With small business financing, there are generally two options available to the owners of budding companies. One can either sell a share of ownership in return for capital, or take out a loan. As with all loans, it is important when taking out a small business loan to aim for a manageable monthly payment. There is no use taking out a business loan so as to cover expenses, only to find that you cannot meet the monthly payments. This loan payment calculator is designed to tell you exactly what you can expect to pay each month, and can be applied both to general personal loans and those for businesses.
How to use it
To use the calculator, it is necessary that the borrower is already aware of the three key figures associated with the loan: that is, the amount desired, the length of the loan, and the interest rate that results from the aforementioned variables. Researching various small business lenders or other financial institutions will supply you with all you need to know, when it comes to these figures. Start by entering these details into the calculator: the amount where it says “Loan Amount”, and the duration where it says “Loan Duration”. Note here that the duration is measured in months, rather than years. Finally, enter the interest rate you have been quoted for your loan and click on “Calculate”.
As an example, we can imagine that an entrepreneur wishes to obtain $15,000 in capital so as to invest in new materials for a startup business. Therefore, start by entering this figure into the box marked “Loan Amount”. The owner of the business is looking at a loan term of around 5 years, which must be entered into the box marked “Loan Duration” in months: so, 60 months. The quoted interest figure on such a loan is 5% – therefore, enter this figure into the box marked “Interest Rate”. Again, this is merely an example. It is important to research the figures before using the calculator. Upon clicking on “Calculate”, it is found that the monthly payment on a loan such as this one will be around $283.