Business line of credit calculator
What a draw costs per month, and what the same money would cost as a factor-rate advance. The second number is the one most owners never see.
Enter what you need, then adjust the terms on either side. The comparison exists because owners routinely weigh a 1.3 factor against a 24 percent line of credit as though those numbers mean the same kind of thing, and they do not.
Line of credit
- Monthly payment
- $4,728
- Interest
- $6,736
- Draw fee
- $1,000
- Total cost
- $7,736
Merchant cash advance
- Daily payment
- $499
- Weekly equivalent
- $2,496
- Total payback
- $65,000
- Total cost
- $15,000
Estimates only, for comparing offers rather than quoting them. Line-of-credit figures assume a fully drawn balance amortized over the term you enter; paying down and redrawing changes the real cost. The advance APR is an approximation using the method described on the factor rate page, and the true figure depends on the remittance schedule and any fees.
Those are estimates. Want the real numbers?
The calculator uses terms you typed in. What you would actually be offered depends on your revenue, time in business, and credit. A funding specialist can put real terms in front of you, and you decide from there.
See what you qualify for →About 60 seconds. No hard credit pull. One funding partner, not a lead list.
How the line of credit math works
Interest accrues on what you have drawn, not on your full limit, which is the structural advantage of a line over a term loan. The calculator assumes you draw the full amount and repay it in equal installments over the term you set. In practice you would often pay down and redraw, which lowers the real cost, so treat the figure here as a conservative ceiling rather than a quote.
Fees deserve attention because they are easy to overlook. A draw fee applies each time you pull money, so a line used repeatedly costs more than a single-draw comparison suggests. Some lenders also charge annual or unused-line fees whether or not you borrow. Ask what applies when the balance sits at zero.
Why the advance number looks so different
A factor rate is a flat multiplier fixed at signing, not a rate that accrues. Two things push its real cost far above the number on the page: the term is short, so the same dollar cost annualizes up sharply, and remittance begins immediately, so you never have use of the full amount for the full period. The method behind the approximation shown above is explained in factor rate vs APR.
Total dollars can be closer than the APR gap suggests, and sometimes the advance is genuinely the right tool, particularly for a short, well-sized, one-time need. What the calculator makes visible is the payment structure underneath the price: a monthly payment you plan around versus a fixed daily withdrawal that arrives whether or not the week was any good.
The number that actually decides it
Compare the payment against your slowest realistic month, not your average and certainly not your best. A payment that clears comfortably in a strong month and strains in a weak one is how the pattern in the MCA stacking cycle begins, and if you are already carrying an advance, the relevant options are in MCA debt consolidation.
For how lines of credit compare to the other products available, see how a business line of credit works.
Common questions
How do you calculate the cost of a business line of credit?
Interest accrues only on what you have drawn, not on the full limit. For a drawn balance repaid in equal installments, the monthly payment is the balance times the monthly rate, divided by one minus (one plus the monthly rate) raised to the negative number of months. Add any draw or maintenance fees on top, since those are part of the real cost.
Is a line of credit cheaper than a merchant cash advance?
In annualized terms, almost always, and often by a wide margin. Total dollars can be closer than expected when the advance term is short, because you repay it faster. The more important difference is usually the payment structure: a monthly payment you control versus a fixed daily withdrawal that does not adjust for a slow week.
What is a good rate on a business line of credit?
It depends on credit profile, revenue, and time in business. Bank lines for strong borrowers can be in the single digits to low teens. Online and non-bank lines commonly run from the high teens into the forties. Anything quoted as a factor rate is not a line of credit, and needs converting before it can be compared.
Do you pay interest on a line of credit you do not use?
Generally no. Interest applies to the drawn balance. Some lenders charge a maintenance, annual, or unused-line fee regardless of usage, so ask specifically what applies when the balance is zero.
Estimates for comparison only, not an offer or a quote. This page is general education, not financial advice. Actual terms depend on the lender and your specific situation.
See what your business qualifies for
A funding specialist walks you through real terms and you decide from there. No obligation either way.
See your match →About 60 seconds. No hard credit pull. One funding partner, not a lead list.