Line of Credit Interest Calculator
See exactly what a draw from your business line of credit will cost. Enter your credit limit, draw amount, rate, and repayment type to get a full cost breakdown. Compare interest-only versus principal-plus-interest repayment, and see how your draw stacks up against an equivalent term loan.
Enter your credit line details and draw amount to see the full cost breakdown. Toggle between interest-only and principal-plus-interest to compare repayment options.
All results update in real time. You only pay interest on what you draw, not the full credit limit.
Your total approved credit line amount.
How much you plan to draw from the line.
Banks: 7-12% | Online lenders: 10-25% | SBA: 6-10%
How long you plan to keep the funds drawn
Pay only interest monthly. Full principal due at end of draw period.
One-time fee charged on each draw. Not all lenders charge this.
Monthly Payment
$500.00
interest only
Total Interest
$3,000
Total Cost
$3,000
Effective APR
12.0%
LOC Draw vs. Term Loan Comparison
| LOC (Interest Only) | Term Loan (P+I) | |
|---|---|---|
| Monthly Payment | $500.00 | $8,627.42 |
| Total Interest | $3,000 | $1,765 |
| Total Cost (interest + fees) | $3,000 | $1,765 |
| Flexibility | Revolving, re-drawable | One-time lump sum |
Comparison assumes same rate and duration. LOC advantage: draw only what you need and repay early without penalty on most lines.
Month-by-Month Payment Schedule
| Month | Payment | Balance |
|---|---|---|
| 1 | $500.00 | $50,000 |
| 2 | $500.00 | $50,000 |
| 3 | $500.00 | $50,000 |
| 4 | $500.00 | $50,000 |
| 5 | $500.00 | $50,000 |
| 6 | $50,500.00 | $0 |
See if you qualify for a $200,000 business line of credit
No impact to your credit score.
Check Your OptionsHow Much Does a Business Line of Credit Really Cost?
A business line of credit works differently from a term loan. You get access to a set credit limit and only pay interest on what you actually draw. This makes it ideal for managing cash flow gaps, covering seasonal expenses, or having funds available for unexpected opportunities. The cost depends on how much you draw, how long you keep it outstanding, and whether you make interest-only or amortizing payments.
This calculator shows the true cost of a specific draw from your business line of credit. Enter your credit limit and draw amount to see monthly payments, total interest, and how fees affect your effective APR. The comparison feature shows how the same amount would cost as a term loan.
Interest-Only vs. Principal-Plus-Interest
Many lines of credit offer interest-only payments during the draw period. You pay just the interest each month and repay the principal when you are ready (or at the end of the term). This keeps monthly costs low but means you owe the full amount at maturity. Principal-plus-interest payments are higher each month but reduce your balance over time, and you pay less total interest. Use the toggle in this calculator to compare both options for your situation.
Watch for Hidden Fees
The stated interest rate is not always the full cost. Some lenders charge draw fees (0.5% to 2% per draw), annual maintenance fees, or inactivity fees if you do not use the line. Draw fees can significantly increase your effective APR, especially on short-term draws. A 1% draw fee on a 3-month draw adds roughly 4% to your annualized cost. Always ask about all fees before signing and use the draw fee slider in this calculator to see the impact.
When a LOC Beats a Term Loan
Lines of credit are more cost-effective when you need flexible, short-term access to funds. If you draw $50,000 for three months then repay, you pay interest only for those three months. A term loan would lock you into 12 or more months of payments on the full amount. However, for large one-time purchases (like equipment), a term loan often offers a lower rate and more predictable payments. Use our loan payment calculator to run the term loan numbers, or try the affordability calculator to see how much you could borrow based on your monthly budget.
How It Works
Enter Your Credit Line
Set your approved credit limit and the amount you plan to draw. Adjust the interest rate to match your terms.
Choose Repayment Terms
Pick your draw duration and toggle between interest-only and principal-plus-interest. Add any draw fees your lender charges.
Review Your Cost Breakdown
See monthly payments, total interest, effective APR, and how this draw compares to an equivalent term loan.
What You Get
Monthly Payment Amount
Your exact monthly cost for either interest-only or principal-plus-interest repayment on the drawn amount.
Total Cost with Fees
Total interest plus any draw fees, so you know the full price of accessing your credit line.
Effective APR
When draw fees are included, the true annualized cost is higher than the stated rate. This shows the real number.
Credit Utilization Tracker
See how much of your credit line you are using and how much remains available for future draws.
Term Loan Comparison
Side-by-side comparison of your LOC draw versus borrowing the same amount as a term loan at the same rate.
Month-by-Month Schedule
A detailed payment schedule showing how interest, principal, and balance change each month of the draw.
Line of Credit Interest Calculator — Frequently Asked Questions
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