Payment math
What a $500,000 business loan costs each month at 8% to 20% over 1 to 25 years, with total interest, computed with the standard amortization formula. All figures are illustrative.
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Short answer: at an illustrative 10% APR, a $500,000 business loan costs about $43,957.94 a month over 1 year, $10,623.52 over 5 years, $6,607.54 over 10 years and $4,543.50 over 25 years. The longer term cuts the payment but raises total interest from $292,904.80 (10 years) to $863,050.00 (25 years).
Published . Figures are illustrative arithmetic, not quotes or offers.
$500,000 is above the Merchant Fund Express term-loan cap. Merchant Fund Express publishes its business term loan at $10K–$250K, with the loan amount capped at 15% of annual revenue and terms of 12 to 18 months, and its business line of credit at $10K to $350K, from 1% per month with a 2.49% fee per draw. A $500,000 request exceeds the term-loan cap, so other structures would apply: an SBA loan (a standard 7(a) loan goes up to $5,000,000 under SBA SOP 50 10 8.1, Section B, Chapter 1), a 504 loan for fixed assets, commercial real estate or equipment financing, or a smaller term loan or line sized to revenue. See SBA 7(a) vs 504 vs SBA Express.
Each cell is the monthly payment that fully repays $500,000 over the term shown at the rate shown. Rates are examples chosen to show the range; they are not market averages and not what any funder will offer you.
| Rate (APR) | 1 yr | 2 yr | 3 yr | 5 yr | 10 yr | 25 yr |
|---|---|---|---|---|---|---|
| 8% | $43,494.21 | $22,613.65 | $15,668.18 | $10,138.20 | $6,066.38 | $3,859.08 |
| 10% | $43,957.94 | $23,072.46 | $16,133.59 | $10,623.52 | $6,607.54 | $4,543.50 |
| 12% | $44,424.39 | $23,536.74 | $16,607.15 | $11,122.22 | $7,173.55 | $5,266.12 |
| 15% | $45,129.16 | $24,243.32 | $17,332.66 | $11,894.97 | $8,066.75 | $6,404.15 |
| 20% | $46,317.25 | $25,447.90 | $18,581.79 | $13,246.94 | $9,662.78 | $8,392.26 |
Read across a row to see the term effect and down a column to see the rate effect. Going from 1 year to 5 years at the same rate cuts the payment by roughly three quarters, while doubling the rate from 10% to 20% on a 10-year term raises the payment by about half.
The monthly payment is only half the decision. The table below shows what the same loan costs in total when you stretch the term.
| Term | Monthly payment | Total repaid | Total interest |
|---|---|---|---|
| 1 years (12 payments) | $43,957.94 | $527,495.28 | $27,495.28 |
| 2 years (24 payments) | $23,072.46 | $553,739.04 | $53,739.04 |
| 3 years (36 payments) | $16,133.59 | $580,809.24 | $80,809.24 |
| 5 years (60 payments) | $10,623.52 | $637,411.20 | $137,411.20 |
| 10 years (120 payments) | $6,607.54 | $792,904.80 | $292,904.80 |
| 25 years (300 payments) | $4,543.50 | $1,363,050.00 | $863,050.00 |
A useful habit is to pick the shortest term whose payment your normal monthly cash flow can carry, not the longest term available.
The monthly payment on an amortizing loan is P × i ÷ (1 − (1 + i)−N), where P is the amount borrowed, i is the annual rate divided by 12 and N is the number of monthly payments. For $500,000 at 10% over 10 years, i is 0.10 ÷ 12 and N is 120, which gives $6,607.54. Payments are rounded to the cent and total repaid is that payment times N.
Three things this math leaves out: origination or packaging fees taken from proceeds, prepayment terms, and payment frequency. A weekly schedule has 52 payments a year, so the per-payment figure is smaller and the interest shifts slightly. Use the term loan payment calculator to test your own amount, rate, term and fee.
Ask any funder for the payment amount, the number of payments and the total of all payments in writing before you sign. Those three numbers let you check the math yourself.
At $500,000, the realistic routes are an SBA 7(a) loan, a 504 loan if the money buys real estate or major equipment, conventional bank or real-estate-secured financing, or equipment financing for a specific asset. Each has its own timeline and paperwork. If you need part of the money quickly while a larger loan is underwritten, see funding to bridge to an SBA loan, and talk to the SBA lender before adding any new obligation.
At an illustrative 10% APR it is about $43,957.94 over 1 year, $10,623.52 over 5 years, $6,607.54 over 10 years and $4,543.50 over 25 years. Your actual rate and term depend on the lender and your file.
No. They are illustrative arithmetic from the standard amortization formula. They are not offers and not market averages.
About $292,904.80 in total interest, assuming equal monthly payments and no fees.
No. The published term loan runs $10K to $250K and is capped at 15% of annual revenue, so this amount exceeds the term-loan cap. An SBA loan or another structure would apply.
Interest accrues on the outstanding balance every month. A longer term keeps the balance higher for longer, so total interest rises even as the payment falls.
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