Calculate monthly payments, total interest cost, and return on investment for business loans. Evaluate whether borrowing makes financial sense for your business.
SBA 7(a) Loans: Up to $5M, best rates (Prime +2.25–4.75%), longest terms (up to 25 years for real estate, 10 years for working capital). Most paperwork, 60–90 day process.
Term Loans: Fixed amount, fixed rate, fixed term. Best for specific investments (equipment, expansion). Banks: 6–13% APR. Online lenders: 10–36% APR, faster approval.
Business Lines of Credit: Revolving credit, pay interest only on what you draw. Best for managing cash flow and seasonal businesses. 8–24% APR typically.
Key factors: (1) Time in business — most banks require 2+ years, online lenders 6+ months; (2) Annual revenue — typically $100K+ minimum; (3) Credit score — 650+ for most bank loans, 580+ for online lenders; (4) Cash flow / DSCR — lenders want to see 1.25x coverage; (5) Collateral — secures lower rates; (6) Industry — some industries (restaurants, real estate) face stricter requirements.
SBA (Small Business Administration) loans are government-guaranteed loans offered through approved lenders. The SBA guarantees 75–85% of the loan, reducing lender risk and enabling better rates and terms. Requirements: for-profit US business, meet SBA size standards (usually <500 employees), have reasonable equity in the business, have exhausted other financing, and have sound business purpose. Apply through SBA-approved lenders (banks, credit unions, CDFIs).
Yes — interest paid on business loans is generally fully tax deductible as a business expense, reducing your effective cost of capital. If your business is in the 25% tax bracket, a loan at 10% APR effectively costs 7.5% after the tax deduction. This makes business loans much more economical than they appear on the surface.