Quick answer
A business holding $150,000 of cash with a net burn of $18,000 a month has 8.3 months of runway. A $100,000 loan at 9% over 36 months extends that to 11.8 months — it buys 3.5 months at the price of $14,479 of interest and a $3,180 monthly payment.
How the Business Loan & Runway works, step by step
Enter the loan amount, APR and term you are considering, plus current cash and monthly net burn. The calculator shows the loan's monthly payment and total interest, runway without the loan, runway with both the cash and the payment included, and the extra months the loan buys.
Runway is cash divided by net burn. The loan changes both sides of that division: it adds cash now and subtracts a payment every month. A loan always extends runway when its term is long enough, but by less than the headline amount suggests, because repayments start immediately and the payment raises burn from day one.
The monthly payment is an amortising payment: each instalment covers that month's interest plus part of the principal. At 9% APR over 36 months, $100,000 costs $3,179.97 a month and $14,479 of interest over the term. Total interest is payment multiplied by term minus principal. Stretching the same loan to 60 months cuts the payment to about $2,076 but raises total interest to about $24,550 — longer terms buy runway at a higher total price.
The useful output is the deadline, not the balance. Runway tells you the date by which revenue must rise or costs must fall. Financing decisions should be made against that date — raising money takes months, so the work starts while runway is still long, not when it is nearly gone.
Model the downside case. If revenue falls 20%, how many months remain? A plan that only works at current revenue is not a plan the loan makes safe. And compare the loan against cutting burn: on $150,000 of cash, cutting $5,000 of monthly burn extends runway from 8.3 to 11.5 months permanently, with no interest and no fixed obligation.
The formula
Monthly payment = P x r / (1 - (1 + r)^-n), where P is principal, r the monthly rate and n the number of payments. Runway = cash / monthly net burn; with the loan, (cash + loan) / (burn + payment).
Worked example — try it on the calculator above
Worked example: $100,000 loan at 9% over 36 months
The monthly payment on $100,000 at 9% APR over 36 months is $3,179.97, with total interest of $14,479 over the term. Cash rises to $250,000 but monthly burn rises to $21,179.97. Runway = $250,000 / $21,179.97 = 11.8 months, versus 8.3 months without the loan. The loan buys 3.5 months of runway, not the 5.6 months the cash alone implies. Cutting $5,000 of monthly burn instead would extend runway to 11.5 months with no interest — nearly the same time, bought without debt. If revenue fell and burn rose to $21,600, runway without the loan would be 6.9 months and with the loan 10.1 months: the loan still helps, but the deadline moves closer either way.
Frequently Asked Questions
How much runway should a business keep?
Six months is a common minimum comfort level for a stable small business; 12 to 18 months is the target most lenders and investors look for in a growth-stage company. Below three months, options narrow sharply: loan approvals, hiring and supplier terms all get worse precisely when the business is weakest.
Does a loan always extend runway?
Not if the term is short. A 12-month loan repaid faster than the business can use the cash can shorten effective runway: the payment raises burn immediately while the cash is spent over time. Lines of credit drawn only when needed, and longer amortisation, extend runway more reliably per dollar borrowed.
What is net burn and how is it different from expenses?
Net burn is expenses minus revenue for the month — the amount cash actually falls. A business spending $60,000 and earning $45,000 burns $15,000. Runway calculated on gross expenses ($180,000 / $60,000 = 3 months) understates the position fourfold in that example. Always divide by net burn.
Should I take a loan to extend runway or cut costs?
Compare what each buys. Cutting $5,000 of monthly burn on $150,000 of cash extends runway from 8.3 to 11.5 months permanently and costs no interest; the example loan buys 3.5 months and adds a fixed obligation. Loans make sense when the time bought will be used to reach a specific, plausible revenue milestone — not to postpone a cost decision.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.