Commercial Loan Calculator

This tool is simple to use and provides real-time calculations as you input your financial details.

1. Enter the total amount of the loan you are considering in the “New Loan Amount” field. This value must fall between $0 and $1,000,000. For example, if you are applying for a $500,000 loan, simply type “500,000” into the field or move the slider.
2. Input the annual interest rate for the loan in the “Interest Rate” section. The calculator accepts rates between 0% and 50%. If your loan has an interest rate of 6%, you would enter “6” here.
3. Specify the loan’s payment period in years under the “Amortization in Years” field. The range for this input is between 0 and 50 years. For instance, if the loan term is 20 years, you would input “20.”
4. The calculator also needs details about your annual income. You’ll need to provide your “Annual Verifiable Net Income,” which is your net income as reported on IRS tax returns or financial statements.
5. Include any “Annual Depreciation Expense” and “Other Non-Cash Charges.” These figures account for non-cash deductions that impact your cash flow and are added back to calculate your total net cash income.
6. Once you’ve entered your income details, the next step is to list your monthly financial obligations. This includes payments for real estate mortgages, business lines of credit, auto loans, credit cards, and any other outstanding loans. If any of these obligations will be eliminated by the new loan, you can specify the amount under “Monthly Debt Payments Eliminated.” This feature allows the calculator to provide a more accurate assessment of your financial situation post-loan.

As you enter these values, the commercial loan calculator will automatically update the results, giving you immediate feedback. For a more detailed breakdown of your financial metrics, you can click the “View Report” button. This report will provide a comprehensive analysis, including whether your debt service coverage ratio meets the threshold of 1.25x or higher. A DSCR of 1.25x or more is generally considered a strong indicator of potential loan approval. This report will also show monthly amortization of the loan based on the term and the interest rate.

To get the most out of the commercial loan calculator, it’s important to be accurate with the information you provide. Entering precise figures will yield the most reliable results. Additionally, take the time to review the detailed report generated by the calculator which can offer valuable insights into your financial standing and highlight areas where you may need to make adjustments before applying for a loan.

While the commercial loan calculator is an excellent self-help tool, it’s not a substitute for professional financial advice. If you have questions or need further guidance, consider consulting a financial advisor or reaching out to a loan expert. They can provide personalized advice tailored to your unique circumstances.

Overall, the commercial loan calculator is a straightforward and effective way to assess your eligibility for a commercial loan. By following the steps outlined above and using the tool’s features to their fullest, you can make informed financial decisions and increase your chances of loan approval.

These are the definitions for every field or result with the commercial loan calculator.

• New loan amount: Total amount of your loan.
• Interest rate: Annual interest rate for this loan. Interest is calculated monthly on the current outstanding balance of your loan at 1/12 of the annual rate.
• Amortization in years: Payment period in years.
• New monthly payment: Monthly payment for this loan.
• Your annual income: Total amount you earn in one year before any taxes or deductions are taken out.
• Annual depreciation expense: Since depreciation reduces your net income, but not your cash flow, the tool adds back depreciation in calculating your total net cash income.
• Other non-cash charges: Like depreciation, these are other non-cash charges to your net income that should be added back to calculate your total net cash income for the year.
• Annual verifiable net income: Your annual net income from IRS tax returns or other financial statements.
• Your monthly obligations: Total amount you’re required to pay each month towards your debts or financial commitments.
• Real estate mortgage: Your monthly payment for any real estate mortgages.
• Business line of credit: Your monthly payment for any business lines of credit.
• Auto loans: Your monthly payment for any auto loans.
• Credit cards: Your monthly payment for any credit cards.
• Other loans: Your monthly payment for any other outstanding loans.
• Monthly debt payments eliminated: Enter the amount, if any, of the monthly obligations you entered above that will be paid off by this new loan.
• Debt service coverage ratio (DSCR): The debt service coverage is determined by dividing the total annual net cash income by the total annual debt service. If you have a DSCR of 1.25x or higher, there is a good chance that you will be approved for your loan.

Let’s give you a little more background on commercial loans and how they work. A commercial loan is a financial tool designed specifically for business purposes. Unlike personal loans, which individuals use for personal expenses like buying a car or renovating a home, commercial loans are extended to companies and corporations. These loans provide the capital necessary for businesses to grow, manage operations, or navigate financial challenges. Financial institutions, such as banks and credit unions, offer these loans, which are typically secured by business assets.

The mechanics of a commercial loan are straightforward. A business applies for a specific amount of funding from a lender. The lender then evaluates the business’s financial health, credit history, business plan, and available collateral. If approved, the lender provides the capital, and the business agrees to repay the principal amount plus interest over a predetermined period, known as the loan term. Repayment schedules can vary with some loans that require fixed monthly payments, while others might offer more flexible arrangements like interest-only payments for a set period. The interest rates on commercial loans can be fixed or variable, depending on the loan type and the lender’s policies.

The applications for commercial loans are catered to nearly every business need across various industries. One of the most common uses is for financing major capital expenditures. For example, a manufacturing company might use a commercial loan to purchase new, state-of-the-art machinery to increase production efficiency. Similarly, a construction firm could secure a loan to buy heavy equipment like excavators and cranes for a large-scale project.

Another significant use of a commercial loan is for acquiring or developing commercial real estate. A growing retail business might use a commercial real estate loan to purchase a new storefront in a prime location. A developer could use a similar loan to buy a plot of land and fund the construction of an office building or a shopping center. These loans are often long-term and are secured by the property itself.

Working capital is another critical area where commercial loans are invaluable. A seasonal business, like a landscaping company, might take out a short-term loan or a business line of credit to cover payroll and material costs during its slow winter months, repaying it once business picks up in the spring. This ensures the business can maintain its operations without interruption.

There are several types of commercial loans tailored to specific needs. As an example, Small Business Administration (SBA) loans are partially guaranteed by the government, which reduces the risk for lenders and often results in more favorable terms for the borrower. This tool can also be used as an SBA commercial loan calculator though you can see our dedicated SBA loan calculator, SBA 7a commercial loan calculator and SBA 504 commercial loan calculator.

These loans are popular among startups and small businesses that might not qualify for traditional financing. Another example is an equipment loan, specifically designed for purchasing business machinery. In this case, the equipment being purchased often serves as the collateral for the loan. Ultimately, commercial loans serve as a vital source of funding that empowers businesses to invest, expand, and thrive.

Check out our other financial calculators:

• Franchise loan calculator
• Business loan calculator
• SBA loan calculator
• SBA 7a loan calculator
• SBA 504 7a loan calculator

The friendly financial experts at First Bank of the Lake offer SBA loans designed with the needs of our customers in mind. We financed more than $600 million in SBA loans over the past 12 months and are ranked as the 15th largest SBA lender in the United States in 2024. Since our founding in October 1985, we have offered outstanding customer service and the best financial options for their needs. Today, First Bank of the Lake offers loans for business enterprises across the United States. To learn more about our bank or about SBA loans, visit our website or check us out on Facebook or LinkedIn. Our friendly and knowledgeable staff members will be happy to discuss your loan options with you and to help you achieve the highest degree of success in your chosen industry. Please contact us at (888) 828-5689 to get your business loan questions answered today!