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Tips to Get the Most Out of a Small Business Loan Calculator

Jordan Wilkinson 22nd Aug 2022 No Comments

Reading Time: 3 minutes

A business loan calculator is a tool that helps you determine the amount of money you need to apply for a small business loan. You can also use it to calculate the amount of money required to get your small business started. It also gives you an estimate of how long it will take to repay the loan. 

The tool will help you find out the information about your company, its financial status, and the approval criteria for getting a loan. The calculator is easy to use, and anyone needing professional help with their application for a business loan can use it. 

But it is not always easy to decide how much money you need to get started or what kind of loan would be best for your business. To help you out, here are some tips to get the most out of a small business loan calculator: 

Calculate your monthly expenses first

Calculating your monthly income will help you determine how much you need from each source to cover those costs and still have enough left over for other things, such as taxes and payroll. 

Consider the fees

Consider all the fees associated with borrowing money before deciding which type of loan makes sense for your situation, whether it is interest rates, fees or other costs related to applying for one like closing costs or origination charges. You should factor in all these. 

Start with your current cash flow statement

The SBA will ask you to provide a cash flow statement that includes all the income, expenses and capital expenditures for the past six months. You can use an Excel spreadsheet or similar program to create this document, but it should be detailed enough so that you can answer all of their questions with confidence. 

Ensure the bank account balances match what you are reporting on cash flow

Make sure your bank account balances match what you reported on your cash flow statement. If they do not match up, it could mean an error in one of your records or that you underreported one of your expenses or over reported another. If this is the case, the SBA will ask you to verify those numbers and correct any problems before they can approve you for financing through their program. 

Include a contingency fund

You may want to consider adding a contingency fund in case things do not go smoothly with your business or some unexpected costs come up. The calculator will automatically calculate how much this would cost based on your projected monthly cash flow. However, it will be hard for this contingency fund to protect against losses if something goes wrong during your startup phase if there is no spare cash available for emergencies. 

Calculate your projected cash flow

The purpose of a business loan calculator is to help you determine how much money you’ll need to get started. That said, some businesses can’t afford to wait until they know how much money they’ll need before getting started. Therefore, it makes sense that they’d want an estimate of their monthly cash flow as soon as possible. Basic plug-in numbers like sales volume and costs into the calculator to get an idea of how much your business will make each month. 

Understand the interest rate

There are two business loan calculators: one offers a fixed rate, and another gives you the option to choose your own. The fixed-rate calculator is used when you have no idea what your business’s financial needs are but you know that the interest rates on other loans are too high or too low for your business plan. The variable-rate option is used when you know exactly how much money you need but also want to know what happens if interest rates go up or down. 

Calculating your loan amount is an essential part of the process. When looking for a small business loan, you’ll probably need to calculate how much money you can borrow. Luckily, several calculators out there make it easier than ever to figure out how much money you qualify for and when your payments will be due. 

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence 

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Jasmine Birtles

Your money-making expert. Financial journalist, TV and radio personality.

Jasmine Birtles

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