Calculate your monthly repayments, total interest, and view a full amortisation schedule for your business loan.
On a £25,000 loan, the term changes the total cost as much as the rate does:
| Rate and term | Monthly | Total interest | Total repaid |
|---|---|---|---|
| 8% over 3 years | £783.41 | £3,202.73 | £28,202.73 |
| 8% over 5 years | £506.91 | £5,414.59 | £30,414.59 |
| 6% over 5 years | £483.32 | £3,999.20 | £28,999.20 |
Stretching the same 8% loan from 3 to 5 years cuts the monthly payment by about £276 but adds around £2,200 of interest. If cash flow can handle the higher payment, the shorter term is cheaper. Check your monthly budget with the cash flow forecast before you commit.
Most business loans are repaid in equal monthly instalments. Early payments are mostly interest, and the share going to the loan itself grows each month. The calculator uses the standard amortisation formula based on the loan amount, interest rate and term.
Interest on a loan used for your business is normally an allowable expense for sole traders and a deductible cost for limited companies, which reduces your tax bill. Repayments of the loan itself are not deductible.
The interest rate is what you pay on the balance. APR adds in compulsory fees, such as arrangement fees, so it is the better figure for comparing loans. Enter the APR here if you want fees reflected in the monthly cost.
The government-backed Start Up Loans scheme, run by the British Business Bank, lends from £500 to £25,000 per founder at a fixed 6% a year over 1 to 5 years, with free mentoring. It is a personal loan used for business purposes.
Sources: Start Up Loans (British Business Bank) and GOV.UK: Expenses if you are self-employed. General information, not financial advice.