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Business loan and interest rate calculator

When you shop for a business loan, interest rates are just one part of the big picture. You also need to consider how much you’re borrowing and how long you’ll need to pay it back. The Bankrate business loan calculator helps you answer all those questions and more. 

Simply enter either the loan amount and loan term in years or enter the loan term in months and the interest rate per year. This will show you your monthly payment, total principal paid and total interest paid. Take your simulated loan a step further by selecting "show amortization schedule" to see a detailed, month-by-month schedule leading up to your final payoff date. You can even add extra payments and find out how paying a little extra per month can reduce your total interest paid.
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What to know about business loans

A business loan is money that you borrow specifically to grow or maintain your business. Starting and running a business can be very expensive, especially in the face of rising inflation. Business loans are ideal for small businesses that need help starting or growing their business. You can also use a business loan to consolidate debt if needed. Small business loans can be particularly helpful for minority-owned businesses and women-owned businesses since these groups may face additional challenges in the financial sphere. 

If you are looking to take out a business loan, you generally have two options: a lump sum installment loan or a revolving line of credit. If you take out a lump sum loan, you will receive all of the money upfront and pay it back in monthly installments with a fixed interest rate. A business line of credit functions more like a credit card. You can draw funds from it as needed, only paying interest on what you borrow. As you make monthly payments and pay back what you’ve borrowed, the funds available are replenished. 

A business loan could help your business succeed, but you should only consider taking one out if you are sure you can afford to pay it back. Before applying for a business loan, make sure you have the necessary documents in order. These generally include a personal credit report, a business credit report, business financial documents and business legal documents. 

Types of business loans

When you’re looking for a business loan, there are three primary options: a traditional bank loan, a loan from an online lender or an SBA loan.

Most major banks offer both business loans and lines of credit. Bank loans are generally best suited for business owners who already have a relationship with a brick-and-mortar bank. However, online lenders tend to be a better option for newer businesses and those with poor credit. You can often find unique lending opportunities with online lenders and there tends to be more variety and flexibility with these lenders.

The Small Business Association (SBA) offers loans to small businesses. These loans typically have competitive rates. more flexible requirements, longer repayment terms and lower rates overall than traditional business loans. 

What to consider when shopping for a business loan

Before taking out a business loan, you should assess your business’s overall financial picture to give you a better idea of what you may be able to qualify for. You also need to shop around and compare lenders. It is ideal to find a lender with the lowest possible rate, but you should also consider borrowing limits, fees, eligibility requirements and other aspects that matter to you such as customer service and online availability. Depending on how quickly you need the funds, you may also want to consider which lenders have the quickest fund delivery time. 

Before signing off on a loan, make sure you have done your research and are choosing the best possible loan for your situation. Many lenders let you pre-qualify without hurting your credit. This lets you see what terms, loan amount and interest rate you are eligible for before making a commitment.  

Alternatives to fund your business

If you need money for your business but you are having trouble qualifying for a personal loan, there are other options available:

  • Personal loans are generally easier to access than business loans and can be used for business purposes. However, these loans tend to have higher interest rates and shorter repayment periods than business loans, which could be risky if your business has a tight budget. 
  • Home equity loans can be used for business purposes, but this should be a last resort. If you have a lot of equity in your home, this option could give you quick access to the cash you need. However, using a home equity loan for business purposes puts you at risk of losing your home if you are unable to pay it back. 
  • Business credit cards allow you to borrow what you need when you need it up to a credit limit. Credit cards also tend to come with perks such as rewards programs, sign up bonuses and an introductory 0 percent APR. 

 

Get answers with Bankrate.com

Particularly with small business loans, interest rates should be reasonable to help the borrower protect his bottom line. Find out what the experts recommend for getting great rates on small business loans and lines of credit.