Contractor Calculator: Business Loan Calculator

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How to use the Business Loan Calculator

To use our Business Loan Calculator simply enter the amount of money that you would like to borrow, enter the annual interest rate on the loan, and enter the term of the loan in months. Simple.

Business Loan Calculator

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months

Repayment Term
1 Year 2 Years 3 Years 4 Years 5 Years 10 Years

Loan Debt Over Time

What is a Business Loan

Just like any other kind of loan, a business loan is borrowing money from a lender, most commonly a bank, with the full intention of paying it back in the future. Although unlike other loans, there are some tax issues and tax-related assessments when it comes to taking out a Business Loan.

Reasons to Take Out a Business Loan

While taking out a personal loan for a new stereo may seem like a silly move, there is a variety of reasons as to why someone should take out a Business Loan.

  • Start-Up Businesses: If you are considering starting up a new business but are unable to get the funds together to start it up, a start-up loan is the way to go.
  • Expansion: If you have a current company and it is going well, it's a good idea to consider expanding. Whether this may be purchasing larger office space, increasing staff numbers, or upgrading technology.
  • Business Failure: This is one of the most common and unfortunate reasons. If you've spent years building up a company from scratch, it's hard to let it go, especially when you think of it as your legacy. If their business is failing and they are in need of funding to help get it back up and running to its full potential again, business owners will take out a loan.

The Process for a Business Loan

  • Advice: Take the time to get advice from people such as your family and friends, or seek advice from an accountant or a worker in a financial position. Help is invaluable when helping you decide if taking out a loan is the right move.
  • Business Case: When enquiring to a lender about a loan, it's important that you sell your story to them. Not only should they understand why you need to take out a loan but they also need to know how you are going to use it. When explaining things to a lender, you should cover:
    • An overview of your company and what your company specializes in.
    • Why you need a loan. Describe the issues you are running into.
    • The time period you will require a loan for. How long do you need to pay it back, how much do you need, and what exactly you are going to spend the money on.
    • The benefits that your company will get out of taking out a loan.
    • How long it will take for you to successfully turn around your business.

Finding a Lender

This may seem like the easiest thing to do, but it is also the hardest. How so? It's simple to find a lender who will give you money but you must look in to the details. Things such as the interest rate must be carefully looked at. You may find a company you will jump at the opportunity to give you a loan, which don't get me wrong, is great. Although, they will more than likely have a high interest rate.

Some of the things that you should consider when finding a lender are:

  • Take the time to look at different lenders, look at all the details you can find about each lender. Compare between loan companies and different banks. Research each lender, take your time, and make the right decision.
  • Take the time to look at the contract. Don't feel as though you should instantly sign the contract, your financial future could depend on it. Read through the contract, maybe even get a financial expert to take a look at it, then once you are sure of it sign it.

Benefits and Problems

Some benefits to taking out a loan are:

  • As soon as the money is available, you can get straight to work on your business plans.
  • You can discuss a financial plan with an accountant since you already know the pay-back rate.
  • You will be able to see the benefits taking place quickly.

Some of the problems you may run in to are:

  • The loan may not be suffice to your needs, meaning you will run in to the problem of increasing that loan or possible having to take out another loan.
  • Taking out a loan may not help at all, and may not improve your business like you hoped.

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