Updated · Built and checked by the PlinzoTools team, formulas tested against published sources
Calculate monthly payments for a business loan, with an optional balloon payment.
This tool calculates the monthly payment for a business loan using the standard amortization formula, with support for an optional balloon payment -- a common business-loan structure where smaller regular payments are made and a large lump sum settles the remaining balance at the end of the term.
Enter the loan amount, annual interest rate, term in months, and (optionally) a balloon payment amount. Monthly payment, total paid, and total interest appear instantly.
Standard amortization, extended for a balloon payment: the regular payment is set so the loan balance is paid down to exactly the balloon amount by the end of the term, rather than to zero.
The calculator returns three figures: the monthly payment, the total paid over the term, and the total interest. With the default inputs of a 100,000 loan at 8 percent annual interest over 60 months and no balloon, you get a level monthly payment, and the total interest is simply the total paid minus the amount borrowed. Because the term is entered in months, a five-year loan is 60, a seven-year loan is 84, and so on. A frequent mistake is typing 5 for a five-year loan, which the tool then treats as a five-month loan with a very high payment.
Suppose you borrow 100,000 at 8 percent over 60 months. With a balloon of 0, you pay off the loan completely through equal monthly payments. Now enter a balloon of 30,000. The tool computes a smaller monthly payment because it only amortizes the portion of the loan that is not covered by the final lump sum. Compare the two results side by side: the monthly payment falls, but the total interest usually rises, because you keep a larger balance outstanding for the whole term. You also need 30,000 in cash, or a refinance, when the term ends.
The result reflects principal and interest only. Business loans commonly carry origination fees, closing costs, guarantee fees, documentation charges, or prepayment penalties, and these are not included. Some lenders quote a factor rate instead of an annual percentage rate, and a factor rate is not interchangeable with the annual rate field here. If your offer uses a factor rate or a fee-heavy structure, the true annual cost can differ substantially from what you enter, so ask the lender for the full annual percentage rate and a written payment schedule.
The calculator also assumes a fixed rate and payments made monthly. Variable-rate loans, interest-only periods, and payment schedules that are weekly or daily will not match the output.
Borrowing decisions have long-lasting consequences, and personal guarantees or collateral requirements can put personal assets at risk. This tool provides an estimate for planning. Before you sign, review the loan agreement with an accountant, financial advisor, or attorney, and confirm the terms directly with the lender.
A large final payment due at the end of the loan term, after smaller regular payments throughout -- common for business/commercial loans and equipment financing. Set it to 0 for a standard fully-amortized loan.
Not necessarily -- it lowers monthly payments during the term, but the loan isn't fully paid off until the balloon, so compare total interest carefully against a standard loan.
The regular monthly payment is set so that the loan balance falls to exactly the balloon amount at the end of the term. That final balloon is then paid in addition to the last regular payment, and it is included in the total paid and total interest.
Because part of the principal is deferred to the end. The trade-off is that you owe a large lump sum at maturity, and total interest is usually higher because more principal stays outstanding for longer.
With no interest the payment is simply (loan amount - balloon) divided by the number of months, and the total interest is zero.
The loan amount and term must be greater than zero. A balloon so large that it would require negative regular payments (a balloon larger than the loan would grow to with interest over the term) is not a real loan structure, so it is rejected instead of showing a negative figure.
Reference: Consumer Financial Protection Bureau