Business Line Of Credit Calculator

Business Line of Credit Calculator – Calculate Your Interest & Draw Costs

A business line of credit provides flexible financing that grows with your company’s needs. Our business line of credit calculator helps you understand exactly how much your revolving credit will cost based on how much you draw and when you repay it. Unlike traditional term loans, lines of credit only charge interest on the amount you actually use, making them ideal for managing cash flow fluctuations, seasonal expenses, and unexpected opportunities.

Using Benifyt’s line of credit calculator is simple: enter your approved credit limit, the amount you plan to draw, your annual interest rate, and any draw or maintenance fees. The calculator instantly shows your monthly interest costs, total interest over time, and complete payment schedule. You can model different draw scenarios to optimize when and how much credit you use.

Small business owners use lines of credit to bridge payment gaps between receivables and payables, purchase inventory before busy seasons, cover payroll during slow periods, and seize time-sensitive growth opportunities. With interest rates typically ranging from 10% to 25% APR, understanding your true costs helps you use credit strategically rather than overextending your business. Our calculator uses real-world formulas that account for revolving balances, variable draw amounts, and paydown schedules, giving you accurate projections that match what lenders will charge.

How Business Lines of Credit Work

Revolving Credit Structure: A business line of credit functions like a credit card for your business. You’re approved for a maximum credit limit (typically $10,000 to $250,000), and you can draw funds as needed up to that limit. As you repay what you’ve borrowed, your available credit replenishes, allowing you to draw again without reapplying.

Interest-Only Payments: Unlike term loans with fixed monthly payments, most business lines of credit require only minimum interest payments during the draw period. You pay interest solely on your outstanding balance, not on your entire credit limit. This flexibility helps manage cash flow since payments adjust based on your usage.

Draw and Repayment Periods: Most lines of credit have a draw period (typically 12-60 months) during which you can access funds, followed by a repayment period when the line converts to a term loan or must be paid in full. Some lines offer perpetual draw periods with no set maturity date.

Fee Structures: Beyond interest rates, expect draw fees ($50-200 per withdrawal), annual maintenance fees ($100-500), and sometimes inactivity fees if you don’t use the line. Our calculator includes these fees to show your complete cost of borrowing.

Types of Business Lines of Credit

Unsecured Lines of Credit require no collateral but typically have lower credit limits ($10,000-$100,000) and higher interest rates (15-25% APR). Qualification depends heavily on your personal and business credit scores, revenue history, and time in business.

Secured Lines of Credit use business assets like equipment, inventory, or real estate as collateral. These secured lines offer higher limits ($50,000-$500,000) and lower interest rates (10-18% APR) because the lender has reduced risk.

Business Credit Cards function as a type of line of credit with additional benefits like rewards programs, purchase protections, and easier approval processes. While convenient for smaller expenses, credit cards typically have higher interest rates (15-30% APR) than traditional lines.

Accounts Receivable Lines of Credit use your outstanding invoices as collateral, advancing 70-90% of invoice values. Interest rates range from 12-25% APR, with repayment automatic once customers pay their invoices.

Qualifying for a Business Line of Credit

Credit Score Requirements: Lenders typically require personal credit scores of 680+ and business credit scores of 140+ (on a 0-300 scale) for the best rates and terms. Some alternative lenders approve borrowers with scores as low as 600, though expect higher interest rates and lower credit limits.

Revenue Thresholds: Most lenders require minimum annual revenues of $50,000-$100,000, with the credit limit typically capped at 10-20% of annual revenue. Consistent revenue history demonstrates your ability to repay during slow periods.

Time in Business: Traditional banks usually require at least 2 years in business, while online lenders may work with companies operating for just 6-12 months. Newer businesses should expect lower credit limits and higher costs.

Financial Documentation: Prepare recent bank statements (3-6 months), business and personal tax returns (1-2 years), profit and loss statements, balance sheets, and accounts receivable/payable aging reports. Strong financials accelerate approval and improve your terms.

