Business Loan Repayment Calculator

How are business loan repayments calculated?

Most business loans are amortising: each repayment is a fixed amount that covers the interest accrued since the last payment, with the remainder reducing the balance. The calculator uses the standard amortisation formula, so early repayments are mostly interest and later ones mostly principal. The amount, term, rate and frequency you enter set the result.

The schedule below the results shows exactly how that split moves over the term: interest dominates early, principal dominates late. For the full definition, see amortisation in our glossary. The figures here are estimates for comparison, not a quote or an offer: a lender sets the actual rate, term and repayment for your business.

What does a balloon payment do to repayments?

A balloon payment lowers each regular repayment by leaving a larger final amount owing at the end of the term. You are not repaying the full balance across the term, so you pay interest on more of the debt for longer, which usually increases the total interest paid over the life of the loan.

Balloons and residuals are most common on equipment and vehicle finance. See balloon payment in the glossary, and our guide to chattel mortgage vs lease vs rental for how the end-of-term amount differs between structures.