Calculator · Line of credit
Business Line of Credit Calculator: Cost of a Draw, Payments and APR Equivalent
A line of credit is priced two ways, and the calculators most sites offer only handle one. Bank lines charge interest on the drawn balance (Prime 7.00% plus 1 to 4 in October 2026); most online lines charge a fee of 1.5% to 3% on each draw and repay it weekly over six to 18 months. This calculator does both: enter your limit, the draw and the pricing from your offer, and it returns the dollar cost of the draw, the payment, the total repaid, an APR equivalent you can compare with a term loan, and what the same money would cost as a revenue-based advance.
How Much Does a Business Line of Credit Cost?
A business line of credit costs money only on what you draw, for as long as it is outstanding. On a bank line at 9% (Prime 7.00% plus 2), a $40,000 draw held for 90 days costs about $890 in interest. On an online line with a 2.5% draw fee repaid over 12 months, the same $40,000 draw costs $1,000, which works out to roughly 22% APR equivalent because the balance amortizes weekly. The undrawn limit costs nothing on most lines (some banks charge an annual or unused-line fee). The same $40,000 as a revenue-based advance at a 1.25 factor would cost $10,000. Use the calculator below with the figures from your offer; current ranges by lender are in business line of credit rates.
Line of Credit Calculator
Business Line of Credit Calculator
Enter your limit, the draw and how the line is priced. Results update as you type.
Only the drawn balance costs money
Bank lines: Prime 7.00% + 1 to 4
Interest-only lines
Online lines: 1.5% – 3% per draw
Online lines: 6 – 18 months
To check the payment against cash flow
Estimates for comparison only. Lender terms vary; bank lines charge interest on the outstanding balance, most online lines charge a fee on each draw repaid over a set term. Compare the written offer.
How to Read the Results
- Cost of this draw: the dollars the draw costs over the days (bank) or the repayment term (online). This is the number to compare across offers.
- Payment: monthly interest on a bank line, or the weekly payment on an online line (draw plus fee divided by the number of weeks).
- APR equivalent: a draw-fee line looks cheap per draw and expensive per year because the balance is repaid as you go; a 2.5% fee over 12 months is about 22% APR equivalent, over six months about 36%. Use it to compare with a term loan, not to judge the dollar cost.
- Unused limit: costs nothing on most lines, which is the reason to open one before you need it.
- Same dollars as an advance: a 1.25 factor on the same amount, for perspective on why a line is the cheaper tool for recurring gaps.
How lines are structured, by lender, is in how a business line of credit works.
Worked Examples at October 2026 Pricing
| Draw | Line | Pricing | Held or repaid over | Cost | APR equivalent |
|---|---|---|---|---|---|
| $25,000 | Bank, Prime + 2 | 9.00% interest | 60 days | $370 | 9% |
| $25,000 | Online, strong file | 1.5% per draw | 12 months | $375 | ~13% |
| $25,000 | Online, standard | 2.5% per draw | 12 months | $625 | ~22% |
| $25,000 | Online, weaker file | 3% per draw | 6 months | $750 | ~36% |
| $100,000 | Bank, Prime + 3 | 10.00% interest | 180 days | $4,930 | 10% |
| $100,000 | Online, 2% per draw | 2% per draw | 12 months | $2,000 | ~18% |
Limits by revenue are in how much business line of credit can I get; the best lines by lender in best business lines of credit.
Share of applicants fully approved, by product (Federal Reserve, 2026)
81% of applicants were approved for at least part of the request. Source: Federal Reserve Banks, 2026 Report on Employer Firms.
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Common Questions
How is interest calculated on a business line of credit?
Bank lines charge a variable rate (Prime plus a margin) on the outstanding balance, accrued daily and billed monthly, so a $40,000 draw at 9% held 90 days costs about $890. Online lines usually charge a fixed fee per draw (1.5% to 3%) and repay the draw plus fee in weekly installments over six to 18 months.
What is the APR on a business line of credit?
Bank lines in October 2026 run about 8% to 11% APR (Prime 7.00% plus 1 to 4). Online draw-fee lines work out to roughly 12% to 36% APR equivalent depending on the fee and the repayment term, even though the dollar cost per draw is small.
Do I pay interest on the unused portion of a line of credit?
Not on most lines. Some bank and asset-based lines charge an annual fee or an unused-line fee of 0.25% to 0.5%; online lines typically charge nothing until you draw.
Is a line of credit cheaper than a merchant cash advance?
Almost always. A $40,000 draw costs $500 to $1,200 on a line versus $8,000 to $14,000 as a 1.20 to 1.35 factor advance. The advance wins only on speed for files that cannot open a line.
Is RAN Funding a lender?
No. RAN Funding is a business financing broker. We present your application to the funders in our network that fit your profile and show you the offers you qualify for; the funding partner sets the approval, amount, rate, fees and terms.
Sources
- H.15 Selected Interest Rates (bank prime loan rate 7.00%) — Board of Governors of the Federal Reserve System
- 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey — Federal Reserve Banks
- Business line of credit rates — RAN Funding
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist tells you up front which products fit your file, what they cost and how fast each one funds.
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