Commercial loan calculator vs. business loan calculator: what’s the difference?

Commercial loan calculators and business loan calculators may sound similar, but they exist for different reasons and are designed for different types of borrowing.

Using the wrong type of calculator could result in inaccurate estimates that aren’t aligned with what lenders will actually offer you. So it’s important to understand the differences and use the right one.

In this article, we’ll compare the main differences between commercial and business loan calculators, explain when to use each one and help you choose the right tool for your specific situation.

Key points:

• Commercial loan calculators focus on property and asset-backed lending with specific loan-to-value (LTV) ratios and longer terms

• Business loan calculators cover general-purpose borrowing including working capital, equipment finance and unsecured lending

• Funding Options by Tide can connect you with over 120 lenders to find the right finance solution, whether you need commercial or business funding

What is a commercial loan calculator?

A commercial loan calculator is specifically designed for property-backed business lending. They focus on commercial mortgages and asset-based finance where the property itself secures the loan.

Commercial loan calculators generally ask you for the value of the property you want to buy, how much you want to borrow and how much you can put towards a deposit.

This information is used to calculate your loan-to-value (LTV) ratio – usually between 60% and 75% for most commercial properties.

Commercial loan calculators are usually focused on larger loan amounts (starting from around £25,000) and longer repayment terms (e.g. 5-25 years).

The calculations should factor in commercial interest rates, which are generally lower than unsecured business lending, since your property provides the lender with security if you can’t repay the loan.

What is a business loan calculator?

A business loan calculator can help you with a much wider range of business financing than a commercial loan calculator, such as working capital loans, equipment finance, expansion loans, and general business loans.

Business loan calculators also work with a much wider range of amounts than commercial ones, ranging from as little as £1,000 for unsecured loans and up to £100,000 or secured loans. Terms typically range from 1-10 years.

Business loan calculators are more flexible because they don’t assume you’ve got property to put up as security.

Key differences between the two calculators

Figures are averages and may vary by calculator and finance provider.

The key difference between the two calculators comes down to what you need the financing for and how the loan’s secured. Commercial calculators assume you’re using property as security, while business loan calculators can work with or without security.

Which calculator should you use?

The type of calculator you should use will depend on your type of business and the reason you’re looking for funding.

Commercial loan calculators can be used to research:

• Buying office space, warehouses, retail premises or other commercial properties

• Refinancing existing commercial property to release equity or get more competitive interest rates

• Buy-to-let property investments through your business

• Mixed-use properties that combine residential and commercial elements

Business loan calculators can be used to research:

• Working capital to manage cash flow gaps or seasonal fluctuations

• Equipment finance for machinery, vehicles, IT systems or other business assets

• Expansion funding to open new locations, hire staff or enter new markets

• General business loans for marketing campaigns, operational costs or buying stock

Watch out for using the wrong calculator! I may give you misleading estimates that don’t match what lenders will actually offer.

What to do after using a calculator

Once you’ve used a commercial or business loan calculator to get a realistic estimate, your next step depends on what you’re looking to fund.

If you’re looking to buy commercial property, you’ll typically need to gather a few documents together for your application, including business accounts, property valuations and proof of deposit. The approval process can take a few weeks, so start early if you have a deadline.

Getting a business loan can be a lot faster, particularly if you want to borrow smaller amounts or if you’re open to considering unsecured loan options. Applications can take as little as a few days rather than weeks.

Whether you need commercial or business finance, consider using a broker to simplify and speed up the process, and potentially help you access better rates. For example, Funding Options by Tide works with over 120 lenders and can match you with the most suitable options for your specific situation.

Find business finance with Funding Options by Tide

Whether you’re looking for a standard business loan, a short-term business loan, or something a little more specialist, like auction finance for property developers, we’re one of the leading names in business finance in the UK, having helped facilitate over £800 million in finance to more than 18,000 customers. 

Checking if you’re eligible is free, only takes a few minutes, and while a full application would impact your personal or business credit score, checking eligibility won’t. Just submit your details via the link below to find out if you could be eligible to borrow up to £20 million.

Find business finance.

FAQs

Can I use a business loan calculator for property purchases?

You can, but you’re unlikely to get accurate results. Business loan calculators don’t factor in loan-to-value (LTV) ratios, commercial mortgage rates or the longer terms available for property-backed lending. It’s better to use a commercial loan calculator for property-related borrowing.

Will calculator results match what lenders actually offer?

Calculators can provide useful estimates. But the actual offer a lender will give you will depend on your credit history, business performance and current market conditions, amongst other things. It’s better to think of calculator results as a starting point rather than a final guarantee.

Do I need different calculators for secured and unsecured loans?

Most business lending calculators can handle both secured and unsecured loans by asking whether you’re providing security. But the terms and rates will likely be very different – secured loans typically offer lower rates and longer terms.

How accurate are commercial loan calculators for mixed-use properties?

Commercial loan calculators can do a good job at estimating the costs of mixed-use properties. But you’ll want to consider using a broker or speaking with a lender directly for an accurate quote. Some lenders treat mixed-use properties differently, so the calculator might not accurately reflect all the options available to you.

Can startups use commercial loan calculators effectively?

Startups can use commercial loan calculators to get a rough idea of potential costs. But most won’t qualify for commercial mortgages without a long trading history and large deposit (typically 25-40%). For this reason, it may be worth focusing on business loan calculators until you’re more established.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.