Business Line of Credit Calculator
See what it actually costs to draw on a business credit line -- interest-only and full repayment.
What Is the Business Line of Credit Calculator?
Think of it as a credit card for your business. You have an approved limit, draw what you need, and pay interest only on what you've pulled out. Most lines split into two phases: a draw period (borrow freely, interest-only payments) followed by a repayment period (pay back principal plus interest). This calculator models both -- showing your interest-only payment, the full repayment amount, and total interest cost. Credit lines are great for cash flow gaps, seasonal inventory buys, and surprises. The danger is the revolving nature: keep drawing without discipline and you end up in permanent debt with nothing to show for it.
How to Use This Calculator
Set Your Credit Limit
Your total approved credit limit. The draw amount can't exceed this number.
Enter the Draw Amount
How much you're actually pulling out. You only pay interest on this amount -- not the full limit.
Set the Interest Rate
The annual rate on drawn funds. Business credit lines typically run 7-25% depending on the lender and your credit profile.
Define Draw and Repayment Periods
How long you'll keep the money out (interest-only phase) and how long you'll take paying it back (principal + interest phase).
Key Concepts
Revolving vs. Non-Revolving
Revolving means you can redraw what you've paid back. Non-revolving is a one-time draw that turns into a term loan. Most business lines are revolving.
Draw Period
The window where you can pull funds and make interest-only payments. Usually 12 to 36 months before the repayment phase kicks in.
Variable Rate Risk
Most lines have variable rates tied to Prime. When the Fed raises rates, your interest cost goes up on money you've already drawn -- there's no cap on the increase.
Maintenance Fees
Some lenders charge $100-$500 annual maintenance fees or inactivity fees if you don't use the line. You're paying even when you're not borrowing.
Expert Insights
A credit line is the cheapest short-term money when used right: draw when a big order comes in, repay when the customer pays. The interest cost is tiny because you only held the money for a few weeks.
Don't use a credit line for long-term needs. If you've had the full balance drawn for 6+ months with no repayment, you basically have a variable-rate term loan with no structure. Convert it to a proper fixed-rate term loan.
Stay under 50% utilization. Lenders check how much you're using at renewal time, and consistently maxing out signals cash flow problems. That can get your limit cut or your line killed at renewal.
Frequently Asked Questions
This calculator provides estimates for educational purposes only. Actual results depend on your specific business financials, lender terms, and market conditions. Consult a qualified financial advisor before making major business financing decisions.
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Source: Federal Reserve Economic Data (FRED). Indicators refresh daily.
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