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Free business loan decision calculator

Can your business safely carry this loan payment?

Calculate the fixed monthly payment, protect closing cash, and test whether current and expected cash flow still cover the debt when the new benefit underperforms.

Quick answer

A manageable payment is not enough; the loan needs cash coverage and a reserve that survives closing.

Test the full financed balance, existing free cash flow, realistic benefit from the borrowed funds, a downside case, cash due at closing, and a coverage threshold selected before seeing the answer.

Monthly payment = fixed-rate amortization of principal plus financed fees

Payment coverage = monthly cash available before new debt ÷ monthly payment

Reviewed August 15, 2026

Step 1

Build the payment and cash case

Loan terms
$

Cash principal requested before any fees financed into the balance.

$

Origination or other fees added to the financed balance rather than paid at closing.

%

Annual fixed interest rate used to calculate equal monthly principal-and-interest payments.

months

Number of equal monthly payments. This calculator does not model balloon payments.

Monthly payment capacity
$

Average monthly cash left after normal operating costs, taxes reserved, and required owner pay—but before this new debt payment.

$

Monthly cash contribution expected from the inventory, equipment, marketing, or capacity funded by the loan. Use contribution, not sales.

%

Percentage of the expected benefit removed in the downside test. Current free cash flow is left unchanged.

×

Cash available per dollar of monthly payment that you want in both the base and stress cases. This is your planning threshold, not a lender approval rule.

Protected cash
$

Cash available after preserving the reserve the business refuses to spend through.

$

Down payment, appraisal, legal, filing, documentation, closing, or other cash due before funding.

This educational model covers a fixed-rate, fully amortizing loan with equal monthly payments. It does not model variable rates, balloon payments, revolving credit, prepayment penalties, collateral, personal guarantees, taxes, covenants, lender underwriting, or legal terms. Compare the lender's full payment schedule and documents before signing.

Understand this decisionCan the business safely carry this loan?Test payment terms, fees, free cash flow, projected benefit, downside coverage, and protected cash.Read the guide →

Separate approval from affordability

A lender saying yes does not make the debt safe.

Approval answers the lender's underwriting question. Owner affordability asks whether the payment fits your actual cash flow, preserves the operating reserve, and survives a miss in the benefit expected from the borrowed funds.

Review every offer's rate, fees, payment schedule, collateral, guarantee, prepayment terms, covenants, and default rights. A low payment can be produced by a long commitment or a balloon that this calculator intentionally does not hide.

Review the exact formulas →

The contract controls

Pressure-test the debt

What is monthly free cash flow here?

Use recurring cash left after normal operating outflows, tax reserves, and required owner pay, but before this new payment. Reconcile it to bank and bookkeeping records rather than using accounting profit alone.

Should projected sales count as the loan benefit?

No. Convert projected sales to cash contribution after the materials, labor, fees, and working capital required to deliver them. Then stress the timing and amount.

Is the coverage target a lender rule?

No. It is your planning threshold. Lenders and programs use their own definitions, periods, adjustments, and underwriting standards.

Does this model variable rates or balloon payments?

No. It models equal monthly principal-and-interest payments at one fixed rate. Use the lender's actual schedule for variable, interest-only, balloon, seasonal, or revolving debt.