# Free and Easy SBA Loan Calculator

## How the SBA Loan Calculator Works

Whether you have an existing loan offer, or you're simply thinking about applying for an SBA loan, you can use this free calculator to estimate your monthly payments—plus, you can evaluate the total cost of the loan, considering both interest and fees.

To use our SBA loan calculator, you simply enter the loan amount (that you were offered or that you're interested in receiving), the repayment period (in months), also called the term, and the interest rate. If you've already received a loan offer, you can enter the interest rate you were quoted. If you don't have a current offer, you can estimate the interest rate based on the SBA's guidelines for lenders. As you'll see explained below, although the interest rate on your SBA loan will vary based on the lender and your qualifications, the SBA sets a maximum for each of their loan programs based on the term of the loan. Typically, the interest rate on SBA loans is the prime rate added to the rate designated by the lender. Overall, SBA loan rates currently range from about 6% to 13%.

With this in mind, to make the most of the SBA loan calculator, you'll also want to enter any and all fees. As you can see, there is a box for origination fees—and if you click "advanced calculations," you'll see options for "documentation fees" and "miscellaneous fees." Although some SBA lenders choose to pay the fees associated with your loan, you'll find that others will attach fees to your loan offer. If you've already received an offer, you'll want to enter the respective fees into the calculator in order to accurately estimate your monthly payments and the total cost of debt. On the other hand, you can, of course, choose to leave these boxes blank, or you can research typical fees for any particular lender and test them with the calculator.

All of this being said, once you've plugged these numbers into the SBA loan calculator, you'll see the total amount of money you'll end up repaying, your monthly payments, your effective APR (which is the interest rate plus fees), and the total cost of borrowing the money.

Ultimately, using an SBA loan payment calculator—like this one—can help you get a better sense of how much an SBA loan will actually cost, as well as help you decide if you can afford to take on this debt.

To learn more about the different SBA loan programs, as well as the rates and fees associated with those loans, you can check out our breakdown below.

## A Quick Guide to SBA Loans

Despite the name "SBA loans," these loans are not actually issued by the U.S. Small Business Administration.

Instead, the SBA guarantees business loans that are issued by their lending partners, typically, banks. Depending on the loan program and your qualifications, the SBA will guarantee up to 85% of the total loan amount.

The SBA guarantee is intended to help small business owners access affordable financing that they wouldn’t normally qualify for from a bank. With the government guarantee, the lender takes on less risk—as the SBA guarantees that they'll receive the majority of their money back if your business defaults on the loan. For this reason, banks are willing to lend to small businesses that they wouldn't typically work with.

This being said, although it may be easier to qualify for an SBA loan than a loan from a traditional bank, SBA loans still require high qualifications—a solid credit score, at least two years in business, and strong financials. Additionally, whereas some alternative lenders can fund a business loan in a matter of hours, SBA loans take more time—anywhere from 60 to 90 days.

If you can qualify for an SBA loan, however, you'll have access to one of the most competitive business financing products out there. On the whole, SBA loans have some of the lowest interest rates, longest terms, and most desirable loan amounts on the market.

So, with this overview in mind, let's review some of the details we discussed with regard to the SBA loan calculator.

Ultimately, the rates and fees you'll pay will depend on a number of variables—the type of SBA loan, your terms, your lender, your qualifications, etc. However, you can get a better sense of what your payments might look like, as well as your total cost of debt, by looking into the guidelines the SBA provides for each of their programs.

Although the SBA offers a handful of programs, the three most popular are: the 7(a) loan program, the CDC/504 loan program, and the Microloan program.

Let's explore the rates and fees you can expect with each of these programs—that way, if you're using the SBA loan calculator, you'll be able to enter the most accurate numbers based on what your business is looking for.

## SBA 7(a) Loan Program

The SBA 7(a) loan program is perhaps the most popular of these three financing programs—likely because it caters to a wide variety of business needs.

The 7(a) loan program offers term loans of up to \$5 million for purposes like business expansion, major projects, working capital, and more.

What rates and fees can you expect to see with an SBA 7(a) loan? Let's break them down—this way, you can use our tool specifically as an SBA 7(a) loan calculator.

#### 7(a) Loan Rates

As we briefly discussed above, the interest rates you'll receive on a 7(a) loan actually aren't determined by the SBA. Instead, they'll vary based on the lender you’re working with, as the bank issuing your 7(a) loan will set the rate.

