Average balance
The amount assumed outstanding on average during the period.
Simple Loan Interest
Launch FeatureAn average balance, an annual rate, and a time period explain a simple interest estimate.
Follow the interest estimate
Review the balance, annual rate, and months, then follow how they produce the simple interest estimate.
Fixed illustrative figures. Select a chapter to focus on a step in the calculation.
Follow the interest
1 / 2 · Loan assumptionsKeep the loan assumptions together.
- Average balance
- $1,000,000
- Annual rate
- 6.5%
- Months
- 12
Simple interest = average balance × annual rate × months/12
$1,000,000 × 6.5% × 12/12 = $65,000
Fixed illustrative assumptions · Not a draw schedule or amortization model
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Review the assumptions
Fixed simple-interest illustration using average balance, annual rate, and time. Omits fees, compounding, draw timing, and principal payments.
Annual rate
The annual interest rate assumed for this simple estimate.
Time period
Express the number of months as a fraction of a year.
The $1,000,000 average balance and 6.5% annual rate are separate illustrative assumptions. This is a simple-interest example rather than a project draw schedule.