Try the math
What an SBA loan costs.
SBA loans run long and price low, which is the trade for the paperwork. Put in the amount, a rate and the term.
The rate is a starting point, not a quote. If somebody has quoted you one, put it in and see what it costs.
The arithmetic
- You borrow
- $150,000
- Illustrative rate
- 10.5% a year
- Repaid over
- 10 years
- Monthly payment
- $2,024
- Total repaid
- $242,883
- Interest paid
- $92,883
Illustration, not a quote. SBA rates are set off a benchmark plus a spread, and a guarantee fee sits on top; the lender states both.
See my optionsBefore you sign
The paperwork takes time. If the need is this month, this is usually the wrong shape.
How an SBA loan works, in fullA worked example
The starting position, written out.
Say you borrow $150,000 to buy out a partner, at an illustrative 10.5% a year, repaid over ten years in level monthly payments.
Ten years of interest adds up to about 62% of the amount borrowed, and the payment is about $2,000 a month for a decade. Stretch the same loan to 25 years and the payment falls to $1,416 while the interest climbs to $274,882, more than the loan itself. A long term is the point of this shape; it is also the thing to be careful with.
Illustration, not a quote
- You borrow
- $150,000
- Illustrative rate
- 10.5% a year
- Repaid over
- 10 years
- Monthly payment
- $2,024
- Total repaid
- $242,883
- Interest paid
- $92,883
Nobody has offered you these terms. The figures are the calculator's own arithmetic at its starting position; real terms come from a funding partner.
How to read the result
What the numbers are telling you.
The payment is low because the term is long
This is the cheapest money on the shelf per month and, over its life, often the most interest in dollars, because the balance is out for years. Read the monthly line and the interest line together. If the money buys something that earns for the whole term, the trade works; if it buys something that is gone in two years, it does not.
The guarantee fee is not in the slider
An SBA loan carries a guarantee fee set by the program, which the lender states and which is often financed into the loan. If it is added to the amount, put the larger amount in. The rate itself is a benchmark plus a spread the program caps; ask the lender for both halves and whether the rate moves with the benchmark.
Time is the other cost
The paperwork on this shape runs to weeks and sometimes months, and the file it asks for is the fullest of the six shapes. The calculator cannot price that. If the need is this month, one of the faster shapes is usually the honest answer, and this one is worth coming back to when the need can wait.
Questions
About the arithmetic.
The questions about an SBA loan itself, and what a funding partner may look at, are on its page.
SBA loan, in fullWhy does the calculator run to 25 years?
Because SBA terms run long. Which term applies depends on what the money buys: working capital and equipment carry terms of about a decade under the program’s rules, and real estate runs longer. The lender states the term. The slider covers the whole range so you can see what each does to the payment and the interest.
Where does the guarantee fee go in the calculator?
Nowhere, on purpose: it is a program fee the lender states, not a figure I can set. It is often financed into the loan rather than paid up front. If yours is, add it to the amount you borrow and read the payment off that. If it is paid at closing, add it to the interest line to see the full cost.
Is an SBA rate fixed or does it move?
Either. The program sets a base rate plus a spread the lender may charge, and the lender may offer it fixed or variable. On a ten-year loan the difference matters: a variable rate that rises two points partway through changes every remaining payment. Ask which it is, what it is pegged to, and how often it can change.
What does ten years of interest add up to?
On the example, $92,883 on $150,000, about 62% of the loan. Illustration, not a quote. That sounds like a lot next to a two-year loan, and it is; it is also spread over 120 payments of about $2,000, which is what makes the shape carryable. The interest total is the price of the long term, not a sign the rate is high.
How does this compare with the faster shapes?
Per month, nothing on the shelf is lighter. Per dollar borrowed over its life, the long term means more interest than a shorter loan at the same rate. The trade against an advance is starker: $150,000 as a merchant cash advance at a factor of 1.30 costs $45,000 however fast you remit it, against $92,883 here over ten years. Illustrations, not quotes. The SBA page explains who the shape is usually for.
The other shapes
Not the one you meant?
- Try the math
Merchant cash advance
Factor rate times advance: the total you remit, and what the money costs.
- Try the math
Business line of credit
Interest on what you draw, over the months it takes to clear.
- Try the math
Term loan
A fixed monthly payment, and the total interest over the term.
- Try the math
Equipment financing
The payment on the machine, and what financing adds to its price.
- Try the math
Invoice factoring
Cash now on an unpaid invoice, the fee, and what comes back when it is paid.
Know what you can carry?
Then tell me what you need. About two minutes, no credit pull to start, and the decision stays yours.