Business Loan Calculator 2026 | Equal Pmt vs Interest-Only IRR

Loan Inputs

Loan Amount (CNY 10,000) Typical SME working capital loan size: CNY 500k–10M

Annual Rate (%) 2026 SME benchmark: LPR + spread → ~3.45%–6% p.a.

Loan Term (Months) Common tenors: 12/24/36/60 mos; Interest-Only usually 12–36 mos

Flexible line: full-payoff month (optional) 0 = no early payoff; e.g. 18 = full settlement at month 18

Compare 4 Repayment Methods

Takeaway: Interest-Only has the lowest monthly payment for the first N months (pure interest) but requires a full principal bullet at maturity — so total interest is materially higher than amortizing methods. The true IRR approximately matches the nominal rate when fees = 0, but cashflow pressure spikes at the end.
Equal Principal costs the least total interest and suits firms with steady reserves; Equal Payment keeps the monthly outlay flat and is easier to budget & reconcile.

How the IRR is calculated

IRR (Internal Rate of Return) is the discount rate at which the net present value of all cash flows equals 0, reflecting the true annualized cost.
• Equal payment (annuity): monthly payment = principal × (monthly rate × (1+monthly rate)^N) ÷ ((1+monthly rate)^N − 1);
• Equal principal: monthly principal = principal ÷ N; monthly interest = remaining principal × monthly rate;
• Interest-first principal-last: pay interest only each month = principal × monthly rate; repay the full principal + that month's interest in the final month;
• Flexible repayment: interest accrues on the actual days the funds are in use; if the full balance is repaid early, the final month repays remaining principal + interest for that period;
All amounts are computed as whole fen (0.01 CNY) to avoid floating-point errors.

Monthly Repayment Schedule

No.	Pmt	Principal	Interest	Remaining

Showing latest / pivotal periods + last rows. Middle rows are collapsed.

Small Biz Loan Tips (2026)

Repayment method:

Predictable payback (e.g. 1–3 years): prefer Equal Payment — flat monthly cost for easy cash planning.
Tight cash flow upfront + large bullet receipt at maturity: consider Interest-Only, but plan ahead for principal repayment (seek no-principal renewal).
Minimize total interest + stable monthly receipts: pick Equal Principal — lowest total interest of the four.
Unpredictable receipts + need flexibility: pick a Flexible Line (daily interest, no early-payoff penalty) for maximum capital efficiency.

Hidden costs: loans can carry guarantee, valuation, bridge, or origination fees. Always fold all extra costs into the IRR before comparing products.

Related Tools

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❓ FAQ

What rates do SME business loans offer?

In 2026, bank secured business loans: ~3.2%–4.5% p.a. (discount below LPR); unsecured credit loans: 4.5%–8%; online/non-bank: 8%–18%. Government-supported high-tech / "Zhuan-Jing-Te-Xin" enterprises: subsidized 2%–3% after rebate.

What eligibility do I need?

Baseline: 1–2 years since business license; physical operating address; 6-month operating cashflow ≥ 2× monthly payment; clean personal & corporate credit. Secured products require collateral; unsecured credit products require tax rating A/B.

What tenors and repayment methods are standard?

Secured credit lines up to 20–30 years; most common Interest-Only structure 3–10 years with annual balloon refinance. Unsecured credit products 1–3 years, Equal Payment amortization. Many 2026 banks offer "no-principal renewal" to cut bridge-refinance costs.

Personal vs corporate business loan?

Personal: borrower is the owner / self-employed; hits personal credit; fast approval; limit CNY 500k–5M. Corporate: borrower is the company; hits corporate credit; higher limit (CNY 10M+); full financials + tax filings required; slower process.

Can I use a business loan to pay off a residential mortgage?

Short-term it often lowers interest cost (business loan rates < mortgage rates), but risks: ① Business loans require compliant purpose docs; recycling into property breaches terms and can trigger full immediate drawdown. ② Interest-Only structures need a large principal bullet at maturity, concentrating cash-flow risk. ③ It may hurt future personal / corporate credit standing. Always use the product in-compliance.