Free Business Loan Calculator
Before you sign an offer letter, know three numbers: the monthly repayment, the total interest, and the rate you're really paying. This business loan calculator shows all three - including the trap where a "24% flat" quote costs almost double what it sounds like. Works in any currency, no sign-up.
Loan repayment formula: monthly payment = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the loan amount, r the monthly rate, and n the months. On a flat-rate quote, interest is instead charged on the full amount all term - nearly doubling the effective rate.
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Flat rate vs reducing balance - the trap in loan quotes
Two lenders quote you "24% per year" on a ₦5,000,000 loan over 24 months. Same words, very different loans. On reducing balance, interest is charged on what you still owe. On a flat rate, it's charged on the full ₦5,000,000 every month until the end - including the part you paid back in month one.
| ₦5m, 24%, 24 months | Reducing balance | Flat rate |
|---|---|---|
| Monthly repayment | ₦264,356 | ₦308,333 |
| Total interest | ₦1,344,545 | ₦2,400,000 |
| Total repaid | ₦6,344,545 | ₦7,400,000 |
| Real annual rate | 24% | ≈ 41% |
Over ₦1,000,000 of extra interest, hiding behind the same headline number. Microfinance banks and many fintech lenders quote flat; commercial banks usually quote reducing balance. Set the "How it's quoted" field to flat and the calculator translates the quote into its reducing-balance equivalent so you can compare offers on equal terms.
The true cost is interest plus fees
Offer letters bury one-off charges: arrangement fee, processing fee, credit life insurance, legal and search fees. Individually small, together often 1-4% of the loan - deducted before the money even reaches your account. A 2% fee on ₦5,000,000 is ₦100,000, which on a one-year loan adds roughly two points to your real annual cost. Put the total fee percentage into the calculator and judge the loan by the "true cost of borrowing" line, not the headline rate.
Business Loan FAQ
How do I calculate the monthly repayment on a business loan?
For a standard reducing-balance loan: repayment = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the amount, r the monthly rate (annual ÷ 12), and n the number of months. A 5,000,000 loan at 24% over 24 months comes to 264,356 a month. Enter your own numbers above and the calculator does it live, including the year-by-year schedule.
What's the difference between a flat rate and reducing balance?
Reducing balance charges interest only on what you still owe, so the interest portion shrinks every month. A flat rate charges interest on the original amount for the whole term - even the part you've already repaid. That's why a 24% flat rate costs about the same as a 41% reducing-balance rate. Always ask which one a lender is quoting before you compare offers.
What is a normal interest rate for a business loan?
It depends entirely on where you borrow and who you are. In mid-2026, Nigerian commercial bank loans to SMEs commonly run 25-35% per year (with development-bank schemes cheaper), while a US SBA-backed loan might be 10-13% and a UK small-business loan 8-15%. Microfinance and fintech lenders quote monthly rates - multiply by 12 and check whether it's flat before you panic or celebrate.
Do fees really matter on a loan?
Yes. A 2% arrangement fee on a 5,000,000 loan is 100,000 gone on day one - on a short loan that can add several points to the true annual cost. Add processing, insurance, and legal fees into the fees field above so the 'true cost of borrowing' line reflects what you'll actually pay.
Is a shorter or longer term better?
Shorter terms cost less in total interest but demand a bigger monthly payment; longer terms are easier on monthly cash flow but more expensive overall. The honest test is your cash flow: if the repayment is more than about a third of your reliable monthly surplus, the term is too short for you regardless of what the interest saving says.
How is this different from a Growpins Ledger account?
This calculator sizes a loan before you take it. Growpins Ledger helps you manage the money afterwards - invoices that get you paid on time, expense tracking that shows whether the repayment fits, and the P&L your lender will ask for next time. The free tier needs no card.
Borrowing to grow? Show the lender clean books.
Growpins Ledger tracks your invoices, expenses, and profit in one place - the records that prove you can service a loan, and the cash flow view that tells you if the repayment actually fits. Built by the team behind Growpins, founded by Dokun Bamigboye. Free tier, no card required.
Get Started FreeWill the repayment fit your cash flow? Check with the Cash Flow Calculator, see if the investment pays with the ROI Calculator, or browse all free tools.
This page is general information, not financial advice. Lenders calculate interest, fees, and schedules in their own ways - the offer letter and amortization schedule from your lender are the figures that bind you.