Business Line of Credit Calculator
Calculate interest-only or amortized payments on a business line of credit, plus total interest and fees, before you draw a dollar.
Built by Toolsque Team · last updated October 2, 2026 · checked against our testing process
Your line of credit
Cost of this draw
A line of credit is revolving, not a fixed loan: interest accrues only on what you have drawn, and paying it back frees up the line to draw again. The amortized figure shows what a fixed monthly payment would look like if you paid this draw down like a term loan instead of interest-only.
Related: loan EMI calculator · all finance calculators
How to use the business line of credit calculator
- Enter the draw amount: how much you actually pull from the line, not the full credit limit.
- Enter the annual rate: check your lender agreement; LOC rates can be variable and change with the prime rate.
- Choose a payoff term: how many months you plan to carry the balance before it's cleared.
- Add an annual fee if your line has one: many LOCs charge a maintenance or unused-line fee separate from interest.
- Compare interest-only vs amortized: interest-only shows the lowest monthly payment; amortized shows what it takes to actually pay the balance to zero.
Business line of credit calculator: what it actually shows
A business line of credit calculator answers a narrower question than a loan calculator: not "what's my payment on the whole limit," but "what's my payment on what I actually drew." Enter the draw amount, the annual rate, and a payoff term, and it shows two numbers side by side: the interest-only payment (what many lines default to) and the amortized payment (what it takes to zero the balance out by the end of the term), plus total interest and any annual fee.
Revolving credit vs. a term loan
A term loan hands you a fixed lump sum on day one with a fixed repayment schedule: you know the payment and the payoff date before you sign. A line of credit works differently. It's a revolving limit: interest accrues only on the portion you've drawn, not the full ceiling. Pay a chunk down and that amount frees back up to draw again, the same way a credit card works but sized for business cash flow. You could draw $10,000, repay $6,000, and still have that $6,000 available without reapplying.
What a line of credit is actually good for
LOCs are built for gaps, not purchases. Typical uses: bridging cash flow between invoicing and getting paid, buying seasonal inventory ahead of a busy stretch, or covering payroll during a slow month without touching savings. What they're not built for is a single large fixed purchase: a truck, a piece of equipment, a buildout. That's what a term loan or an equipment loan is priced and structured for, usually at a lower rate because the lender can tie the loan to a specific asset. Use the line for the in-between, and a term product for the one-time big-ticket item.
Secured vs. unsecured, and rate ranges
Business LOC rates commonly run higher than secured term loans, and they vary a lot by lender, your credit profile, and how established the business is. A line secured against receivables or inventory usually gets a better rate than an unsecured line, because the lender has collateral to fall back on if you don't repay. An unsecured line skips that step but typically costs more and comes with a lower limit. Rather than quote a number that won't match your actual offer, run your lender's real rate through the calculator above.
Interest-only vs. amortized: why the tool shows both
Many lines of credit let you pay interest-only each period. That keeps the monthly payment low, but the principal never shrinks unless you pay extra toward it. It's fine as a short bridge; it turns into a slow leak if the balance sits there for a year. The amortized figure shows the other end of the spectrum: what it actually costs to retire the balance by a set date. Comparing the two side by side is the point of this tool: it makes the tradeoff between "affordable now" and "actually paid off" visible before you commit to a repayment plan.
Worked example
A contractor draws $25,000 on a business line of credit to cover material costs after a job starts but before the first progress payment lands, typically a matter of weeks. At a representative rate, interest-only payments during that stretch are small: just the cost of carrying the draw. Once the progress payment arrives, the contractor pays the $25,000 down in one shot, the line resets, and there's no lingering balance. Run the same $25,000 at a longer term instead, and the amortized column shows what happens if that payment doesn't land on schedule: a real monthly payment and real total interest instead of a quick bridge.
Related tools
Comparing the line against a fixed loan structure? The loan EMI calculator shows the fixed-payment side of that comparison. For more finance calculators like this one, see all finance calculators.
How the payment is calculated
Interest-only monthly payment = draw amount × (annual rate ÷ 12)Amortized monthly payment = standard loan amortization formula using draw amount, monthly rate, and payoff term in monthsTotal interest (interest-only) = interest-only monthly payment × number of monthsTotal interest (amortized) = (amortized monthly payment × number of months) − draw amountTotal cost = total interest + annual fee × (payoff term ÷ 12)Frequently Asked Questions
What's the difference between a line of credit and a business loan?
A loan gives you a fixed lump sum with a fixed schedule from day one. A line of credit is revolving: you draw only what you need, pay interest on just that portion, and paying it down frees the limit back up to draw again.
Do I pay interest on the full credit limit or just what I draw?
Just what you draw. A $50,000 line with a $10,000 balance only accrues interest on that $10,000, not the unused $40,000, though some lenders charge a small unused-line fee separately.
Should I pay interest-only or pay it down faster?
Interest-only keeps payments low but the balance never shrinks on its own. It works well for a short bridge you'll clear quickly, like waiting on a client payment. For anything that will sit longer than a few months, the amortized payment is the more realistic number to plan around.
Is a business line of credit good for buying equipment?
Usually not the best fit. A line of credit suits recurring gaps like payroll or inventory, while a single large fixed purchase like equipment or a vehicle typically gets a better rate through a term loan or equipment loan tied to that specific asset.
What's the difference between a secured and unsecured line of credit?
A secured line is backed by collateral, often receivables or inventory, and usually comes with a better rate. An unsecured line skips the collateral requirement but typically costs more and comes with a lower limit.
Why are business line of credit rates usually higher than a term loan?
Term loans, especially secured ones, give the lender a clear asset and repayment schedule to underwrite against. A revolving line carries more uncertainty for the lender, and unsecured lines carry even more, so rates typically run higher and vary a lot by lender and credit profile.
Does this calculator include fees?
It includes an optional annual fee field if your line charges one. It doesn't account for draw fees, unused-line fees, or other lender-specific charges, so check your agreement for anything beyond the annual fee.