Free Tool
Business Loan Calculator
Use our free business loan calculator to work out your monthly repayments, total interest cost, and full amortisation schedule for any business loan. Enter your loan amount, interest rate, and term for an instant result — no sign-up required.
How to Use This Business Loan Calculator
- Loan Amount: Enter the total amount you want to borrow in pounds.
- Annual Interest Rate: Enter the interest rate your lender has quoted, as a percentage (e.g. 7.5 for 7.5%).
- Loan Term: Enter the number of years over which you will repay the loan.
- Extra Monthly Payment (optional): Enter any additional amount you plan to pay each month to reduce your balance faster.
- Click Calculate Repayments to see your monthly payment, total interest, and full amortisation schedule.
Business Loan Repayment Calculator
Loan Summary
Principal vs Interest
Loan Balance Over Time
Amortisation Schedule
Showing first 6 and last 6 months. Full schedule runs for the loan term.
| Month | Payment | Principal | Interest | Balance |
|---|
How to Interpret Your Results
Extra Payments
Save more than you think. Even £50 extra per month goes straight to reducing your principal, compounding into significant interest savings and a shorter term over time.
Amortisation
Watch where money goes. In early months, most of each payment covers interest. As the balance falls, more goes to principal — accelerating repayment as you go.
Interest Rate
Small changes, big impact. A 1–2% difference in interest rate can mean thousands of pounds in total cost over a long loan term. Always compare lender offers carefully.
What is a Business Loan?
A business loan is a fixed sum of money borrowed from a bank or lender that you agree to repay over a set period — the loan term — with interest. Business loans are one of the most common forms of finance for UK small businesses and startups, used for everything from buying equipment and vehicles to funding working capital and expansion.
This calculator models an amortising loan — the standard structure for most UK business loans. Each monthly payment is split between interest (the cost of borrowing) and principal (the balance owed). In the early months, most of each payment goes to interest. Over time, as the principal falls, a greater share of each payment reduces the balance.
Real-World Example — Van for a Small Business
A florist needs a new delivery van costing £20,000. They take out a business loan at 7% annual interest over 5 years.
Monthly repayment: £396.02
Total interest paid: £3,761.04
Total cost of loan: £23,761.04
Now suppose they add £50 extra per month. The calculator shows they would pay off the loan around 5 months early and save approximately £290 in interest — a meaningful saving for a small business for minimal extra effort each month.
The Monthly Repayment Formula
M = P × [r(1+r)^n]
÷ [(1+r)^n − 1]
- M = Monthly repayment
- P = Loan principal (amount borrowed)
- r = Monthly interest rate (annual rate ÷ 12)
- n = Total number of monthly payments
Key Loan Terms Explained
Principal
The amount of money you borrow — not including interest.
Interest
The fee charged by the lender for providing the loan, calculated as a percentage of the outstanding balance.
Loan Term
The number of years (or months) over which you repay the loan. A longer term means lower monthly payments but more interest paid overall.
Amortisation
The schedule of payments showing how each monthly payment is split between interest and principal reduction over the life of the loan.
How to Get the Best Business Loan Rate
The interest rate you are offered depends on several factors. Here’s what lenders typically look at and how you can improve your position:
Factors in your favour
- → Strong and consistent revenue history
- → Good personal and business credit score
- → Trading for 2+ years
- → Offering security or a personal guarantee
- → Borrowing a smaller percentage of your turnover
Steps before applying
- → Compare offers from multiple lenders
- → Check whether APR or flat rate is quoted
- → Ask about arrangement fees and ERCs
- → Prepare up-to-date accounts and cashflow data
- → Consider government-backed schemes (e.g. British Business Bank)
Frequently Asked Questions
What is a business loan calculator UK?
A business loan calculator helps you work out your monthly repayment, the total interest you will pay over the loan term, and how much you can save by making extra payments. Enter the loan amount, annual interest rate, and loan term in years for an instant result with a full amortisation schedule.
How do extra payments on a business loan work?
Any extra payment goes directly to reducing your principal balance, not to interest. Because the principal is lower, the interest charged in the following month is also lower. This creates a compounding effect that can shorten your loan term significantly and save a meaningful amount on total interest paid over the life of the loan.
What is the difference between APR and annual interest rate?
The annual interest rate is purely the interest charged on the loan balance. APR (Annual Percentage Rate) is broader — it includes the interest rate plus arrangement fees, origination fees, and any other charges associated with taking out the loan. APR is the more useful number when comparing loan offers from different lenders.
What is loan amortisation?
Amortisation is the process of repaying a loan through regular scheduled payments over time. Each payment is split between interest (the cost of borrowing) and principal (the amount borrowed). In the early months, most of each payment goes to interest. Over time, as the principal falls, more of each payment reduces the outstanding balance.
Can I repay a business loan early in the UK?
In most cases yes, but always check whether your lender applies an early repayment charge (ERC). Some lenders charge a fee equivalent to a set number of months’ interest if you settle ahead of schedule. This calculator assumes no early repayment penalty — factor in any ERC before making overpayments.
Related Free Calculators
Use these alongside your loan analysis to understand the full financial picture.
Need a full financial model?
Go deeper with a premium template
Our Cash Flow Forecast template lets you model loan repayments alongside your full business finances in Excel or Google Sheets — from £9.99.