raise the effective rate.
Payment by amount and term
Calculated at 10.25%, the median initial rate on recently approved SBA 7(a) loans.
| Amount | 3-year | 5-year | 7-year | 10-year |
|---|---|---|---|---|
| $50,000 | $1,619 | $1,069 | $837 | $668 |
| $100,000 | $3,238 | $2,137 | $1,673 | $1,335 |
| $250,000 | $8,096 | $5,343 | $4,183 | $3,338 |
| $500,000 | $16,192 | $10,685 | $8,365 | $6,677 |
| $1,000,000 | $32,385 | $21,370 | $16,731 | $13,354 |
Run your own numbers, including fees, with the loan payment calculator.
The formula, if you want it
Payment = P × i ÷ (1 − (1 + i)−n)
Where P is the amount borrowed, i is the annual rate divided by 12, and n is the number of monthly payments. Every ordinary term loan and mortgage uses this.
Why your actual payment differs
- Fees taken from proceeds. A 3% origination fee on $250,000 means $242,500 arrives while you repay on $250,000. The payment is unchanged; your effective rate is not.
- Variable rates. Most SBA 7(a) loans reprice with prime, usually quarterly. A two-point move on a $250,000 ten-year loan changes the payment by roughly $250 a month.
- Daily or weekly debits. Common with online lenders. The same nominal rate costs more, and lumpy receipts turn it into overdraft risk.
- Interest-only periods. Common on construction and practice start-ups, and the payment jumps when amortization begins.
- Balloons. If the term is shorter than the amortization, the payment looks affordable and the balance is due in full at the balloon date.
The payment you can actually carry
A payment you can technically make is not the same as one a lender will approve, and neither is the same as one your business should carry. Lenders want cash flow of at least 1.15x total debt service and are comfortable at 1.25x. Work backwards from that with the affordability calculator rather than forwards from what you hope to borrow.
Questions people actually ask
What is the monthly payment on a $500,000 business loan?
About $6,729 a month over ten years at 10.25%, the current median SBA 7(a) rate. Over five years the same loan is roughly $10,700 a month. Term length matters more than most borrowers expect.
Can I get an interest-only period?
Sometimes, and it is worth asking. Interest-only or graduated payment periods of six to twelve months are standard in practice acquisitions, construction, and some start-up financing. Model the payment after the interest-only period ends, not during it.
Does paying extra reduce my payment?
Usually it reduces the term rather than the payment -- you finish sooner and pay less total interest. Some lenders will re-amortize on request after a large principal reduction. Check for prepayment penalties first: SBA 7(a) loans of 15 years or more carry 5%, 3%, and 1% in years one through three.