Which funding products does this apply to?

Term Loan. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Are the figures here quotes?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What a particular lender charges is on that lender's page, where it publishes it at all.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

Can I reuse this content?

Quote a paragraph with a link back. Do not republish whole articles.

How a business term loan amortises: the real interest split

How a business term loan amortises, and why the early payments are mostly interest

The payment is level for the whole term. What sits inside it is not, and the split moves slowly enough that a loan you have serviced for a year can still owe most of its principal.

By Find Me Funders research desk Updated 14 September 2026 923 words 4 min read

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

Your payment does not change. The two things inside it do, every single month, and in a direction that matters to you if you ever intend to sell the business, refinance the debt, or clear it early.

An amortising term loan charges interest on the balance you still owe. At the start the balance is the whole loan, so the interest slice is at its widest and the principal slice is at its thinnest. Every payment shaves the balance a little, which shrinks next month's interest, which leaves more of the same fixed payment to attack principal. The effect compounds in your favour, but slowly at first.

Illustrative only — a $150,000 loan over 60 months

Illustrative only — assume $150,000 advanced, a 60-month term, a fixed nominal rate of 9.5% per year charged monthly, equal monthly payments, no fees and no prepayment penalty. Nothing here is a market rate; it is one set of inputs chosen to show the shape.

The payment is $3,150.28. Here is what it contains:

Month 1: $1,187.50 interest, $1,962.78 principal
Month 12: $1,009.65 interest, $2,140.63 principal
Month 30: $683.19 interest, $2,467.09 principal
Month 60: $24.74 interest, $3,125.54 principal

Over the first twelve payments you hand over $37,803.36 and knock $24,606.45 off the balance. Over the last twelve payments you hand over the same $37,803.36 and knock off $35,927.84. Same money, very different work.

Two markers are worth committing to memory. Half the total interest on that loan is paid by month 19. Half the principal is not repaid until month 34. Total interest over the full term is $39,016.75, and the total of all payments is $189,016.75.

Why the first year feels like it barely moved the balance

After twelve payments on that loan you still owe $125,393.55 of the original $150,000. You have paid in $37,803.36. If someone asked you in month 13 what the loan cost you so far, the honest answer is $13,196.90 — the rest was your own money coming back off the balance sheet.

This is not a trick and it is not a fee. It is what charging interest on an outstanding balance does. But it produces two predictable surprises.

The first is at sale or refinance. Owners often assume that a third of the way through a term they owe roughly two thirds. On the loan above, a third of the way through, they owe 84% of it.

The second is when a broker offers to refinance you into a longer term "to lower the payment". The payment does drop. The balance you are refinancing is higher than you expected, and the interest clock restarts at its steepest point.

Term length changes the total, not the mechanism

Illustrative only — the same $150,000 at the same 9.5% nominal rate, varying only the number of months:

24 months: payment $6,887.17, total interest $15,292.17
36 months: payment $4,804.94, total interest $22,977.93
60 months: payment $3,150.28, total interest $39,016.75
84 months: payment $2,451.60, total interest $55,934.17

Going from 36 months to 84 months cuts the payment by roughly half and raises the interest bill by about $33,000. Neither is right or wrong. The 84-month version is right if the payment is what would break you and the asset lasts seven years. It is wrong if you are financing something that will be worthless in three.

The details that change the arithmetic

Simple interest versus precomputed.With simple interest, interest accrues on the balance day by day, so paying early genuinely reduces what you owe. With precomputed or add-on interest, the total charge is fixed at signing and baked into the payment schedule, so paying early saves far less than the amortisation table suggests — sometimes nothing beyond a discretionary discount. Ask which one you are signing. See add-on interest and early payoff discount.

Day-count basis.Interest quoted on a 360-day year and applied to actual days elapsed produces slightly more interest than a 365-day basis at the same stated rate. It is a small number on a small balance and a real number on a large one.

Payment frequency.Weekly or daily debits repay principal faster than monthly ones at the same stated rate, so total interest falls — but the cash pressure rises. Do not read a lower total interest figure as a better deal without checking that you can survive the debit schedule.

Origination and closing fees.A fee deducted from the advance means you did not receive the face amount. Interest is charged on the face amount. On the loan above, a fee of $4,500 taken at funding means $145,500 in the bank against $189,016.75 repaid.

Balloons.A loan can amortise on a 20-year schedule and mature in 5. The payment is calculated as if you had 20 years; the balance is due in 5. Check the maturity date and the amortisation period separately, because they are frequently different numbers. See balloon payment.

What to ask for before you sign

Ask for the full amortisation schedule, not the payment. A schedule shows the balance at every month, which is the number you need for any decision about refinancing, selling, or prepaying. Ask whether interest is simple or precomputed. Ask for the day-count basis. Ask for the maturity date and the amortisation period as two separate answers.

If a lender cannot produce a month-by-month schedule for a fixed-rate term loan, that is worth pausing over. The schedule is not a courtesy; it is the arithmetic of the contract.