Business Line of Credit Costs in 2026

Interest Rates by Lender Type:

• Traditional Banks: 10-15% APR for qualified borrowers
• Online Lenders: 12-25% APR with faster approval
• Credit Unions: 8-18% APR for members with strong relationships
• Alternative Lenders: 18-30% APR for higher-risk borrowers

Common Fees to Include:

• Draw Fees: $50-200 per withdrawal (some lenders charge none)
• Maintenance/Annual Fees: $100-500 yearly
• Origination Fees: 0-3% of credit limit (one-time)
• Late Payment Fees: $25-50 per occurrence
• Inactivity Fees: $50-100 if line unused for 90+ days

Our calculator includes all these fees to provide an accurate total cost projection, helping you compare offers from multiple lenders on an apples-to-apples basis.

When to Use a Business Line of Credit

Seasonal Cash Flow Management: Businesses with seasonal revenue fluctuations use lines of credit to cover expenses during slow months and repay during peak seasons. Retail stores, landscaping companies, and tourism businesses benefit most from this flexibility.

Inventory Purchases: Buy inventory before your busy season without depleting cash reserves. Draw funds to purchase stock, generate sales, and repay the line from revenue.

Emergency Expenses: Lines of credit serve as financial safety nets for unexpected equipment repairs, urgent inventory restocks, or bridge financing when customer payments are delayed.

Taking Advantage of Opportunities: Quick access to capital lets you capitalize on time-sensitive opportunities like bulk purchase discounts, strategic acquisitions, or expansion into new markets.

FREQUENTLY ASKED QUESTIONS

How do I calculate interest on a business line of credit?

Interest on a business line of credit is calculated daily based on your outstanding balance. The formula is: Daily Interest = (Outstanding Balance × Annual Interest Rate) ÷ 365 days. Your monthly interest payment is the sum of all daily interest charges. For example, a $25,000 balance at 15% APR would cost approximately $10.27 per day or $312.50 per month in interest. Our calculator automatically computes these costs based on your draw amount and repayment schedule.

What’s the difference between a business line of credit and a business loan?

Business lines of credit are revolving credit with flexible borrowing up to a limit, interest charged only on amounts drawn, variable payment amounts, and the ability to reborrow as you repay. Business term loans provide a lump sum upfront, charge interest on the full amount, require fixed monthly payments, and must be repaid before you can borrow again. Lines of credit offer more flexibility, while term loans provide predictable payments and often lower interest rates for larger amounts.

How much can I borrow with a business line of credit?

Business line of credit limits typically range from $1,000 to $250,000, depending on your qualifications and lender:

• Small business lines: $1,000-$50,000
• Mid-size lines: $50,000-$150,000
• Large lines: $150,000-$250,000
• SBA lines (CAPLines): Up to $5 million for qualified businesses

Your credit limit depends on annual revenue (typically 10-20% of revenue), credit scores, time in business, and whether the line is secured or unsecured. Use our calculator to determine what draw amount fits your budget.

Can I pay off my line of credit early?

Yes, you can pay off your business line of credit early, and doing so saves on interest costs since you’re only charged for the time you carry a balance. Most lines of credit don’t have prepayment penalties, unlike term loans. Early payoff restores your full available credit and reduces your total borrowing costs. Check your agreement for any early payment fees, though these are rare for revolving credit products.

How long does it take to get approved for a business line of credit?

Approval timelines vary by lender:

Online Lenders: 1-5 business days

• Application: 15-30 minutes online
• Decision: Same day to 48 hours
• Funding: 1-3 business days

Traditional Banks: 2-6 weeks

• Application: 1-2 hours with documentation
• Decision: 1-3 weeks
• Funding: 3-7 days after approval

SBA CAPLines: 45-90 days

• Application: 2-4 hours
• Decision: 30-60 days
• Funding: 7-30 days

Speed up approval by having complete financial documentation ready, maintaining strong credit scores, and demonstrating consistent revenue. Some lenders offer instant prequalification that doesn’t affect your credit score.

NEXT STEPS: Apply for a Business Line of Credit

Now that you understand your potential line of credit costs, you’re ready to take action. Use your calculator results to:

1. Compare multiple lender offers using the same credit limit and draw amounts
2. Determine your optimal credit limit based on actual cash flow needs
3. Plan your draw and repayment strategy to minimize interest costs
4. Apply with confidence knowing exactly what you’ll pay

Ready to secure flexible financing?