Table of contents
Securing a $1 million business loan can be a major turning point for your company, whether you’re expanding operations, stabilizing cash flow, or funding an acquisition. But before committing to a large financing decision, you should understand what your monthly payment will look like and how factors like interest rate, loan structure, and term length can impact your total cost.
This guide breaks down the monthly payment on a $1 million business loan, shows how different repayment strategies affect interest costs, and outlines what lenders look for when you apply for large-scale financing.
How much is the monthly payment on a $1 million business loan?
Here’s an example for a $1 million loan over 3 years (36 months) at 12% annual interest, using a standard amortizing structure with fixed monthly payments.
- Monthly payment: ~ $33,161.67
- Total amount paid over 3 years: ~ $1,193,820
- Total interest paid: ~ $193,820
Loan assumptions
- Principal: $1,000,000
- Annual interest rate: 12%
- Monthly interest rate: 1% (0.01)
- Term: 36 months
- Structure: Fully amortizing (no balloon payment)
Businesses often ask: Is this what I’ll actually pay?
The answer depends on loan type, lender, fees, credit profile, and repayment structure.
What affects the monthly payment on a $1 million business loan?
Not all loans are structured the same. Key variables include:
- Loan type and structure
- Fully amortizing term loan
- Interest-only loan with balloon payment
- Variable rate loan
- Revenue-based financing
- Interest rate
- Even a 1–2% difference can change the total cost by tens of thousands of dollars.
- Fees and closing costs
- We cover these next.
Other loan costs to factor in
When evaluating the true cost of a loan, make sure to account for fees beyond the base interest rate.
- Origination fees
- Usually 1%–5% of the loan amount.
- Example: A 1% fee on $1,000,000 = $10,000
- Prepayment penalties
- Not all lenders charge them, but some do, especially traditional banks.
- Additional lender fees
- These may include underwriting fees, packaging fees, or annual review fees.
- Always request a full cost breakdown before you sign loan documents.
Cash flow scenarios: How repayment strategy impacts your interest costs
Below are four common repayment approaches and how each one affects overall interest on a $1,000,000 loan at 12% APR.
If you’re short on time, jump to the summary table below.
Scenario 1: Baseline 3-year loan
- Term: 36 months
- Monthly payment: $33,161.67
- Total interest: $193,820
This serves as the baseline for comparison.
Scenario 2: Shorter term 2-year loan
- Monthly payment: $47,060.91
- Total paid: $1,129,462
- Total interest: $129,462
- Interest saved vs. 3-year term: ~$64,358
Scenario 3: Adding extra monthly principal payments
Option A: +$5,000 per month
- New monthly payment: $38,161.67
- Loan payoff: ~31 months
- Total interest: ~$175,300
- Interest saved: ~$18,500
Option B: +$10,000 per month
- New monthly payment: $43,161.67
- Loan payoff: ~27 months
- Total interest: ~$156,500
- Interest saved: ~$37,300
Scenario 4: Adding annual lump-sum payments
Assuming 3 yearly principal payments:
Option A: $50,000 per year
- Loan payoff: ~33 months
- Total interest: ~$182,900
- Interest saved: ~$10,900
Option B: $100,000 per year
- Loan payoff: ~29 months
- Total interest: ~$161,200
- Interest saved: ~$32,600
Cash flow scenario summary chart
| Scenario | Payoff Time | Total Interest | Interest Saved |
|---|---|---|---|
| 3-year baseline | 36 months | $193,829 | – |
| 2-year term | 24 months | $129,462 | $64,358 |
| +$5k/month | ~31 months | ~$175,300 | ~$18,500 |
| +$10k/month | ~27 months | ~$156,500 | ~$37,300 |
| +$50k/yr | ~33 months | ~$182,900 | ~$10,900 |
| +$100k/yr | ~29 months | ~$161,200 | ~$32,600 |
Understanding amortization: Why monthly payments look the way they do
When you take out a fixed-rate business loan, your monthly payment stays the same, but the way that payment is applied changes over time. That’s amortization.
- Early in the loan: Most of the payment goes toward interest.
- Later in the loan: More goes toward principal as the interest portion shrinks.
For large business loans, amortization provides:
- Predictable monthly payments
- Better budgeting and cash-flow planning
- Clear visibility into debt reduction over time
Using an amortization schedule (or our business loan calculator) helps you see exactly how quickly you’re paying down the debt.
What lenders look for in a $1 million business loan application
When you apply for a business loan or any large commercial financing, lenders will look for:
- Strong annual revenue - Consistent, reliable revenue is one of the biggest factors for approvals at this loan size.
- Solid personal and business credit - While smaller loans may allow lower credit scores, million-dollar loans often require FICO 630–720+.
- Proven financial management - Track records of successfully handling large amounts of capital (e.g., $2M+ lifetime funding) build lender confidence.
- Clear use of funds - You’ll need a detailed, strategic plan for how the $1 million will be invested in the business.
- Industry and regional specifics - Sectors like manufacturing, construction, transportation, wholesale distribution, and logistics often qualify more easily due to strong asset bases and cash-flow patterns.
Take control of your business financing
Understanding your $1 million business loan monthly payment gives you the clarity to plan, invest, and grow with confidence. With the right structure and repayment strategy, your financing becomes a predictable asset.
If you're ready to explore your options, we can help you compare loan programs, run your repayment scenarios, and secure the capital you need with confidence.
Start your digital application today and take the next step toward scaling your business.
ABOUT THE AUTHOR
Joseph Camberato is the CEO & Founder of National Business Capital, where he has led the company in funding more than $2.5 billion for growth-minded businesses since 2007. With firsthand experience building NBC from a startup into a national private lender, Joe writes on the economic forces shaping access to capital, including interest rate shifts, private credit trends, and the challenges mid-sized companies face when banks pull back.
