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SBA 7(a) Loan Calculator

SBA 7(a) Loan Calculator

You can quickly ascertain the monthly instalments towards your SBA 7(a) loans. You just have to input the loan amount, tenure in years and interest rate in the Small Business Loan Calculator. Our SBA 7(a) Loan Calculator provide you with the following results:

  • Your monthly 7(a) loan repayments (monthly instalments)
  • Total interest payments for the entire tenure.
  • Total payments (principal + interest) for the entire tenure.
  • Loan amortization schedule (repayment schedule)
  • A chart presentation showing your annual principal and interest payments.
Loan Calculator

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What is a SBA 7(a) Loan Calculator?

A SBA 7(a) Loan Calculator is an online tool that provides access to calculate your monthly loan repayments before applying for a 7(a) loan or any other loan product. To calculate your small business loan payments, you can access our online small business loan calculator by filling in basic loan details, such as loan amount, repayment tenure and interest rate. Monthly loan repayment is automatically calculated, as per the entered details. The exact loan payments shall be defined by the lender at the time of loan approval.

The SBA 7(a) Loan Calculator assists you in calculating the monthly instalments of your SBA 7(a) Loan. The calculator facilitates pre-determining the amount you need to pay every month as your monthly payment. It helps you to select a loan amount that complements your short-term business plans either to enhance your business for profitability or adaptability to suit the current market requirements. It facilitates your cash flow planning for the long term.

What is an SBA 7(a) loan?

SBA 7(a) loans are the most popular and common loan program by the US government’s Small Business Administration (SBA). If you are a small business entrepreneur in the United States, SBA 7(a) loans are a great choice for your business. These loans are an effective source of finance for small businesses in the US to grow your business. SBA 7(a) loans have tight lending standards, but their flexible terms and low-interest rates can make them one of the best ways to fund a business.

SBA 7(a) loans can be used for a variety of purposes, it is the best option when real estate is part of a business purchase. It can also be used for:

  • Short- and long-term working capital
  • Refinance current business debt
  • Purchase furniture, fixtures, and supplies

Read more: How to apply for an SBA loan in 7 simple steps

What are the eligibility criteria for SBA 7(a) Loans?

To be eligible for SBA 7(a) loan assistance, businesses must:

  • Operate for profit
  • Be considered a small business, as defined by SBA
  • Be engaged in, or propose to do business in, the United States or its possessions
  • Have reasonable invested equity
  • Use alternative financial resources, including personal assets, before seeking financial assistance
  • Be able to demonstrate a need for a loan
  • Use the funds for a sound business purpose
  • Not be delinquent on any existing debt obligations to the U.S. government

If your business fulfils the following minimum requirements, then you should seriously consider applying for SBA 7(a) funding:

  • 2+ years of business history under your belt
  • A 690+ personal credit score for the business owner
  • $100,000+ in annual revenue for your business

You can find more details about eligibility requirements for SBA 7(a) loans here on the official government website.

Know more about: SBA Express Loans

What are the benefits of using the SBA 7(a) Loan Calculator?

  • It provides advance knowledge about the instalment amount that a borrower is going to pay monthly. Using the online SBA 7(a) loan calculator, you can know the amount needed to be kept aside monthly for loan repayment.
  • With prior knowledge of monthly loan payments, you can manage your finances around the monthly payment amount and tackle expenses accordingly.
  • With the knowledge of the total principal amount and the total interest payable, you can use the calculator to choose a loan tenure you will be comfortable with.
  • It provides a quicker accurate loan payment calculation. Traditional manual methods of monthly instalment calculation are time-consuming, complex, and often prone to errors. An online calculator offers accurate results within seconds.

How to use SBA 7(a) Loan Calculator?

Our SBA 7(a) loan calculator is super easy to use. All you need to do is enter the tenure, rate of interest, and total loan amount. With these three quick steps, you can determine the loan repayment amount in seconds. Here is a step-by-step guide for using the calculator:

  • Enter the total loan amount.
  • Input the tenure for the loan.
  • Enter the interest rate that is comfortable for your current business profile.
  • After you hit the ‘Calculate’ button, your monthly loan payment amount is generated.

