Loan Fee Amortization Calculator

What this does

How the math works

effective rate = IRR(−(loan − fees), payment 1, …, payment n)
interest expense = carrying amount × effective rate
amortization = interest expense − cash interest
carrying amount = loan balance − unamortized costs

Check my math: a worked example

These numbers come straight from the calculator using its example inputs — if the math ever changes, this example changes with it.

Mistakes I see a lot

• Expensing the fees the day you pay them. For a term loan they're amortized over the loan's life.
• Putting the costs on the balance sheet as a prepaid asset. For term debt they're netted against the loan.
• Forgetting the write-off when the loan is paid off or refinanced early. Whatever's unamortized comes off the books that day.
• Mixing up the lender's side and the borrower's side. Lenders defer loan fees under different rules (ASC 310-20); this is the borrower's view.

Questions people ask

Interest method or straight-line?

GAAP's answer is the interest method. Straight-line is acceptable when the difference isn't material — often true for small fees on short loans, less true for big fees on long amortizing loans. Run both here and compare.

Where does the amortization go on the income statement?

Interest expense. The whole point is that the fees are part of your cost of borrowing.

What about taxes?

For tax, loan costs are generally amortized over the loan term too (usually straight-line or a constant-yield method), but check with your tax preparer — the book and tax numbers can differ.

What if I refinance instead of paying off?

Depending on how different the new loan is, it's either treated as a new loan (write off the old costs) or a modification (keep amortizing). The rules are in ASC 470-50 — worth a quick call with your accountant.

Does the spreadsheet recalculate?

Yes. The effective rate is a live IRR() of the cash flows, and the schedule, annual summary, as-of balances, and journal entries all update from the Inputs sheet.

Assumptions and limits

• Borrower's side of GAAP (ASC 835-30): fees and costs paid to get a term loan are debt issuance costs, shown as a reduction of the loan on the balance sheet (not an asset) and amortized to interest expense.
• Interest method: the effective rate is the IRR of the cash you actually received (loan − fees) and every scheduled payment. Each period's expense = carrying amount × that rate; the part above the cash interest is the amortization.
• Straight-line spreads the costs evenly per period. It's a shortcut GAAP allows only when the result isn't materially different from the interest method.
• Payments follow the loan engine (lender-style rounding). The first payment is one period after the loan date; the last period absorbs rounding so the costs amortize to exactly $0.
• An early payoff at face (no prepayment penalty) retires the note; any costs not yet amortized are written off as a loss on extinguishment of debt.
• "As of" defaults to December 31 of the loan's first year. Revolving lines of credit follow different rules (costs can be an asset amortized straight-line) — this is for term loans.