Written by Calculate your business loan repayments
Need to cover business expenses? Taking out a loan is one of the simplest most common ways to do it. However, it’s important to know what each loan may end up costing in the long-term, which is where you can use Savvy’s business loan calculator. Our handy tool will give you a better idea of what you might pay for financing based on your loan size, term, interest rate and more!
Why compare business loans with Savvy?
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You can speak with one of our specialist commercial brokers who can walk you through a range of loans to best suit your companies needs.
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You can compare business loan offers, through a range of trusted lenders, maximising your chances of a great rate.
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You can fill out our simple online form to generate a free business finance quote within minutes. You can also come back to it at any time.
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How to compare loans before using the business loan repayment calculator
Borrowing range
First and foremost, you should ensure the lenders you’re considering for your business’ loan offer the amount that you’re looking for. For example, there’s little point in spending time tossing up options for a $300,000 loan if one or more of the lenders you’re looking at cap their loans at $250,000.
This also applies at the other end of the scale, with some lenders enforcing a minimum of $10,000, which may not fit with what you need.
Loan terms
By that same measure, you should always keep an eye on the potential terms available for loan repayments when comparing your options. You shouldn’t sacrifice your business’ comfort in covering your loan, so it’s important to select lenders which offer your preferred terms.
Some will restrict their loans to only two to three years in length, while others will require at least six to 12 months as a minimum.
p over time and end up costing you a great deal of money on your loan. These can include charges such as establishment or application fees (up to 3% of your loan amount) or annual maintenance fees. Prices for these vary between lenders, so you should look to prioritise low-fee loans wherever possible to help you save more.
Interest rates and fees
You should also look to minimise the cost of your repayments wherever possible, which you can do by looking at their interest rates and fees. Rates are always prominently displayed, so it’s simple to compare them to one another, although it’s important to note you may not receive the lowest possible rate indicated on your loan offer. On top of this, charges such as establishment fees of 2% to 3% of your loan amount are also worth paying attention to.
Repayment flexibility
It’s important to leave the door open wherever possible to paying off your loan sooner than its scheduled end time, as your business’ revenues may increase over time to the point where it’s no longer necessary to stick to the minimum required payment for each instalment.
Many lenders will enable you to repay more than the required amount, which can help you shorten your loan term and reduce the interest you pay overall.
Consider your options with Savvy
Above all else, though, you should compare as many loans as thoroughly as you can. You can do this here with Savvy, as we’re partnered with a range of competitive and reputable lenders from around the country to deliver you the highest-quality comparisons for your business.
You can choose the best loan available to your business and head straight to your lender’s site to apply today.
how do i use savvy's business loan repayment calculator?
Crunching the numbers on your repayments is easy with Savvy’s business loan calculator. Simply follow these steps:
- Enter the desired loan amount (up to $300,000 for unsecured loans or $2,000,000 for secured)
- Select a loan term between one and seven years.
- Enter the interest rate
- Choose a weekly, fortnightly or monthly repayment option
- See the breakdown of the total amount to pay, as well as the total interest incurred by the loan
You can adjust each of these variables to see what impact they have on the cost of your repayments and the loan as a whole.
What factors impact the cost of my business loan repayments?
Interest rate, loan duration and loan repayment frequency all impact the cost of business loan repayments, as does whether the loan is secured or unsecured. Unsecured loans are where the borrower puts up some kind of collateral that can be claimed against as repayment in the case of default, and are considered lower risk by lenders, thus attracting lower interest rates than unsecured ones.
Business loan repayments are affected by:
- Interest rates – The higher the interest rate, then the higher the repayments.
- Loan duration – longer loan periods have lower periodic repayments, while shorter loan periods have higher ones.
- Repayment frequency – repaying more frequently results in slightly lower repayments over time, as the loan principal reduces faster.
- Secured vs unsecured loans – Secured loans use collateral as a guarantee the loan will be repaid, resulting in a more competitive interest rate than on unsecured finance.
What establishment fees are there?
Set up fees on business loans are usually in the hundreds of dollars as a once off fee.
Business loan repayments are affected by:
- Interest rates – The higher the interest rate, then the higher the repayments.
- Loan duration – longer loan periods have lower periodic repayments, while shorter loan periods have higher ones.
- Repayment frequency – repaying more frequently results in slightly lower repayments over time, as the loan principal reduces faster.
- Secured vs unsecured loans – Secured loans use collateral as a guarantee the loan will be repaid, resulting in a more competitive interest rate than on unsecured finance.
How do interest rates affect repayments?
As seen below, higher interest rates result in higher monthly repayments for the same loan amounts.
| Loan amount (over 5 years) | Monthly repayments with 15.00% p.a. interest rate | Monthly repayments with 17% p.a. interest rate | Monthly repayments with 19% p.a. interest rate |
|---|---|---|---|
|
$15,000 |
$357 |
$373 |
$389 |
|
$30,000 |
$714 |
$746 |
$778 |
|
$60,000 |
$1,427 |
$1,491 |
$1,556 |
|
$90,000 |
$2,141 |
$2,237 |
$2,335 |
|
$120,000 |
$2,855 |
$2,983 |
$3,113 |
|
$150,000 |
$3,569 |
$3,728 |
$3,892 |
All calculations based on business loans with five-year terms.Â
How is the interest rate on my business loan calculated?
