Whether you’re expanding your business, stabilizing cash flow, or funding an acquisition, getting a $1 million business loan can be a major turning point for your company. But before you make a big financing decision, you should understand your monthly payments and how factors like interest rate, loan structure and term length affect your total costs.
This guide details the monthly payments on a $1 million business loan, shows how different repayment strategies affect interest costs, and outlines what lenders are looking for when you apply for large-scale financing.
What are the monthly payments on a $1 million business loan?
The following is an example of a $1 million loan with a term of 3 years (36 months), an annual interest rate of 12%, a standard amortization structure, and fixed monthly payments.
- Monthly payment: ~$33,161.67
- Total amount paid over 3 years: ~$1,193,820
- Total interest paid: ~$193,820
loan assumptions
- Main: USD 1,000,000
- Annual interest rate: 12%
- Monthly interest rate: 1% (0.01)
- semester: 36 months
- structure: Fully amortized (no balloon payments)
Businesses often ask: Is this what I’m actually paying?
The answer depends on the loan type, lender, fees, credit profile and repayment structure.
What would affect the monthly payment on a $1 million business loan?
Not all loans are structured the same. Key variables include:
- Loan types and structures
- Fully Amortized Term Loan
- One-time interest-only loan
- floating rate loan
- income-based financing
- interest rate
- Even a 1-2% difference can change the total cost by tens of thousands of dollars.
- Fees and closing costs
Other loan costs to consider
When assessing the true cost of a loan, make sure you consider fees beyond the base interest rate.
- Origination fee
- Typically 1%–5% of the loan amount.
- Example: 1% fee on $1,000,000 = $10,000
- Prepayment penalty
- Not all lenders charge them a fee, but some do, especially traditional banks.
- Additional loan fees
- These may include underwriting fees, packaging fees or annual review fees.
- Be sure to ask for a complete breakdown of costs before signing the loan documents.
Cash Flow Scenario: How Repayment Strategy Affects Your Interest Costs
Here are four common repayment options and how each affects the overall interest on a $1,000,000 loan with an APR of 12%.
if you are pressed for time Jump to summary table below.
Scenario 1: Baseline 3-year loan
- semester: 36 months
- Monthly payment: $33,161.67 USD
- Total interest: $193,820
This serves as a baseline for comparison.
Scenario 2: Short-term 2-year loan
- Monthly payment: $47,060.91 USD
- Total payment: $1,129,462 USD
- Total interest: $129,462 USD
- Save on interest with 3-year term: ~$64,358
Scenario 3: Add additional monthly principal payment
Option A: +$5,000 per month
- New monthly payment: $38,161.67 USD
- Loan repayment: ~31 months
- Total interest: ~$175,300
- Save on interest: Approximately $18,500
Option B: +$10,000 per month
- New monthly payment: $43,161.67 USD
- Loan repayment: ~27 months
- Total interest: ~$156,500
- Save on interest: ~$37,300
Scenario 4: Add annual one-time payment
Assuming 3 years of principal payments:
Option A: $50,000 per year
- Loan repayment: ~33 months
- Total interest: ~$182,900
- Save on interest: ~$10,900
Option B: $100,000 per year
- Loan repayment: ~29 months
- Total interest: ~$161,200
- Save on interest: ~$32,600
Cash flow scenario summary chart
| Imagine | Repayment time | total interest | Save interest |
|---|---|---|---|
| 3-year baseline | 36 months | $193,829 | – |
| Term of 2 years | 24 months | $129,462 USD | $64,358 |
| +$5000/month | ~31 months | ~$175,300 | Approximately $18,500 |
| +$10,000/month | ~27 months | ~$156,500 | ~$37,300 |
| +$50,000/year | ~33 months | ~$182,900 | ~$10,900 |
| +$100,000/year | ~29 months | ~$161,200 | ~$32,600 |
Understanding Amortization: Why Your Monthly Payment Looks Like This
When you apply for a fixed-rate business loan, your monthly payments remain the same, but your payment options change over time. This is amortization.
- Loan initial stage: Most of the payment goes toward interest.
- Later on when taking out a loan: As the interest portion decreases, more money flows toward the principal.
For large business loans, amortization provides:
- Predictable monthly payments
- Better budgeting and cash flow planning
- Clear visibility of debt reduction over time
Using an amortization schedule (or our business loan calculator) can help you understand exactly how quickly you’ll pay down your debt.
What Lenders Look for in a $1 Million Business Loan Application
When you apply for a business loan or any large business financing, lenders will be looking for:
- strong annual revenue – Consistent, reliable income is one of the biggest factors in approval for this loan size.
- Good personal and business credit – While smaller loans may allow for lower credit scores, million-dollar loans typically require FICO 630-720+.
- Proven financial management – A record of successfully handling large amounts of capital (e.g., $2 million+ in lifetime financing) builds lender confidence.
- The purpose of funds is clear – You need a detailed strategic plan on how to invest the $1 million into the business.
- Industry and regional specifics – Industries such as manufacturing, construction, transportation, wholesale distribution and logistics are generally more likely to qualify due to their strong asset base and cash flow model.
Take control of your business financing
Knowing your monthly $1,000,000 business loan payment gives you 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 options, and get the funding you need with confidence.
Launch your digital applications today and take the next steps to grow your business.
