Line of Credit Calculator

What the calculator does

A business line of credit doesn't cost anything like a term loan, because you don't borrow the whole limit — you draw pieces of it as needed. The line of credit calculator estimates what a specific draw will cost given your APR, your repayment period, and any draw fee.

Interest on the drawn balance, not the limit

The defining mechanic: interest accrues only on what you've drawn. A $100,000 limit with a $15,000 outstanding draw accrues interest on $15,000. Monthly, the approximation is:

Monthly interest ≈ drawn balance × (APR ÷ 12)

At 16% APR, a $15,000 balance accrues roughly $15,000 × 0.0133 = $200 a month while it stays at $15,000.

When you repay a draw over a fixed period in equal payments — the structure many online lines use — the math becomes ordinary amortization applied to the drawn amount, exactly like a small term loan with the draw as the principal. The balance declines with each payment, so each month's interest shrinks.

Worked example: a draw with a draw fee

You draw $20,000 at 16% APR, repaying monthly over 12 months:

• Monthly rate: 0.16 ÷ 12 = 0.01333
• Payment: 20,000 × 0.01333 ÷ (1 − (1.01333)^−12) ≈ $1,814.65
• Total repaid: about $21,776
• Interest cost: about $1,776

Now add a 2% draw fee — charged the moment you take the money:

• Fee: $20,000 × 0.02 = $400
• True cost of the draw: $1,776 + $400 = $2,176

The fee added about 22% to the cost of this draw, and it gets worse for short repayments: repay the same draw in 3 months and interest is only about $445, so the same $400 fee nearly doubles the cost. Frequent small draws on a fee-charging line can quietly make the draw fee the biggest cost on the account.

Repayment speed changes everything

Same $20,000 draw at 16% APR, repaid in equal monthly payments over different periods:

Stretching from 6 to 24 months cuts the payment by more than two-thirds — and nearly quadruples the interest. Lines reward businesses that repay draws quickly, which is why they fit short cash-flow gaps (bridging receivables, seasonal inventory) far better than long-lived purchases. Before drawing, name the incoming cash that repays it and pick the schedule that matches.

Using the results

• Model a realistic draw, not the full limit. Price the line on how you'd actually use it — a typical draw, repaid on your typical cash-flow cycle.
• Compare providers on total cost of that same draw. Identical APRs with different draw fees produce different real costs; identical fees with weekly vs. monthly payments strain cash flow differently.
• Convert everything to APR before comparing. Some products quote weekly fee rates or flat fees instead — our APR vs. interest rate guide shows how to normalize them.
• Check the payment against your cash flow. A draw whose repayment eats your margin turns next month's gap into a bigger one.

Estimates here describe the math of a draw, not an offer. Providers set actual limits, rates, and fees through their own underwriting — the calculator just makes sure you understand a quote before you rely on one.