Business Loan & DSCR Calculator
The payment, the true cost once the origination fee is baked in, and the debt-service coverage ratio a Canadian lender checks before saying yes — with the after-tax cost of borrowing and how CSBFP-backed loans compare.
Balance & interest over time
Remaining principal falls as cumulative interest paid climbs. Early payments are mostly interest.
What the loan really costs
Principal repaid, interest, and the up-front origination fee — the total cash that leaves the business.
Amortization schedule
Annual summary: what goes to principal, what goes to interest, and the balance at each year end.
| Year | Payments | Principal | Interest | Balance |
|---|
How this is calculated
The payment
A commercial term loan is a standard amortizing loan compounded monthly: the monthly rate is r = rate ÷ 12 and the payment is P × r ÷ (1 − (1 + r)^−n) where n = years × 12. Unlike a residential mortgage (which Canadian law compounds semi-annually), term loans are quoted and compounded monthly. Total interest is payment × n − principal.
DSCR — the number lenders actually check
Debt-service coverage ratio is your operating cash flow divided by the loan payment. Here it is (monthly revenue − monthly operating expenses) ÷ monthly payment. Most Canadian commercial lenders want 1.25 or higher — comfortable headroom. Between 1.00 and 1.25 is tight and often needs collateral or a personal guarantee; below 1.00 the business can't cover the payment from operations and approval is unlikely. (Sophisticated lenders use EBITDA with add-backs for interest and depreciation; this tool uses a simpler revenue-minus-expenses cash flow, which is conservative.)
The origination fee and effective APR
A fee charged up front means you receive amount − fee in cash but still repay the full loan plus interest. The effective APR is the monthly rate i that makes the present value of your payments equal that net cash — solved by Newton's method — then annualized as i × 12. It is always at or above the quoted rate; the shorter the term, the more a fixed fee stings.
After-tax cost of borrowing
Interest on money borrowed to earn business income is deductible in Canada. At a combined small-business tax rate t, the after-tax interest cost is total interest × (1 − t). The Canadian small-business rate is roughly 9% federal plus a provincial small-business rate (often 0–3.2%), landing near 12% for most incorporated small businesses in 2026.
CSBFP — government-backed small-business loans
The Canada Small Business Financing Program guarantees loans up to $1.15 million for businesses with under $10M in annual revenue (up to $500,000 for equipment/leaseholds, up to $150,000 for working capital or intangibles). Rate ceilings are prime + 3% floating or the residential-mortgage rate + 3% fixed, plus a one-time 2% registration fee that can be financed into the loan — enter it in the origination-fee field to see its effect on your effective APR. Rules confirmed as of July 2026; the program is administered by ISED.
What this doesn't model
Interest-only or balloon structures, floating-rate resets, prepayment penalties, GST/HST on any fees, or a line of credit's revolving balance. For personal or vehicle borrowing see the credit-card payoff, car loan vs lease, and debt payoff plan tools.