Business Line of Credit Calculator

Enter the draw schedule, not just the limit

Your credit limit is the maximum modeled borrowing capacity. It is not the amount that should automatically earn interest. Enter the opening balance and each new draw or principal repayment on the date it affects the balance. If your lender posts a transaction differently, use that posting date.

Add the quoted annual interest rate and the contract's day-count basis, such as 365 or 360. Enter draw fees, recurring account fees, and any annual fee separately. If the rate changes during the period, split the schedule at the change date instead of assuming the original rate applied throughout.

Check how payments are allocated. This calculator's simple schedule treats entered repayments as principal reductions. Interest and fees are shown separately as paid charges. If your actual payment first covers unpaid interest and fees, use the remaining principal portion in the repayment field.

Continue with SBA Loan Calculator or SBA 504 Loan Calculator for the next calculation.

How daily-balance interest works

For each day, the calculator multiplies outstanding principal by the annual rate divided by the selected day-count basis. It adds those daily amounts for the period. A draw increases the balance; a principal repayment reduces it from the specified effective date.

The method charges for the days money is outstanding. It does not assume the entire credit line was drawn or that a draw halfway through the month was present from the first day. It also does not automatically compound unpaid interest into principal.

Business credit products differ in their fees, access methods, and repayment terms. For example, Wells Fargo's business credit-line description distinguishes revolving access from a fixed loan. Your agreement controls the specific calculation and required payment.

Example: a 30-day borrowing period

Assume a $50,000 limit and a $20,000 opening balance. The balance stays at $20,000 for 10 days. You then draw $10,000, leaving $30,000 outstanding for the next 20 days. The illustrative rate is 12% with an actual/365 basis.

Interest is calculated as:

($20,000 × 10 + $30,000 × 20) × 12% ÷ 365 = $263.01.

Suppose the draw fee is 1% of the $10,000 draw and the period account fee is $25. Those charges add $125, making total interest and fees $388.01. If you pay $5,000 of principal after the final day's interest, closing principal is $25,000 and modeled available credit is $25,000.

The $5,000 principal payment is a cash outflow but is not a financing cost. Keep it separate from the $388.01 charge total. If unpaid fees are added to your real loan balance, enter that treatment separately instead of assuming this example covers it.

Use the result to plan cash needs

Compare the timing of the draw with expected customer receipts. Paying down principal earlier can reduce interest, but a draw fee may make repeated borrowing more costly than the interest alone suggests. Check whether an unused-line or minimum charge applies even when the balance is zero.

A line of credit is not necessarily permanent funding. Review renewal dates, borrowing-base limits, required cleanup periods, and lender rights to restrict availability. The calculator's unused capacity reflects only the entered limit and principal, not an approval to draw.

Use the business loan calculator to compare a fixed term loan. If the need comes from unpaid invoices, the invoice factoring calculator offers a different cost and cash-timing comparison.

Limits of the estimate

This tool does not generate your contractual minimum payment or statement balance. Those may involve billing cycles, minimum interest, fees, past-due charges, and payment allocation rules. It also does not determine collateral availability or a borrowing base. Use the actual lender statement to reconcile posted amounts.

Frequently asked questions