Business line of credit calculator
A revolving facility is priced in three places at once. This calculator adds interest, draw fees and maintenance fees together so you can see what the money really costs.
Business line of credit calculator
What a revolving facility actually costs once interest, draw fees and maintenance fees are added together.
Methodology and limitations
Interest = drawn balance × (APR ÷ 12) × months outstanding, which assumes the balance is carried rather than amortised down; a facility you pay down steadily will cost less than shown. Draw fees = drawn amount × fee % × number of draws. The effective annual cost annualises total cost against the amount actually used, so short holds of a fee-heavy facility look expensive — that is accurate, not a rounding artefact. This model excludes non-utilisation fees charged on the undrawn portion and any per-transaction ACH cost. Figures are estimates for comparison only, not an offer; final pricing is set by the funding provider after underwriting.
When a line of credit beats a term loan
A line of credit wins when the need is repeated and short — covering payroll between receivable cycles, buying inventory ahead of a season, or bridging a slow month. You pay only for the days you carry a balance. A term loan wins when the need is a single, known amount held for years, because a fixed rate and a fixed payment cost less over that horizon and are easier to budget around.
Work through the trade-off in detail in line of credit vs term loan, then check the payment on the fixed alternative with the loan payment calculator. Before you commit to either, run the debt service calculator to confirm your deposits comfortably support the new payment.
To see the product itself, read the business line of credit page and the published qualification minimums. Current benchmark pricing sits on the business loan rates page, and every term on your offer sheet is defined in the glossary. If a provider quotes a factor rate instead of an APR, convert it with the factor rate calculator before comparing, and size a realistic amount with the qualification estimator.
Most variable revolving pricing in the United States is quoted over the bank prime loan rate, and in Canada over the chartered bank prime rate. The Consumer Financial Protection Bureau publishes guidance on reading disclosed credit costs.
Frequently asked questions
How is the cost of a business line of credit calculated?
Three components add together: interest on the balance you have drawn, a draw fee charged each time you pull funds, and any annual or monthly maintenance fee that applies whether or not you use the facility. Interest is the drawn balance multiplied by the monthly rate for each month the balance stays out.
What is a typical draw fee on a business line of credit?
Draw fees are commonly quoted as a percentage of each advance and vary widely by provider and product. Because a fee is charged per draw, a facility you tap frequently can cost far more than its headline rate suggests. Always ask for the fee schedule in writing before signing.
Does a line of credit cost anything if I never draw on it?
It can. Many revolving facilities carry an annual or monthly maintenance fee, and some carry a non-utilisation fee on the undrawn portion. Enter that fee in the calculator to see your standing cost of keeping the facility open.
Is a line of credit cheaper than a term loan?
It depends on how you use it. For short, repeated needs a line is usually cheaper because you only pay for the days you carry a balance. For a single large purchase held over years, a fixed term loan is normally cheaper and more predictable.
What utilisation level looks good to a funding provider?
Consistently running a revolving facility at or near its limit reads as cash-flow strain and can hold back a future increase. Regularly drawing and repaying, with the balance cycling well below the limit, generally supports a limit review.
Do these figures apply in both the U.S. and Canada?
Yes, the mathematics is identical. Switch the currency toggle so results display in USD or CAD to match your business. No conversion is applied — enter your own figures in your own currency.
Are these numbers an offer?
No. This is an estimating tool that runs entirely in your browser. Nothing is submitted, no credit inquiry is performed, and your actual limit, rate and fees are set by the funding provider after full underwriting.
Last reviewed: by the Simply Approved Business Loans editorial team.
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