Business Line of Credit Calculator
Paying interest only keeps the payment at $400.00 but the $40,000.00 balance never goes down. As you repay, the credit becomes available to draw again.
How the business line of credit calculation works
Interest is charged only on what you draw
With a $100,000 limit and $40,000 drawn, you pay interest on $40,000. The other $60,000 costs nothing until you use it.
The minimum is often interest only
At 12% a year, interest is 1% a month: $40,000 × 12% ÷ 12 = $400. Paying only that leaves the balance where it is.
Spread the balance over a payoff period to clear it
Paying $40,000 off over 12 months at 12% takes $3,553.95 a month and costs $2,647.42 in interest.
Add any annual fee
Some lines charge a yearly maintenance or renewal fee. It counts as part of the cost even in months you don't draw.
Worked example. A business draws $40,000 from a $100,000 line at 12%. The interest-only payment is $400 a month. To clear the balance in 12 months, the payment is $3,553.95, and total interest comes to $2,647.42. $60,000 of credit stays available.
Business Line of Credit FAQ
How does a business line of credit work?
The lender sets a credit limit. You draw what you need, pay interest only on the amount drawn, and as you repay, that credit becomes available again. Many lines have a draw period with low or interest-only payments, then the line is renewed or the balance has to be paid off.
How is interest calculated on a line of credit?
On the balance you've drawn, usually daily or monthly. A simple monthly estimate is balance × yearly rate ÷ 12, so $40,000 at 12% is $400 a month. With daily interest it is balance × rate ÷ 365 × days: $394.52 for a 30-day month, $407.67 for a 31-day month.
What is the monthly payment on a business line of credit?
It depends on the lender. Many require interest only during the draw period, others a fixed share of the balance or a set payoff period. Enter your payoff period above to see the payment that clears the balance.
Do I pay interest on the unused part of the line?
Usually not. Some lenders charge an unused-line or maintenance fee instead, so read the agreement.
What is the payment on a $50,000 line of credit?
At 12% a year, interest only is $500 a month. To pay off $50,000 in 12 months the payment is $4,442.44 ($3,309.27 interest), over 24 months $2,353.67 ($6,488.17 interest), and over 36 months $1,660.72 ($9,785.76 interest). Enter your own rate above.
What are business line of credit interest rates?
They are set by each lender and are usually variable, often quoted as the prime rate plus a margin. The bank prime rate was 7.00% in the Federal Reserve H.15 release of 19 Oct 2026. For SBA 7(a) lines the margin is capped at 3% to 6.5% over the base rate depending on size, which at that prime rate is a maximum of 10% to 13.5%. That is a cap, not a typical rate; use the rate in your offer.
Is there an SBA line of credit?
Yes. Under the SBA 7(a) program, revolving lines are allowed through SBA Express (up to $500,000, with a 50% SBA guarantee and revolving lines of up to 10 years) and CAPLines for seasonal, contract and working-capital needs (most CAPLines have a maximum maturity of 10 years). You apply through a lender.
Line of credit vs loan: which is cheaper?
It can be, because you borrow only what you need and only for as long as you need it. Rates are often variable and can be higher than a secured term loan, so compare the total cost.
What happens to my available credit when I repay?
It goes back up. A revolving line lets you draw, repay and draw again up to the limit while the line is open.
Sources: SBA: Types of 7(a) loans (SBA Express and CAPLines revolving lines) · SBA: 7(a) terms, conditions and eligibility (maximum interest rates) · Federal Reserve H.15: Selected interest rates (bank prime loan rate)