The interest rate you receive on your business loan depends both on the rates on offer at the time of your application and a range of variables specific to your business.
Factors specific to your business that affect the rate you’ll be offered include:
- Business financials / turnover
- Type of business
- Credit score
- History repaying similar loans
- Loan amount
- Years in business / age of ABN
- Whether you’re a property owner
- Whether the loan is secured or unsecured
- Existing loans
How can I save money while repaying my business loan?
There are many ways you can go about reducing the cost of your business loan repayments, both in terms of your ongoing instalments and its overall cost across its term. Here’s how you can do it:
Choose a shorter loan term
As is the case with almost all loans, the shorter the repayment term, the less you’re likely to be required to pay in interest and fees. Loan debts which decrease at a faster rate will come with the bonus of reducing interest more quickly than a long-term loan would.
For instance, a $30,000 loan at 8.00% p.a. over three years would cost $3,843 in interest, whereas the same loan over two years would only set you back $2,564, a saving of almost $1,279. It’s important to note, though, that shorter terms will result in higher repayments, which may not be an option if your business’ turnover can’t support it.
Make additional repayments
Most business loans come with the option to make additional payments above the minimum required amount per instalment. By paying above this level, you can reduce your loan term considerably and cut down on the interest and fees you may otherwise be required to pay.
For example, a $50,000 loan at 8.00% p.a. over three years would cost you $6,306 in interest overall. However, by paying an extra $100 on top of its standard $722 fortnightly repayments, you’d save $872 for your business and trim its term by 10 fortnights.
Put down a deposit (if possible)
Although you can borrow 100% or more of the cost of the expense you’re looking to cover, paying for a portion of it with your business’ savings can help minimise the loan cost. Many businesses wouldn’t be in a position to do this, but if yours is, it might be worth reducing your loan size (and the interest and fees you’ll pay as a result).
As an example, instead of taking out a full $30,000 loan over three years at 8.00% p.a., you could put up $3,000 of your business’ cash reserve and save $3,378 overall. Every little bit can make a difference to your business.
Look for offers with low fees
Loan fees can be a substantial drain on your business’ funds, particularly with establishment fees of up to 3% of your total loan amount. While it may not seem like much, this charge on a relatively modest $50,000 business loan would cost $1,500. However, many lenders charge low or no establishment or annual fees, which could potentially help your business save thousands over the term of your repayment cycle.
Apply for a secured business loan
If your business has an asset which can be used as collateral for a loan, such as equity in a commercial property or expensive equipment such as machinery, a secured loan can give you access to finance at a lower overall cost. Because these loans are seen as safer from a lender’s perspective (given that there’s a tangible asset which can be used to recoup any potential lost funds), they typically come with lower interest rates and fees overall.
are there other types of business finance available through Savvy?
Yes – there are other potential sources of funds which could be more useful or suitable for your business’ particular needs, so it’s important to explore your options before diving into the process:
Business line of credit
A line of credit is a type of business finance that allows you to withdraw funds up to an approved limit whenever you see fit. This avoids the burden of managing a lump sum over a long period, instead enabling you to withdraw, repay and withdraw again to suit your business’ needs. These arrangements typically come with higher rates and fees, however.
Business overdraft
An overdraft facility is very similar to a line of credit in principle, except it’s attached to your business’ bank account and enables you to withdraw beyond $0. Overdrafts come without any set repayments, instead only requiring you to pay the interest charged each week, fortnight or month. Like lines of credit, though, added costs are generally quite high.
Bridging finance Â
Bridging finance is taken out by businesses who are in between qualifying for larger finance but need access to funds sooner. This is typically secured by an asset and enables you to borrow up to $1 million in some cases. This can be repaid over as little as two weeks up to 12 months. These loans often come with higher rates and fees than standard loans, however, so they may not be ideal if you simply need a loan detached from any larger finance application.
Applying for a business loan
Business loan eligibility and documentation
Business loan FAQs
Business loans can be approved and funded as soon as the same day you apply. However, the time it takes to get approved will vary depending on the complexity of your application and the state of your business’ finances, as well as the particular lender you elect to go with. Applying early in the day and week maximises your chances of having it sorted within 24 hours.
No – as you can see in our commercial loan calculator, there’s no requirement for you to put forward a deposit as part of your business loan. There’s nothing stopping you from using some of your business’ available cash towards whichever expenses need covering, though, which reduces the size of your loan and therefore the interest you’ll have to pay.
Yes, it’s possible to be approved with a less than perfect credit score, though this will generally result in a less competitive interest rate.
Fortnightly repayments result in more of the loan principal being repaid faster than with monthly repayments. As the interest on the loan is calculated monthly, the additional repayment reduces the total remaining amount slightly in between. The result is the loan gets repaid slightly faster and accrues less total interest.
