Commercial Loan Calculator
See exactly what your commercial loan will cost — monthly payments, balloon balance, and total interest — in seconds.
How Commercial Loan Calculator Works
A commercial loan works differently from a standard residential mortgage. Most commercial loans use a structure where your monthly payment is calculated based on a longer amortization period (say, 25 years), but the actual loan term is much shorter (say, 5 years). When that shorter term ends, you don't owe nothing — you owe a large lump-sum payment called a balloon payment. This calculator shows you all three critical numbers upfront.
The monthly payment tells you what you'll actually pay each month during the loan term. It's calculated using the full amortization schedule, which spreads out principal and interest as if you were paying the loan off entirely over 25 years. This keeps your monthly payments more manageable compared to what they'd be on a shorter amortization.
The balloon payment is the remaining loan balance owed at the end of your loan term. Because your term (e.g., 5 years) is shorter than your amortization period (e.g., 25 years), you haven't paid down nearly as much principal as you would on a fully amortizing loan. The balloon amount is the balance still outstanding when the term expires — which you'll need to either pay off in cash or refinance.
Total interest paid reflects all the interest you accumulate over your loan term. It's calculated as the sum of all monthly payments made, minus the principal actually paid down over that period. This number helps you understand the true cost of financing and is especially useful when comparing loan structures side by side.
This calculator is ideal for business owners and real estate investors evaluating office buildings, retail spaces, industrial properties, multifamily buildings, or any commercial real estate purchase. Use it to stress-test different interest rates, loan amounts, and term combinations before you sit down with a lender.
Commercial Loan Calculator Formula Breakdown
Formula
Monthly Payment = [Loan Amount × (Interest Rate ÷ 12)] ÷ [1 − (1 + Interest Rate ÷ 12)^(−Amortization Months)]
Balloon Payment = Loan Amount × [(1 + Monthly Rate)^(Amortization Months) − (1 + Monthly Rate)^(Loan Term Months)] ÷ [(1 + Monthly Rate)^(Amortization Months) − 1]
Total Interest Paid = (Monthly Payment × 12 × Loan Term in Years) − (Loan Amount − Balloon Payment)Variables Explained
- Loan AmountThe total amount you're borrowing from the lender. This is typically the purchase price of the commercial property minus your down payment. For most conventional commercial loans, expect to put down 20–30%, meaning a $1.25M property purchase might result in a $1M loan. Some SBA programs allow as little as 10% down for owner-occupied properties.
- Interest RateThe annual interest rate on your loan, expressed as a percentage. As of March 2026, conventional commercial loan rates typically range from about 5.5% to 7.5%+ depending on the property type, your creditworthiness, loan structure, and current market benchmarks like the 10-year Treasury yield and SOFR. Owner-occupied properties with SBA financing tend to attract lower rates than pure investment properties.
- Amortization ScheduleThe number of years used to calculate your monthly payment — as if the loan were being paid off entirely over this period. Commercial loans commonly use 20–30 year amortization schedules. A longer amortization period means lower monthly payments, but it also means a larger balloon payment at the end of your loan term.
- Loan TermThe actual length of your loan agreement, in years. This is almost always shorter than the amortization period for commercial loans — typically 5, 7, or 10 years. At the end of the term, the outstanding balance (the balloon payment) is due in full. Borrowers usually either refinance the balloon or sell the property before the term ends.
Example Calculation
Given:
- Loan Amount: $1,000,000
- Interest Rate: 7.5%
- Amortization Schedule: 25 years
- Loan Term: 5 years
Calculation:
Monthly interest rate: 7.5% ÷ 12 = 0.625% (0.00625)
Amortization in months: 25 × 12 = 300 months
Loan term in months: 5 × 12 = 60 months
Monthly Payment = ($1,000,000 × 0.00625) ÷ (1 − (1.00625)^(−300)) = $6,250 ÷ 0.84572 = $7,390.43
Balloon Payment = $1,000,000 × ((1.00625)^300 − (1.00625)^60) ÷ ((1.00625)^300 − 1) = $1,000,000 × (6.4803 − 1.4532) ÷ (6.4803 − 1) = $1,000,000 × 5.0271 ÷ 5.4803 = $917,289
Total Payments Made: $7,390.43 × 60 = $443,425.80
Principal Paid Down: $1,000,000 − $917,289 = $82,711
Total Interest Paid: $443,425.80 − $82,711 = $360,714.80Result:
Monthly Payment: $7,390.43 | Balloon Due in 5 Years: $917,289 | Total Interest Paid: $360,715Explanation
A business owner is purchasing a $1.25M commercial retail property with a 20% down payment, resulting in a $1M loan. Their lender offers a 7.5% rate on a 5-year term with a 25-year amortization. Each month they'll pay $7,390.43. After 5 years, they'll have paid down only about $82,711 of principal — leaving a balloon payment of roughly $917,289 still owed. At that point, they'll likely need to refinance. Over the 5-year term, they will have paid approximately $360,715 in interest.
Steps
- Step 1 — Calculate Monthly Payment: Using the loan amount, annual interest rate converted to a monthly rate (rate ÷ 12), and amortization period converted to months (years × 12), apply the standard amortization formula to find the fixed monthly payment.
- Step 2 — Calculate Balloon Payment: Project forward to the loan term end date (e.g., month 60 for a 5-year term) and calculate the remaining principal balance. This is the balance that would remain if you were making payments on a 25-year schedule but only making them for 5 years.
- Step 3 — Calculate Total Interest Paid: Multiply the monthly payment by the number of payments made over the loan term (months), then subtract the actual principal paid down (loan amount minus balloon payment). The result is the total interest cost during the loan term.
Tips for Using Commercial Loan Calculator
- 💡Don't confuse loan term with amortization period — they're two very different numbers. The amortization period determines your monthly payment size; the loan term determines when your balloon payment comes due. Mixing them up can lead to a nasty surprise when your balloon is due sooner than expected.
- 💡Plan your exit strategy before you sign. Since most commercial loans end with a large balloon payment, you'll either need to refinance, sell the property, or have the cash to pay it off. Refinancing isn't guaranteed — if rates have risen or your property value has dropped, your options may be limited. Build this into your business plan from day one.
- 💡Shop rates aggressively. Commercial loan rates aren't standardized — two borrowers with similar profiles can receive very different quotes from different lenders. Factors like your DSCR (debt service coverage ratio), loan-to-value, property type, and borrower creditworthiness all influence the rate. A 0.5% difference on a $1M loan can mean tens of thousands of dollars in interest over the loan term.
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