Business line of credit calculator

How the calculation works

A business line of credit differs from a term loan: you don't borrow the whole limit at once. You approve the line, then draw when you need cash, and interest or the factor charge applies only to what you draw. The calculator supports the two ways lenders actually quote a draw:

• Factor rate (typical online lender). You repay the draw × the factor, in equal weekly payments over the term, and the origination fee is usually withheld from the funded amount. A factor rate is not an interest rate — a 1.10 factor repaid over 26 weeks is roughly 50% APR once the weekly compounding and the fee are priced in. Our factor rate → APR table shows how much a factor rate costs across common terms.
• Annual rate (bank line). Interest accrues on the outstanding draw, and the payment spreads the drawn amount plus accrued interest evenly across the weeks. If your bank line quotes prime + a margin, enter the current sum.

The effective APR line reuses the same actuarial rate-solver behind ourmerchant cash advance calculator: it finds the periodic rate that makes the stream of weekly payments discount back to thenet amount you actually received after the fee, then annualizes it to 365 days.

If you'd rather size the revolver against your short-term assets than price a specific draw, the working capital calculatorcovers the liquidity side. For the formal definition of the pricing term, see our factor rate glossary entry.

Worked example

A business has a $100,000 line and draws $50,000 from an online lender at a 1.10 factor rate, repaid over 26 weeks, with a 3% origination fee withheld:

Two things to notice. First, the fee means you're repaying $55,000 on $48,500 in hand — the APR is computed on the money you actually received, not the sticker draw. Second, the same 1.10 factor spread over 52 weeks instead of 26 costs the same $6,500 but roughly half the annualized rate — factor rates are far more expensive per year when the term is short.

Assumptions and limitations

• The calculator assumes a single draw repaid over the selected term. Real revolvers let you draw, repay, and redraw — your actual cost depends on your average daily balance.
• Fees are modeled as a single withheld fee. Some lines charge annual fees, monthly maintenance fees, or per-draw fees on top; add those to the fee input for a closer estimate.
• Most bank lines carry variable rates (prime or SOFR + margin). A rate change mid-term changes your payment; this calculator holds the rate fixed for the full term.
• In APR mode, interest is accrued straight-line and paid evenly with the weekly payment. For a bank line you amortize monthly instead, the total will be slightly different — the business loan calculator handles amortized term debt precisely.

Frequently asked questions

What's the difference between a line of credit and a term loan?

A term loan is a lump sum repaid on a fixed schedule — once repaid, it's closed. A line of credit is revolving: borrow up to a limit, repay, borrow again, and pay only for what's drawn. Lines typically cost more per year than term loans precisely because of the flexibility and the short draw terms.

What is a factor rate on a line of credit, and what APR is that really?

A factor rate is a multiplier on the amount drawn — repay a fixed $1.10 per $1.00 drawn. It is not an interest rate and ignores both time and fees. On a 26-week draw a 1.10 factor with a 3% fee works out to roughly a 49–50% effective APR. Compare quotes on the effective APR line rather than on the factor rate, or see the factor rate to APR table for common combinations.

How does the origination fee change my cost?

Most online lender fees are deducted before funding, so you repay the full gross draw while receiving the draw minus the fee. The calculator computes APR on the net amount, so a 3% fee on a 26-week draw adds several percentage points to the APR — check the line-by-line breakdown above.

How much should my weekly payment be, relative to revenue?

Weekly-repayment lenders look at about 10% of revenue, so a payment plan that consumes more of your weekly receipts than that sets up a debt cycle. Model the draw against your inflows the same way you'd stress a fixed loan with the business DSCR calculator.