Buying a lottery ticket and winning is never a given.
Getting a business loan might feel the same way. You don’t want to take unnecessary risks, but having money to fund projects or improve cash flow will help your business to continue to succeed.
If only you could know how much the loan would cost… Well, a business loan calculator can answer your questions in a few minutes. That way you won’t feel stressed about whether or not a business loan is your next step because you’ll already know if you can pay for it.
Here’s how a family business used the financial tool and knew what they were going to pay (and if they could afford it) before they ever committed to a loan.
A story about family, food, hard work and success
Dora’s parents started selling Mexican food from their home and eventually expanded by buying a restaurant. They wanted to build a community by offering delicious food and a place for people to gather. Year by year they became more and more famous, not only in their neighborhood but locally.
The owners’ business plan paid off but like all business owners, they encountered obstacles to reach success.
They not only struggled when deciding what items to add or remove from the menu, like most restaurants. They struggled with having enough money to buy equipment, pay professionals and, more recently, to invest in software for online security and apps for the customers.
All of those changes required money they didn’t have, so they sought counsel from an online lender.
Since they didn’t know how much they could comfortably afford, the loan specialist suggested they use a business loan calculator. The tool was simple and easy to use.
They entered a loan amount for $36,000, selected a 48-month term, and a 1.75% interest rate.
Within seconds, the screen revealed what their costs were going to be: a $2,516 closing fee and total interest of $17,509. The monthly payments were going to be $1,115.
The information helped the borrowers determine whether they should get a business loan based on two other requirements.
- Monthly payment shouldn’t exceed 80% of the net profit.
- Total loan cost must not exceed the expected total return after making the investment.
Monthly net profits for the restaurant average about $1500 so the monthly payment of $1,115 is within the 80% guideline.
By making 48 payments, Dora and her family will spend $20,025 in costs over the life of the loan and realize an estimated return of $18,480. Without a doubt, a business loan was a profitable solution for them.
After signing the papers and getting the loan, they were able to update their restaurant. Now customers can download an app to place pick-up orders in a secure way that safeguards their personal data.
Furthermore, they hired a business coach to help them navigate through all these changes and future improvements. By having money to pay a lawyer, an accountant and a chef, they made enhancements along the way as their business prospered.
Dora’s family learned to manage their money by making investments, putting capital away for the future, and making improvements when needed. What the owners love most is food, hard work and making a difference in people’s lives, and they are succeeding in all 3 areas.
A Business Loan Calculator Removes Stress by Providing Answers
You can probably relate to Dora’s dilemma and course of action.
A business loan would make a huge difference in your business by positioning it for exponential growth. If you aren’t sure whether applying for a loan makes sense, why not use a business loan calculator to find out?
In a few minutes, you can assess what costs you’ll pay so you can make an informed decision. Simply reset the calculator to create different loan scenarios. By using the calculator, you know what to expect and can plan your business’s future.