An amortization schedule is a table showing each loan payment broken down into principal and interest components over the full loan term. Early payments are mostly interest; later payments are mostly principal.
An amortization schedule is the complete payment-by-payment breakdown of a fully amortizing loan. Each row shows the payment date, total payment amount, interest portion, principal portion, and remaining balance. Because interest accrues on the outstanding balance, early payments carry a higher interest share — the balance is largest at origination. As payments reduce principal, interest charges shrink and more of each payment goes toward principal. This is called 'negative amortization in reverse' — it's by design. For a $100,000 loan at 7% over 5 years (60 months), monthly payment = ~$1,980. Month 1: ~$583 interest, ~$1,397 principal. Month 60: ~$14 interest, ~$1,966 principal. The total interest paid over 5 years is approximately $18,800. Lenders are required to provide amortization schedules at or before closing for most commercial loans. Amortization schedules matter for tax planning (interest is deductible; principal is not), cash-flow forecasting, and refinancing decisions. If you refinance early, you'll have paid a disproportionate share of interest relative to principal — particularly relevant for prepayment penalty calculations. Not all business loans are fully amortizing. Interest-only loans, balloon loans, and lines of credit do not follow a standard amortization schedule. MCAs and revenue-based financing use factor rates rather than interest, so amortization schedules don't apply.
Interest is calculated on the outstanding principal balance. At origination, the balance is at its maximum, so interest charges are highest. As you pay down principal each month, the balance shrinks, and so does the interest portion of each payment. This is standard loan math, not a lender practice — it applies to all fully amortizing loans.
Yes. Extra principal payments reduce the outstanding balance, which reduces future interest charges. This can shorten your loan term or reduce future payment amounts depending on loan terms. Review your loan agreement — some business loans have prepayment penalties that can offset the interest savings from early payoff.
No. Standard amortization applies to term loans with fixed payments. Lines of credit, interest-only loans, and balloon loans have different payment structures. MCAs have no amortization schedule — they use factor rates with variable daily or weekly payment amounts based on revenue.
Yes — you should always request it. For most commercial loans, lenders must disclose repayment terms before closing. Ask for the full amortization table in writing, not just the monthly payment amount. Understanding total interest paid over the full term is essential for comparing loan offers.