This being said, however, (and again, as we mentioned above) SBA lenders are subject to SBA guidelines for their loans—which include maximums for interest rates.

Therefore, your total SBA 7(a) loan rate will be comprised of two parts—a base rate and an allowable spread (the SBA maximum).

The base rate is determined by the current prime rate (usually hovering somewhere between 3% and 4%). The allowable spread, on the other hand, is what the lender can charge on top of the base rate (which is what allows them to make money) to arrive at your final interest rate.

According to SBA guidelines, for 7(a) loans of more than \$50,000 and with terms shorter than seven years, the maximum spread is 2.25%. For loans above \$50,000 with terms of seven years or more, however, the maximum spread is 2.75%.

All in all, the final rate for an SBA 7(a) loan is likely to fall somewhere between 6% to 8%.

This being said, however, it's important to remember that this interest rate is different than the APR that is estimated when you use an SBA 7(a) loan calculator. In order to better estimate the APR on your 7(a) loan, you'll need to consider the fees associated with the loan as well.

#### 7(a) Loan Fees

Although SBA loans are one of the most affordable financing options on the market, you'll need to pay at least one fee on a 7(a) loan. This fee, the SBA guarantee fee, is unique to SBA loan programs—as it's a fee charged for the service of guaranteeing the loan.

Essentially, to offer SBA loans, the lender has to pay a portion of the guaranteed amount to the government. In many cases, therefore, the lender passes this cost along to you in the form of a guarantee fee.

The actual fee that comes included in your loan offer (and plugged into your SBA 7(a) loan calculator, however, depends on the details of the loan. The guarantee fee is based on the loan’s maturity and the dollar amount guaranteed—not the total loan amount.

Unfortunately, this means that you won't know what your guarantee fee is until you get your loan offer. This being said, however, the SBA does set a few guidelines with regard to this fee:

• Loans of less than \$150,000 will have no guarantee fee.

• Loans of more than \$150,000 with a term of one year or less will have a guarantee fee of 0.25% of the guaranteed portion of the loan.

• Loans between \$150,000 and \$700,000 and maturities of more than one year will have a guarantee fee that’s 3% of the guaranteed portion of the loan.

• Loans of more than \$700,000 and more than one year in maturity will have a guarantee fee of 3.5% of the guaranteed portion.

• Loans of more than \$1 million will have an additional 0.25% fee added onto the guaranteed portion of the loan.

###### SBA 7(a) Loan Calculator Example

Let’s use an example to take a look at the 7(a) loan’s rates and fees and how you might plug them into an SBA loan calculator.

Say you’ve qualified for an SBA loan from a lender who’s offering you \$200,000 over a three year term, with an interest rate of 5.75%.

As we've explained, before you plug these numbers into your SBA 7(a) loan calculator, you need to know what portion of the loan the SBA is guaranteeing—as that percentage will determine your guarantee fee.

The SBA will guarantee 85% on loans of up to \$150,000 and 75% on loans of more than \$150,000. So, for this example, let’s say the SBA guarantees 75% of your \$200,000 loan—or \$150,000. In this case, the guarantee fee on your loan will be \$4,500.

If you plugging these numbers into your SBA loan calculator, then you’ll see that you have to pay back \$218,223.29 in total, with monthly payments of \$6,061.76, at an effective APR of 7.12%.

## SBA CDC/504 Loan Program

The SBA CDC/504 loan program is another of the most popular SBA loan programs for small business owners.

Whereas the 7(a) loan program is an all-encompassing option for general financing purposes, the CDC/504 loan program is much more specific.

CDC/504 loans can only be used for major fixed asset purchases. Therefore, you’re looking to finance a purchase of a major piece of equipment or real estate, then a CDC/504 loan might be right for you.

This being said, unlike 7(a) loans, which are issued wholly from SBA lending partners, CDC/504 loans are in part funded by certified development companies (CDCs), nonprofit organizations looking to aid community development. SBA lenders fund another piece of the loan and with a down payment, your business funds the final piece. Typically, the CDC will fund 50% of the loan, the bank, 40%, and your down payment will make up the final 10%.

So, what do the rates and fees look like for an SBA 504/CDC loan? Let's take a look.

#### CDC/504 Loan Rates

Compared to the 7(a) loan program rates, the rates on CDC/504 loans are much more complex.

This complexity comes from the fact that CDC/504 loans are funded by two different entities, as we mentioned—an SBA lender (typically a traditional bank), and a certified development company.

