Small Business Loan Calculator

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Are you ready to apply for your small business loan? You can quickly get a quote right here.

Launch or grow your small business

Apply for a small business loan now

In a world bursting with opportunities, you certainly have thought ‘I wonder if I could do that one day…’ or ‘I wish I had the money to [fill in your business dream.]’

This may be why you have started to search for more information about small business loans. But where do I start? How do I know how interest rates work and how much to borrow?

The good news is that getting a small business loan is common in Canada. The Business Development Bank of Canada reports that the country has more than 1.22 million small businesses as of December 2019. The Canadian Small Business Financing Program has played an important role in helping finance many of these businesses.

So applying for your small business loan in Canada will be simple, especially with our small business loan calculator tool to help you plan. The page explains how a business loan calculator works and what you need to know to get a small business loan.

How does a business loan calculator work?

A business loan calculator is a critical tool for a start-up business searching for a business loan. It will help you to save time and effort. This is done by letting you project the amount of money that you will need to pay each month to pay off the interest and principal of your future loan.

It is important to note that it is sometimes referred to as a business loan amortization calculator. It is the same tool.

So here it works:

  • Firstly, you will need to input your loan amount. This can be a real amount or a projection of what you think you might need.
  • Secondly, you will need to put in the interest rate percentage and the term (in other words the time you will need to pay off this loan.)

The calculator assumes a 5% interest rate. You will have to get some quotes from financial services providers to find an accurate figure. Interest rates depend on the lending climate at the time, your financial history, the nature of the business, and collateral. Otherwise, you can take estimated figures and work with an estimated result to get started.

Once these values have been inserted into the loan calculator, you have your answer! This will show you the amount that you need to pay each month to cover both the capital amount borrowed and the interest amount on your small business loan.

How much can I borrow with a small business loan?

The Canada Small Business Financing Program helps financial institutions offer business loans of up to $1,000,000.

It could be less though, as the financial institutions themselves will have their own rules and limits.

With the above points that mention how you will be paying off the borrowed money, perhaps the question has entered your mind ‘Well then, should I borrow more or less?’

If the interest rate is low you could choose to borrow more money than what you need to have a start-up reserve for when you begin your business. As entrepreneurs know, businesses face many unexpected challenges. Going back to a bank for a second loan too early is not easy.

Our loan calculator can help you to plan. Try experimenting with different lump-sum amounts and what you will pay per month on these.

When the interest rate is expensive prioritize your spending and acquisition of assets or resources needed to start your small business. The loan will be paid off faster, which means you could take out another. Alternatively, you will have enough money to purchase what you need from the business’s turnover.

If your business is not already established, remember that your credit score will be considered by the lender. However, there are many other things they will take into consideration as well.

Want to see how much you could qualify for? Request a quote today and start comparing business loans today.

Launch or grow your small business

Apply for a small business loan now

What factors should I consider when choosing a small business loan?

This is an essential question to ask yourself when looking for a loan for your small business. Many people are so excited to get funding and get the business going that they are hasty and don’t do their calculations correctly.

This is where the small business loan calculator comes in. You will be able to forecast part of your expenditure with more clarity. Some of the factors below may help you to choose your lender.

Interest rates

Be mindful when choosing a loan with a high-interest rate. Remember that a high-interest rate will add extra pressure when you are trying to meet all your other monthly expenses.

When you input your given percentage into HelloSafe’s business loan interest calculator it will show you more clearly how much interest you will be paying and what your monthly instalment should be.

You are paying for your loan (almost like a rental) and you want your money to be working well for you. Is the interest you are paying worthwhile when considering what the loan amount is doing for you?

Duration of the loan

This is the period that you are committing to pay off your loan. Payment intervals are usually monthly. The duration and payment frequency will depend on what terms you negotiate with your lender.

Once again, the duration will be inserted into our loan calculator and this will help you to see how long you will be paying off the loan.

Think about the duration both in terms of the number of months as well as the number of years you are committing to. Sometimes when you look at the number of months it may not seem as long as when looking at the same amount in yearly terms.

