Estimate your monthly payments, total interest, and full repayment schedule for a business line of credit. Enter your drawn balance, annual interest rate, and repayment term.
Many lenders charge 1–3% per draw
Repayment Results
* This is an estimate based on a fixed interest rate and does not account for variable rate changes, fees beyond draw fee, or early repayment. Consult your lender for exact figures.
Business Line of Credit Repayment Calculator
What This Calculator Does and Why It Is Useful
A business line of credit (BLOC) gives your company flexible access to funds up to a set limit. Unlike a term loan, you only draw what you need and pay interest on the amount drawn. But knowing your actual repayment cost — monthly payment, total interest, and total amount repaid — is essential for cash flow planning.
This free calculator helps business owners model their repayment costs before drawing from a line of credit or when reviewing an existing balance. You can compare fully amortized repayments against interest-only scenarios to make a better decision for your business finances.
How to Use This Calculator
Step-by-Step Instructions
- Enter the outstanding or planned drawn balance in dollars.
- Type in the annual interest rate quoted by your lender.
- Enter the repayment term in months for how long you want to repay the balance.
- If your lender charges a draw fee, enter the percentage (many charge 1–3% per draw).
- Select whether you will make fully amortized payments or interest-only payments.
- Click Calculate Repayment to see your monthly payment, total interest, and total cost.
- Use Reset to clear all fields and run a new scenario.
The Formula Explained
For a fully amortized repayment, the monthly payment is calculated using the standard loan amortization formula. This spreads both principal and interest evenly across the repayment term so you owe nothing at the end. For interest-only repayments, you pay just the interest each month and the full principal is still owed at term end.
Breaking Down the Formula
The amortization formula is: Monthly Payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1] — where P is the principal (drawn balance), r is the monthly interest rate (annual rate ÷ 12), and n is the number of months. This is the same formula used for mortgages and car loans.
For a full explanation of how amortization works, Investopedia’s guide to amortization covers the concept clearly and is a reliable reference for business owners.
Example Calculation with Real Numbers
Say you draw $50,000 on your line of credit at an 8.5% annual rate and repay over 36 months. Monthly rate = 8.5% ÷ 12 = 0.7083%. Monthly payment = approximately $1,578. Total repaid = $56,808. Total interest = $6,808. If your lender also charges a 1.5% draw fee, add $750, bringing total cost to $7,558.
When Would You Use This
Real Life Use Cases
Business owners use this calculator when deciding whether to draw on a line of credit for inventory, payroll gaps, equipment, or an unexpected expense. It is also useful when comparing offers from multiple lenders to see which truly costs less after fees. Finance managers use it to model cash flow impact before recommending a draw to company leadership.
Specific Example Scenario
A retail shop owner draws $30,000 in November to stock up for the holiday season. She plans to repay over 6 months. With a 9% annual rate and a 2% draw fee, this calculator instantly shows her monthly payment of approximately $5,125 and a total cost of $31,350 including fees — helping her confirm the margins justify the borrowing cost before committing.
Tips for Getting Accurate Results
Use the Rate You Are Actually Charged — Not the Prime Rate
Many business lines of credit are priced at prime rate plus a margin. Your actual rate might be prime + 2% or prime + 4%. Always use the fully loaded rate your lender quotes you, not just the benchmark rate, or your calculation will understate the true cost.
Account for Variable Rates in Your Planning
Most business lines of credit carry variable interest rates. This calculator assumes a fixed rate, so use it as a baseline estimate. If rates rise mid-repayment, your actual payments could increase. The Federal Reserve’s H.15 release publishes current prime and benchmark rates to help you stay current.
Do Not Forget Draw Fees and Annual Fees
Many lenders charge a draw fee of 1% to 3% of the amount drawn plus an annual maintenance fee. These can add hundreds or thousands to your total borrowing cost. Enter the draw fee percentage in the calculator and ask your lender about any annual fee not reflected here.
Frequently Asked Questions
What is a business line of credit repayment?
Repayment is the process of paying back the balance you drew from your credit line, plus any interest and fees. You may repay in fixed monthly installments (amortized) or in interest-only payments with the principal due at a set date, depending on your lender’s terms.
How is interest calculated on a business line of credit?
Interest accrues daily on the outstanding balance. Each month, interest is calculated as the daily rate multiplied by the number of days in the billing cycle multiplied by your balance. This calculator uses a simplified monthly rate for estimation purposes.
What is the difference between a revolving and non-revolving line of credit?
A revolving line allows you to draw, repay, and draw again up to your limit. A non-revolving line works like a loan — once you repay the drawn amount, that portion of the credit limit is not restored. Most business lines of credit are revolving.
Can I pay off my business line of credit early?
Yes, most business lines allow early repayment. Since interest is charged on the outstanding balance, paying it down faster saves you money. Check with your lender whether there are any prepayment penalties before doing so.
What happens if I only make minimum payments?
Minimum payments on a business line of credit often cover just the interest. This means your principal balance barely decreases and you continue to accrue interest month after month. Try to pay more than the minimum whenever cash flow allows.
What is a draw fee and how does it affect my total cost?
A draw fee is a one-time charge — usually 1% to 3% of the amount drawn — that some lenders collect at the time you access funds. It is applied to the draw amount and adds to your total borrowing cost. Always ask your lender if this fee applies before drawing.
Is the interest on a business line of credit tax deductible?
In most cases, yes. Interest paid on a business line of credit used for legitimate business purposes is tax deductible as a business expense. Speak with your accountant and review IRS Publication 535 for full details on business interest deductions.
What typical interest rates should I expect on a business line of credit?
Rates vary widely based on your credit score, time in business, revenue, and lender type. Bank lines may start around 6–10% for well-qualified borrowers. Online lenders and alternative lenders may charge 15–50%+. Always compare the annual percentage rate (APR) rather than just the stated rate to get a true cost comparison.
Conclusion
A business line of credit is one of the most flexible financing tools available to small and medium businesses. But flexibility comes with responsibility — drawing without knowing your repayment cost can strain your cash flow unexpectedly. This free calculator gives you a clear picture of monthly obligations and total interest before you commit.
Use the results as a guide when talking to your lender, reviewing your cash flow projections, or comparing multiple credit offers. Accurate planning upfront is the best way to keep your business finances healthy.