Business loan cost comparison calculator

Two business loan offers rarely arrive in the same format. One quotes a weekly repayment over 18 months, the other a total payable over two years, and each has its own list of fees. Comparing headline rates won’t settle it, because they’re often calculated differently. The fairest test is old-fashioned: how many dollars do you get, how many do you pay back, and over how long? This calculator does that sum for two offers at once.

The inputs for each offer

You enter three figures for Offer A and the same three for Offer B.

• Amount ($). The money the loan provides. If the lender deducts its establishment or other fees from the advance, enter what will actually land in your account, not the headline figure.
• Total to repay ($). Every dollar heading back to the lender from start to finish: all scheduled repayments plus any fees not already built into them (monthly account fees, settlement fees, a final payout fee).
• Term (months). How long the loan runs. Convert weeks to months by dividing by 4.33.

The federal business.gov.au site tells borrowers to weigh upfront and ongoing charges alongside the rate when you compare products. Getting the “total to repay” box right is how you do that.

What the four results tell you

Result	How it’s worked out	What to take from it
Cheaper in total dollars	(Total − amount) for each offer, compared	Which costs fewer dollars overall, and the gap
Offer A cost per $1 · per month	Cost ÷ amount, then ÷ months	Cost relative to the money received, adjusted for term
Offer B cost per $1 · per month	Same, for B	As above
Monthly repayment A vs B	Total ÷ months for each	The average monthly pressure on cash flow

If the two offers cost exactly the same, the calculator names Offer A. The note under the results is worth taking seriously: a longer term usually costs more overall but can leave much more cash in the business each month.

A worked example where the headline amount misleads

A landscaping business needs about $80,000 for a new ride-on fleet and has two offers.

• Offer A: $80,000 advanced, $97,600 to repay over 18 months.
• Offer B: advertised as $85,000 over 24 months with $104,000 to repay, but a $4,250 establishment fee comes off the advance, so $80,750 is paid out.

Entering Offer B at the advertised $85,000:

	Offer A	Offer B
Cost in dollars	$17,600	$19,000
Cost per $1	$0.22	$0.22
Cost per $1 per month	$0.012	$0.009

On these numbers, Offer B looks far cheaper per month, and only $1,400 dearer in total.

Entering Offer B at the $80,750 actually received:

	Offer A	Offer B
Cost in dollars	$17,600	$23,250
Cost per $1	$0.22	$0.29
Cost per $1 per month	$0.012	$0.012
Average monthly repayment	$5,422	$4,333

Now Offer A is cheaper by $5,650, and the per-month cost is essentially level. The real choice is between saving $5,650 overall (A) or keeping about $1,089 more in the business each month (B). Either can be the right call, but only the second set of numbers shows it honestly.

Weighing up two quotes already? Let a specialist look at both; the form is short and your credit file isn’t touched.

Reading the per-month figure correctly

Cost per $1 per month is a fair yardstick for lining up offers with different terms. It isn’t an interest rate, and it has one quirk worth knowing: it divides by the original amount for the whole term. On a loan that you repay in instalments, the balance falls over time, so the cost relative to the money you still hold is higher than this figure suggests. That’s fine for comparing two amortising loans against each other, because both are treated the same way. It’s less reliable for comparing an amortising loan with an interest-only one or a facility you draw and repay at will, such as a business line of credit.

The monthly repayment row is also an average. Loans repaid daily or weekly are converted to a monthly equivalent, and a loan with a balloon payment at the end will show an average that’s higher than the regular instalments. Check the actual schedule in each offer.

Questions to put to both lenders first

• What is the total payable, including every fee? Get it in writing. A lender should be able to give you one figure.
• What does early repayment cost? With some products the whole cost is payable however soon you finish; others discount it. Our early repayment entry explains the common approaches. If you might pay out early, compare the payout figures, not the full-term totals.
• Are any fees deducted from the advance? If so, use the net amount as above.
• What fees apply to a missed or late repayment? Dishonour and default fees don’t belong in the comparison, but they tell you a lot about the lender.
• Is security or a director’s guarantee required? A cheaper secured loan and a dearer unsecured one aren’t quite like for like. The secured vs unsecured business loans comparison weighs that up.

If either quote is expressed as a factor (for example 1.2), the factor rate calculator turns it into total dollars and a daily or weekly repayment first. For turning a single quote into a repayment schedule, use the business loan repayment calculator. And if the purpose of the comparison is to replace an expensive loan you already have, see refinancing expensive short-term business debt.

Which offer wins? It depends on the job

What matters most	The offer to favour
Lowest total cost, and cash flow can handle it	The offer with the smaller cost in dollars
Breathing room each month	The longer term, accepting a higher total
Paying off fast when a contract pays	The offer with the cheapest early payout
Keeping property out of it	The unsecured offer, if the cost gap is tolerable

The head-to-head on short-term vs long-term business loans goes deeper on the trade-off between total cost and monthly pressure.

Not sure either offer is your best option?

Comparing two quotes is smart. Sometimes, though, the more useful question is whether a third option would beat both: a different lender, a secured structure, or a shorter term that fits a known payment date.

That’s what our enquiry form is for. Allow a minute or so to complete it, and rest easy that your credit score stays exactly where it is. Nothing gets broadcast to a queue of lenders hoping for a bite; a person reviews what you’ve sent and phones you to talk it through. Mention the offers you already hold and describe your situation accurately, so we can tell you quickly whether something better exists or whether one of your quotes is already the right one.

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