Small business owners typically pay a fixed amount of principal plus interest on business loans. The debt is considered amortized when it is paid in equal installments over the life or term of the loan. Specifically, the principal is the same amount for each payment, but the interest rate fluctuates.
As more payments are made on the loan, the interest paid with each payment gets smaller, and more of the payment is allocated to the principal amount. An amortization schedule breaks down these factors in a chart that shows change over time with the specific amounts owed for each payment of the business loan.