Lender Flexibility

Is your lender going to understand should you be a little late with one of your payments? Knowing that you have some flexibility in the terms can make a huge difference when it comes to choosing the right lender for you.

Lenders often impose penalties for failing to pay on time. Choosing a lender that understands the pressures and challenges of a small or start-up business and building a relationship with your financial institution will help you down the road.

Can you afford it?

In your business plan, you should include a provision for the monthly expense of your loan.

Calculate how much the borrowed money will generate (projected income) in comparison with the repayments of your small business loan. This is where our small business loan calculator comes in.

Should you default on your loan you may lose your business or some of your assets. This underlines the importance of budgeting well. You should have a well-formulated business plan and organized financial projections and/or statements that can be submitted to the lender.

How much do you need?

Have a clear idea in your mind of what you will need and what you can do without. You won't always get the full amount that you request. Some borrowers ask for more than they need to make sure that they get their desired amount. This strategy can be counterproductive when interest rates are high, especially if you’re unsure of your ability to repay.

You can try testing different amounts on the small business loan calculator. (Remember to keep the interest and the duration the same if you change the amount you wish to borrow.)

What do I need?

You will need to have a clear plan for what you need to get your business going. In your business plan, you should list all the assets that you will need to start and successfully run your business.

A very important forecast that is often forgotten is that you will need some working capital (see the description below.) An unwritten rule among entrepreneurs is to try to have 3 months of working capital in your account when you start your business. At least at first, you won’t know how much money will come in and at what speed.

What documents do I need to apply for a small business loan?

What documents you will need when applying for a small business loan depends partially on where is your business. The table below will help you see what you need to prepare when applying for your loan.

Company statusBusiness planFinancial statementProof of employmentCredit check ofCash flow statementsProof of collateral
Sole Proprietor
Business loan application: documents needed at different stages

What is start-up financing?

This is the financing that you will use to start your business. If you are a start-up company or a budding entrepreneur it is the initial capital injection that you will need to get the business running.

Often, you will apply for a small business loan. This enables you to buy what you need to start and get your business up and running. It is a source of financing that you receive and then can buy assets, start to pay staff (even with low start-up revenues), establish a rental contract and so on. Without an adequate start-up financing loan, many businesses would not exist today.

If you would like to take a step towards getting a loan request a quote for a small business right here:

Launch or grow your small business

Apply for a small business loan now

What is working capital?

Working capital is the money that your business needs to operate. This may include buying products, paying for expenses such as rent, electricity and water, salaries, buying stock, etc.

If you think in imagery: this is the grease and fuel that you use to keep that engine of yours running.

Consider including an amount in your loan that will allow you to have a month or two months’ working capital. This will ensure that you can pay for all your expenses in the first few months if you have not hit your sales targets.

Try using the small business loan calculator above. You can keep the loan period and the amortization rate the same. Then change the loan amount. You will then have an idea of how much the extra money you may want to borrow will cost you.

What is the Canadian Small Business Financing Program (CSBFP)?

The CSBFP is a program that helps small businesses and start-ups to get loans. The program is funded by the Canadian Government to encourage entrepreneurship and economic development. Should a small business loan recipient default on their loan the SCBFP will reimburse the bank up to a maximum of 85% of the full loan amount. This in turn allows those lenders to lend more generously to new businesses.

You can apply for a maximum of $1,000,000. $350.000 is the maximum amount for improvements on leased property, purchasing or improving equipment. This application is done directly through your chosen lender.

Good to know

Only small businesses and start-ups are eligible to apply. Your annual revenue has to be less than $10 million.

Where to now?

Having considered the above information, have a look at HelloSafe’s small business loan calculator. Try different values, different interest rates and then you can have a good idea as to the range that you can expect to pay for your small business loan.

One of the most important things you can do when starting a business is to plan well. As Benjamin Franklin once said, “If you fail to plan then you are planning to fail.”

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