Business Loan Calculators Explanation
To help in comparing different financing options, we’ve listed several APR calculators. While one product might have a different interest rate from another product, their APRs may be similar. To truly understand which product is best for you, use our APR calculators for a quick comparison on cost.
What Is APR?
APR means annual percentage rate. APR is often different from your loan interest rate and determines that actual cost of your loan. The reason there is a difference between APR and interest rate is because APR includes various loan fees such as origination and administration fees. Using APR instead of just interest rate is important as it will provide the true cost of your loan.
Many offerings will put the interest rate front and center to grab your attention while the APR is in the fine print. Don’t be tricked by this advertising practice. Use our calculators to find your APR and have a better understanding of the cost involved.
Invoice Financing APR Calculator
Invoice financing (also called factoring) is a great option when your business needs cash. Invoice financing companies will provide you with 80-85% of the total invoice amount, which is usually made up of multiple invoices. This advance covers any cash shortages in your business. The invoicing company will then collect payment from customers and pay the remaining amount to you minus the financing company’s fees. Fees can range from 0.5% to 4% a month.
Financing fees involved are going to be different from a traditional term or bank loan. Use your invoice financing term in the calculator below to get the true cost of your advance and to compare with alternative funding sources.If you’d like to use our Invoice Financing APR Calculator, simply copy and paste the code below.
Kabbage APR Calculator
With a 6 month working capital, small business loan from Kabbage, you don’t have to worry about origination or prepayment fees, which you’ll find on cash advances and daily debit loans.
Here’s how a Kabbage loan is structured: A risk premium is assigned to you. This will range from 1% – 13.5%. You’ll pay the following for the first two months:
[amount borrowed] * [1/6 + risk premium]
After this, the following four months changes the loan structure to:
[amount borrowed] * [1/6 + 1%]
When including financing cost, you get a total of:
[amount borrowed] * [2 * risk premium + 4]%
Rather than trying to figure out the APR, just plug your Kabbage numbers into this calculator and let it do the work for you. Additionally, you’ll also get a comparison with other loan products.
For more info on Kabbage cash flow loans and other financing option, click here.
OnDeck APR Calculator
As one of the largest lenders for small business loans, OnDeck offers a 24 month term loan ranging from $5,000 to $500,00. Also available from OnDeck is a 6 month line of credit up to $100,000. You can choose from two payment arrangements: Fixed daily or weekly.
With a different fee structure from most loans, it’s best to use the calculator below to get a better understanding of cost involved. OnDeck’s average interest rate is 19% with an origination fee of 2.5% for the first loan. Subsequent fees include 1.25% for the second loan and 0-1.25% for the third.
Merchant Cash Advance APR Calculator
Merchant Cash Advance (MCA) isn’t a company. It’s a type of financing. Businesses sell a percentage of their future credit/debit sales for an advance. Before the business can can gain access to any money from sales, the lender must first get paid. This is done by the lender debiting card receipts on a daily basis directly from the merchant’s account.
If your business has unpredictable cash flow or sales cycles that are affected by seasonality, MCAs can be a great option. Because MCAs work off of percentages and not fixed amounts, calculating the total cost on any advanced amount can be difficult. To easily calculate your MCA cost, use the calculator below.
Common MCA’s include Can Capital, RapidAdvance, and Newteck.
Term Loan APR Calculator
Terms loans provide for easier access to financing with a friendly application process. If you’re having difficulty with other financing options, a term loan might be your best option. The trade off for this more accessible loan is a higher interest rate.
Upon approval of a term loan, your term sheet will include numbers for the interest rate, repayment period (1-5 years) and other fees. These fees can include an origination or monthly fee. To find the cost of your loan, add up the fees then use the remaining numbers in the calculator below.
A few lenders include Fundation, Funding Circle and Deastruck. To learn more about term loans, read more about these lenders along with reviews in our free ebook. Please download our free ebook (‘[ebook title]’) here.
Business Loan Calculator Definitions
This number should be one of the first numbers you come across on your loan documentation. This will be the approved amount the lender is willing to lend to your business.
This is the rate set by the lender and incurred at set intervals. It’s one of the main ways lenders make money from loans. For the borrow, it isn’t the most important number. You should be more concerned with APR – annual percentage rate. The APR will include all loan fees and give you a more accurate loan cost. Using APR across different loan offerings allows for a better comparison. You can use our APR calculators to help you determine the true cost of your loan.
Application & Origination Fees
Application fees cover administrative work such as credit and background checks. Origination fees may be a percentage of the loan. Additionally, they can include cost such as underwriting and loan issuance processing.
This is the total length of the loan and the time that you are under contract with the lender for the loan. At the end of the loan, either full repayment or renegotiated is expected.
Monthly Servicing Charge
Some up front fees may be negotiated into monthly fees, reducing your up front cost. In certain cases, lenders may charge a monthly fee in addition to other fees.