How the origination fee changes the math
Most business lenders charge an origination fee — a percentage of the amount you borrow — to cover underwriting and processing. When that fee is financed, it is not paid out of pocket at closing; instead it is rolled into the loan balance and repaid, with interest, over the full term.
This calculator computes the fee, adds it to your requested loan amount, and amortises the combined balance into equal monthly payments. The upshot is that you pay interest on the fee as well as on the money you actually use, so a financed fee costs more than its sticker percentage suggests.
Understanding the results
The monthly payment is what you owe each month for the life of the loan. The origination fee line shows the dollar amount of that charge, the total interest is everything paid above the financed balance, and the total cost is the sum of every payment you will make.
The donut chart breaks your total payments into three pieces: the money you borrowed, the financed fee, and the interest. Seeing the fee and interest side by side makes the true price of the loan clear.
Keeping business borrowing affordable
When evaluating a business loan, look beyond the headline rate:
- Compare offers by APR, which captures the origination fee, rather than the nominal interest rate alone.
- Ask whether you can pay the fee upfront instead of financing it — that avoids paying interest on the fee.
- Match the term to the life of what you are buying; financing short-lived inventory over many years inflates the interest you pay.
- Check for prepayment penalties so you can repay early and cut interest if cash flow allows.
What this does not include
This is a planning estimate. It excludes other possible charges such as draw fees, late fees, collateral or personal-guarantee requirements, and any variable-rate adjustments. Confirm the exact terms and total cost with your lender before committing.
Formula
fee = loanAmount·feePercent/100; financed = loanAmount + fee; r = annualRate/100/12; payment = financed·r / (1 − (1+r)⁻ⁿ)Frequently asked questions
- Why is the fee added to the loan?
- When an origination fee is financed, it is added to the principal and repaid with interest over the term — increasing both the payment and the total cost.