In short, therefore, rates on the CDC portion of the loan change monthly in tandem with U.S. treasury rates. The SBA lender, on the other hand, decides the interest rates on their portion of the loan. Overall, if you're looking for an estimate to use with an SBA 504 loan calculator, it's common for total interest rates on these loans to fall somewhere between 5% to 6%.

#### CDC/504 Loan Fees

Due to the way CDC/504 loans are funded, the SBA doesn’t fully outline fees—unfortunately, making it difficult to use an SBA loan calculator to estimate payments or total cost of debt with this program.

This being said, you can expect to pay some sort of guarantee fee (passed onto you from the bank lender), a servicing fee (paid to the CDC for providing the 40% debenture), and a fee paid to a central servicing agent.

The SBA does ensure, however, that the three possible fees won’t total more than 3% of the debenture. (And in some cases, you can actually finance the fees with the 504 loan proceeds.)

With this in mind, it's once again important to remember that the interest rate you’re quoted on for your CDC/504 loan won’t illustrate the total cost of the loan. You'll need to include these fees, and if possible, use an SBA 504 loan calculator, to determine what your APR will be, and therefore, how much the loan will actually cost your business.

## SBA Microloan Program

The SBA Microloan Program is the third of the most popular programs for small business owners.

Microloans, as the name suggests, are small-dollar loans made to eligible small businesses and certain non-profits. This program offers loans of up to \$50,000, intended to help small businesses grow their operations with affordable working capital.

How affordable is an SBA Microloan when you factor in rates and fees? Let's find out.

#### Microloan Rates and Fees

With the Microloan program, the SBA issues funds to designated intermediary lenders, which are nonprofit community-based organizations with experience lending to businesses in their areas.

For this reason, the interest rate you receive on your microloan isn’t up to the SBA—it depends on the microlender you’re working with. This being said, however, interest rates will typically range between 8% and 13%.

Along these lines, the fees you receive on your microloan are again, up to the lender who issues the loan. Therefore, once you receive the interest rate and fees from the lender, you can easily plug in these numbers to your SBA loan payment calculator to estimate your monthly payments and total costs.

## Alternatives to SBA Loans

As we've discussed, with some of the most desirable rates and terms on the market, SBA loans are great financing options for small business owners.

This being said, however, SBA loans can still be difficult for the average small business owner to qualify for. Although the SBA guarantee does help more small business owners get approved for these loans, you still need to meet fairly high requirements to qualify.

Therefore, if you find yourself unable to qualify for an SBA loan, you might consider the following three alternatives:

###### Term Loans

Most small business owners are familiar with business term loans. With these loans, you receive a lump sum of capital and pay it back with fixed monthly payments over a set term.

In the past, only banks offered term loans. Today, however, you can work with online, or alternative lenders to receive a term loan even if you can't qualify for a bank loan.

These online lenders (like Kabbage, Bluevine, and Funding Circle) offer short or long term loans with interest rates that vary based on the lender and your qualifications.

Overall, you can find online term loans in amounts up to \$500,000, in terms from a few months to five years, and interest rates ranging from 7% to 30%.

Find out what a term loan might cost with our Term Loan Calculator.

A business line of credit is one of the most flexible types of financing. Similar to a credit card, a business line of credit gives you access to a pool of funds that you can draw on whenever you want or need to—paying interest only on the capital you use. Plus, once you’ve repaid what you drew in full, your line of credit refills to its original amount.

Generally, a business line of credit is a good option for business owners who could use a cushion on their cash flow. It's also a worthwhile option for an emergency fund and to be used in conjunction with other types of financing.

Like term loans, you can get a line of credit from a bank, but these products are harder to qualify for. Some online lenders, however, offer extremely competitive amounts, terms, and rates for their line of credit products.

###### Equipment Financing

If you were interested in an SBA loan to make a major equipment purchase for your business, equipment financing is another option to consider.

As the name suggests, equipment financing is used specifically for purchasing new or used equipment.

Typically, equipment lenders will offer you up to 100% of the value of your new equipment, which you’ll pay back over a set period of time—usually one to five years, or the expected lifetime of the equipment.

One benefit of pursuing this type of financing is that it could be slightly easier to qualify for low rates—usually ranging from 8% to 30%—because equipment loans are self-securing. In essence, the equipment you purchase with the loan acts as collateral for the financing—giving lenders some reassurance that they’ll get their money back in the case that you default on the loan.

Find out what an equipment loan might cost with our Equipment Loan Calculator.