Xero’s business loan calculator
Taking out a loan? Use Xero’s small business loan calculator to estimate your repayments and the total amount you’ll pay back. Understand the cost of borrowing money so you can confidently plan your finances.
- Quick repayment estimates
- Understand your total loan cost upfront
- Choose your repayment frequency – weekly, bi-weekly, or monthly
Tired of manual calculations?
Let Xero handle the numbers so you can focus on growing your business. Sign up for free!
Understanding your loan repayment result
Your result shows the total financial commitment required to service your debt based on the current market standard: reducing balance interest. If your $50,000 loan shows a $967 monthly repayment, that figure stays the same even as the "split" changes. Early on, more of your payment covers the inter
- State Sales Tax Rate: 7.25%
- Average Local Tax Rate: 1.73%
- Maximum Local Tax Rate: 5.25%
- Average Combined Rate: 8.98%
Important note:
California's base state rate is 7.25%, but cities and counties can add local taxes. Your actual rate depends on your specific location.
What to do with your loan calculation
Now that you have an estimate, the next step is to see how these payments fit into your cash flow forecast. Because this is a standard loan structure, your interest costs will actually drop every month as your balance decreases. Xero helps you track this shift automatically, ensuring your financial
.1742870730063.png)
Manage business loans effortlessly with Xero
Stop manual spreadsheet tracking. Xero automatically tracks your loan balances, categorizes your interest expenses for tax season, and gives you real-time visibility into your debt-to-equity ratio. You’ll always have the data you need to show lenders you’re a low-risk borrower ready for growth
Get one month free
FAQs on Xero’s business loan calculator
This calculator uses the reducing balance method (also known as amortization). This means you only pay interest on the money you haven't paid back yet. It’s generally the most cost-effective way to borrow because your interest charges get smaller as your loan balance drops.
This calculator uses the reducing balance method (also known as amortization). This means you only pay interest on the money you haven't paid back yet. It’s generally the most cost-effective way to borrow because your interest charges get smaller as your loan balance drops.
Yes. Because interest is calculated on your remaining balance, any extra "lump sum" payment you make goes directly toward reducing the principal. This "cancels" the interest that would have been charged on that money in the future. Always check with your lender for any early exit fees before making extra payments.
Yes. Because interest is calculated on your remaining balance, any extra "lump sum" payment you make goes directly toward reducing the principal. This "cancels" the interest that would have been charged on that money in the future. Always check with your lender for any early exit fees before making extra payments.
No, this calculator focuses strictly on the Annual Interest Rate. Most business loans also include origination fees, monthly service fees, or documentation charges. To find your true "Effective Interest Rate," you should add these one-off fees to the total interest paid for a clearer view of your total cost of capital.
No, this calculator focuses strictly on the Annual Interest Rate. Most business loans also include origination fees, monthly service fees, or documentation charges. To find your true "Effective Interest Rate," you should add these one-off fees to the total interest paid for a clearer view of your total cost of capital.
While the loan principal you receive isn't "income" (and therefore isn't taxable), the interest you pay is generally tax-deductible as a business expense. If you pay $5,000 in interest over a year, that $5,000 reduces your taxable profit, effectively lowering your tax bill. Keeping clean records in Xero ensures every cent of deductible interest is captured.
While the loan principal you receive isn't "income" (and therefore isn't taxable), the interest you pay is generally tax-deductible as a business expense. If you pay $5,000 in interest over a year, that $5,000 reduces your taxable profit, effectively lowering your tax bill. Keeping clean records in Xero ensures every cent of deductible interest is captured.
A secured loan requires an asset (like property or equipment) as collateral, which usually results in a lower interest rate because there is less risk for the lender. An unsecured loan doesn't require collateral but often comes with a higher interest rate and stricter credit requirements to offset the lender's risk.
A secured loan requires an asset (like property or equipment) as collateral, which usually results in a lower interest rate because there is less risk for the lender. An unsecured loan doesn't require collateral but often comes with a higher interest rate and stricter credit requirements to offset the lender's risk.
Most lenders look for a "Debt Service Coverage Ratio" (DSCR) to ensure your business has enough cash flow to cover repayments. A good rule of thumb is that your monthly business income should be at least 1.25 to 1.5 times your total monthly debt payments. Use Xero’s cash flow reports to see how a new loan fits into your current margins.
Most lenders look for a "Debt Service Coverage Ratio" (DSCR) to ensure your business has enough cash flow to cover repayments. A good rule of thumb is that your monthly business income should be at least 1.25 to 1.5 times your total monthly debt payments. Use Xero’s cash flow reports to see how a new loan fits into your current margins.
More tools for your business
Gross margin calculator
Enter your costs and revenue to discover your gross margin – and the potential success of your business.
Cash flow calculator
Work out how much money is flowing in and out of your business, including taxes.
Markup calculator
Enter cost and markup to price products for profit.
Disclaimer
Xero does not provide accounting, tax, business or legal advice. This calculator has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business.
Get one month free
Purchase any Xero plan, and we will give you the first month free.