Depending on your input of information, the loan calculator will display the monthly loan instalments together with an amortization schedule and a graphical table for your easy viewing.

How are SBA 7(a) loan monthly repayments calculated?

The small business loan monthly instalment is calculated based on your loan amount, the interest rate quoted at the time of disbursal and the total tenure of the loan. By using an online small business loan calculator, you can arrive at a realistic figure of your total monthly obligation, which can help you to decide on the loan tenure and the loan amount beforehand.

The following is the SBA 7(a) loan calculation formula:

Monthly loan instalment = P x R x (1+R)^N / [(1+R)^N-1]

P = Principal amount of the loan

R = Rate of interest (Annual rate of interest/ 12/100)

N = Number of monthly instalments

How is Interest Calculated on a Business Loan?

The interest rate is the amount of charge that the lender charges for the amount lent and is expressed in a percentage of the principal. Let’s have a look at how is business loan interest calculated.

Normally, two types of interest rates are quoted to the borrower, the nominal interest rate and the APR. The nominal interest rate is the annual rate of interest charged by the lender, whereas, APR is the annual total cost of the loan that includes interest cost, processing fee, administrative fee and other costs.

And, the effective interest rate reflects the true cost of the loan considering compounding. The formula for the effective interest rate is (1+r^n)-1, where ‘r’ is the periodic rate of interest and ‘n’ is the term.

What are the common sources of finance for small businesses?

There are many financing options available to small companies. Let’s look at some of the common financing options and deal with the problem of ‘How to Finance a Small Business?’

1. Own funding– tap into his personal assets such as – stocks, mutual funds, real estate, or jewellery – to raise money. One can either sell the assets to raise money or take a loan on any assets.

2. Family and Friends Circle– They may lend the money to the business in the form of a loan or may be willing to take an equity stake in the company

3. SBA Loans– SBA loans are a popular source of capital for small businesses in the US. SBA provides a variety of loan options for small businesses for the acquisition of fixed assets, real estate, working capital, inventory purchase etc. Read more: SBA loans.

4. Trade Credit– Trade credits are offered by the suppliers of inventory. Such credit may range anywhere from one month to three months.

5. Community development finance institutions– There are thousands of nonprofit community development finance institutions (CDFIs) across the US, all providing capital to small business and microbusiness owners on reasonable terms.

6. Venture capitalists– Venture capitalists (VCs) are an outside group that takes part ownership of the company in exchange for capital. The percentages of ownership to capital are negotiable and usually based on a company’s valuation.

7. Angel Investors– An angel investor is an individual who is more likely to invest in a startup or early-stage business that may not have the demonstrable growth a VC would want.

Also read: 13 sources for startup funding in the US

What is a Business Term Loan?

A business term loan is short to long-term loan given by banks to businesses. Businesses utilise this amount to meet their working capital requirements, asset purchases, expansion, etc. The period and interest of a term loan depend on the type of loan product selected by the business.

Term loans are also known as instalments loans. Instalment loans are the credit facility in which the bank makes full payment to the business. The repayment is in form of monthly, quarterly, half-yearly or annual instalments depending upon the kind of agreement. The instalment loans help to meet all types of business expenses. The rates of interest on these loans vary depending on the period of the loan.

The following are some examples of term loans:

What is a small business loan amortization schedule?

Though the monthly loan payments one pays to remain largely uniform throughout the tenure of the loan, the amounts repaid are credited towards the principal and interest to be repaid. Typically the initial instalments contribute more towards the interest amount with later instalments paying towards the principal.

An amortization schedule provides the break-up of these amounts repaid towards principal and interest. It also provides their respective balances through every year of the small business loan. It is the road map towards the repayment of your loan denoting the milestones and the ideal points you should be at through the cycle.

Disclaimer: These calculators are provided for representational purposes only. Results depend on many factors, including the assumptions you provide. We do not guarantee their accuracy or applicability to circumstances. All borrowers are required to conduct their own calculations before making any decision. All loans are at the sole discretion of the lender.

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