Our Business Loan Calculator Works out the Cost of Borrowing for Your Business
Author: Russell SmithNovember 5, 2018
Can you afford a business loan? Our business loan calculator can help you visualise the costs of borrowing.
When it comes to securing funding for your business, the business loan is a tried-and-tested method. But it’s important only to take out a business loan if you can repay it, along with any interest and additional fees. Use our business loan calculator below to check if you’re able to afford a business loan.
Disclaimer: there may be additional costs associated with your business loan that are not included in the calculator above. While we make every effort to ensure that our business calculator is accurate, you should double check the numbers against another trusted source. Our business loan calculator is not intended to replace the advice of a qualified financial advisor.
What Is an Unsecured Business Loan?
If you’re looking to get a business loan, one of the first things you’ll notice is that they come in two distinct flavours: secured and unsecured. A secured loan is one that’s backed up by collateral. Typically, you will borrow money from a lender and use property, such as your home, as collateral.
The advantage of a secured loan is that you’ll typically be able to borrow a more substantial amount at a smaller cost and over a longer period. The disadvantages are that it’s normally slow to process a secured loan, and you may lose your collateral (property) if you are unable to make your repayments. With this in mind, it’s essential that you speak to a qualified financial advisor before taking out a secured loan.
An unsecured loan is, as you might have guessed, one that is not backed up by collateral. This means that unsecured loans tend to be more expensive and for smaller amounts, as the lender is taking on more risk when they give you the loan. On the plus side, it’s usually quicker to get an unsecured loan and you won’t necessarily lose any property if you cannot make your repayments.
Where Can You Get a Business Loan?
There are various places to get a business loan if you want one, including banks, peer-to-peer lending sites and even the government. It’s always best to check the various costs associated with business loans, as some places offer much better rates than others.
Are Business Loan Repayments Tax Deductible?
One thing that can make or break a business loan is the potential tax benefits. But are business loan repayments tax deductible? The answer is “partially”.
In most cases, when you repay a business loan, you are paying off two parts: the principal (amount originally borrowed) and the interest. The part of your repayment that goes towards paying off the principal is not tax deductible. However, the part of your repayment that goes towards paying off interest is tax deductible.
Let’s take a look at an example. Let’s say your monthly business loan repayments are £1,000. Of this amount, £800 goes towards paying off the principal and £200 goes towards interest repayments. The £200 is tax deductible, but the £800 is not.
Are you unsure whether a business loan is right for you? We offer a free, no-obligation consultancy service and we can help you understand your options.
Russell Smith is an award-winning accountant and founder of RS Accountancy. With over a decade of experience running his company, he has worked with countless small businesses just like yours, helping them grow profits and manage their finances. Russell is also a prolific financial writer, having contributed to such publications as The Guardian, The Telegraph and The Daily Mail.