How is business loan interest calculated?
Business loan interest is calculated one of three ways: amortizing interest (you pay interest on the declining balance, like a mortgage), simple interest (a flat charge on the original amount), or a factor rate (a fixed multiplier with no interest at all). Two offers can advertise similar-sounding numbers and differ enormously in true cost. Misreading the math is how borrowers end up paying double what they expected, and it's exactly why Quordx Capital discloses total repayment cost on every match, not just a headline rate.
Last updated · Reviewed by Cody Dreis
50+ Lenders|Funding in as little as 24 hours
The three calculation methods, decoded
Amortizing interest: used by banks, SBA lenders, and most term lenders. Each fixed payment splits between interest (charged on the remaining balance) and principal. Early payments are interest-heavy; later ones mostly principal. Example: $100K at 7.2% over 5 years runs about $1,990/month, roughly $19,400 in lifetime interest. Pay early and you skip future interest. **Simple interest:** some short-term lenders charge a flat percentage of the original principal, so the cost doesn't shrink as you repay. A "10% rate" on a 6-month simple-interest loan is a far higher APR than 10%. **Factor rates:** merchant cash advances multiply the advance by a factor, typically 1.15-1.50. A $50K advance at 1.30 means $65K repaid, period: early repayment saves nothing. The universal translator is APR, which folds in fees and timing so different structures become comparable.
Products by calculation type
Business term loans and SBA loans: Amortizing; the structure that rewards early payoff. Best for most borrowing needs.
Business lines of credit: Interest accrues only on drawn funds for the days outstanding. Best for short, recurring needs.
Merchant cash advances: Factor-rate pricing; fast, but the fixed cost makes it expensive. A tool for specific situations, never the default.
How Quordx Capital Works
One application, roughly 5 minutes, and one document upload put Quordx Capital's matching process to work matching you against 50+ vetted lenders. You get 3-7 ranked matches with the pricing method, total repayment, and every fee laid out plainly. Most lenders respond within 24-48 hours; funding typically arrives in 3-7 business days.
What to Expect
No decoding required: each offer shows what you'd repay in dollars, not just a rate that hides the structure. If a factor-rate product is among your matches, its true cost gets stated bluntly alongside cheaper alternatives. Looking is free, no fees touch you ever, and nothing obligates you to accept.
Apply for Funding
No obligation · Initial inquiry doesn't impact credit · Takes about 10 minutes
Written by
Cody Dreis
Founder, Quordx Capital
Read full bio
Related articles
More on this topic from the Quordx Capital library.
Important Disclosures
Quordx Capital is a business funding broker, not a lender. We facilitate introductions between U.S. small and medium-sized businesses and lenders or capital providers in our network. All credit decisions, funding amounts, rates, fees, repayment terms, and timelines are determined solely by individual lenders based on their own underwriting criteria.
Funding figures and timelines shown on this page are illustrative and represent ranges within our lender network, they are not guarantees and individual outcomes may vary based on business profile, industry, time in business, revenue, credit history, and lender availability. Not all applicants qualify for every product.
The initial inquiry does not impact your personal credit score. Some lenders may perform a hard credit pull during underwriting; Quordx only authorizes such checks with your specific consent for the lender presenting an offer. Applicants are protected under the Equal Credit Opportunity Act (ECOA) from discrimination based on race, color, religion, national origin, sex, marital status, age, or because all or part of an applicant's income derives from any public-assistance program.
This Site is intended for commercial, business-purpose financing for U.S. businesses only. Not available for consumer loans, residential mortgages, or owner-occupied real estate. Quordx may receive compensation from lenders when applications result in funded transactions. This does not change the rate, fee, or terms offered to you. See our Advertiser Disclosure for details.
By submitting an application or contact information, you consent to be contacted by Quordx and its lending partners via phone, text, and email, including by automated means, regarding your funding inquiry. Consent is not a condition of receiving funding. Message and data rates may apply. Reply STOP to opt out. See our Privacy Policy and Terms of Service.