AtlasCalcsUtility Calculation Suite
2026-09-21 7 min read

Line of Credit Calculator

Draw-period interest, conversion and the cost of the facility for a line of credit. Live calculator with worked steps, charts.

Calculator

Credit Line Limit
$
Amount Drawn
$
Annual Interest Rate(%)
%
Interest-Only Draw Period(months)
months
Repayment Period(months)
months
Payment Frequency
Advanced options (1)
Origination Fee / Points (% of loan)(%)
%

This specialty loans calculator runs on the standard amortisation model: interest is charged on the outstanding balance each month, and anything extra you enter is applied to principal immediately.

Results

Optimal

Interest-Only Payment During Draw

$743.75/month

On $85,000 drawn for 1 year.

Repayment Payment

$2,762.71/month

Over 3 years after the draw period.

Undrawn Availability

$65,000

Still available to draw.

Interest During the Draw Period

$8,925

Interest During Repayment

$14,457

Commitment Fee on Undrawn Balance

$650

1.00% a year on the unused portion.

Total Cost of the Facility

$24,032

Line Utilisation

56.67%

Live results update as you type — currently showing interest-only payment during draw of $743.75 /month on 12 payments a year. Replace the defaults with your own quote for an exact comparison.

Visualizations

Cost of the Facility

Draw interest37%
Repayment interest60%
Commitment fee3%

Payment Pattern: Draw Period to Repayment

Formula

During the draw period interest is charged on the drawn balance only; when the draw period ends the drawn amount converts to a term loan.

IO payment = Drawn × i Repayment payment = Drawn × i ÷ (1 − (1 + i)^−n)

Variables

SymbolNameUnitDescription
DrawnAmount drawncurrencyBalance currently outstanding on the line
iMonthly ratedecimalAnnual rate ÷ 12
nRepayment periodscountTerm of the repayment phase

Explanation

This is what the facility costs during the draw period, what repayment looks like, and the all-in cost of the structure.

Step-by-Step Calculation

Follow each step to understand how the result is calculated from your inputs.

Step 1

During the draw period you pay interest only on what you have drawn.

Interest = drawn × monthly rate
Drawn:$85,000
Monthly rate:0.875%
Result: $743.75 per month for 1 year
Step 2

When the draw period ends the drawn balance converts to a term loan.

P = A × i ÷ (1 − (1 + i)^−n)
Repayment term:3 years
Result: $2,762.71 per month
Step 3

Add the commitment fee charged on the unused portion of the line.

Total cost = IO interest + repayment interest + commitment fee
Intermediate: $8,925 + $14,457 + $650
Result: $24,032 all-in
Final Answer
$743.75

Worked Examples

See how the calculator works with different scenarios.

Scenario

The line of credit calculator run on the values above, showing the full calculation path rather than only the answer.

Inputs

Rate:10.5
Frequency:monthly (12 per year)
Limit:150000

Calculation

1. During the draw period you pay interest only on what you have drawn. → $743.75 per month for 1 year 2. When the draw period ends the drawn balance converts to a term loan. → $2,762.71 per month 3. Add the commitment fee charged on the unused portion of the line. → $24,032 all-in

Result

Interest-Only Payment During Draw: $743.75 /month

Interpretation

Line of $150,000 with $85,000 drawn at 10.50%: $743.75 monthly during draw, then $2,762.71 for 3 years; all-in cost $24,032.

Understanding Your Result

Your Result: Interest-Only Payment During Draw: $743.75 /month

Typical range: Lines of credit typically price at prime plus 1%–3%, with commitment fees of 0.25%–0.5% a year on the undrawn portion.

What This Means

This is what the facility costs during the draw period, what repayment looks like, and the all-in cost of the structure.

Why It Matters

Line of $150,000 with $85,000 drawn at 10.50%: $743.75 monthly during draw, then $2,762.71 for 3 years; all-in cost $24,032.

Professional Interpretation

Line of $150,000 with $85,000 drawn at 10.50%: $743.75 monthly during draw, then $2,762.71 for 3 years; all-in cost $24,032.

How this is calculated

During the draw period interest is charged on the drawn balance only; when the draw period ends the drawn amount converts to a term loan.

What drives the result

Commercial lenders look at the source of repayment first and the collateral second. Revolving facilities price on utilisation and committed balances, asset-based lines advance a percentage of eligible collateral, and government-guaranteed loans trade a fee for a longer term and a lower rate.

Recommendations

  • •Draw only what the working-capital cycle needs — the interest clock starts immediately.
  • •Negotiate a clean-up period or you may be converted into a term loan whether or not you need it.

Educational Content

Introduction

Business credit is priced on structure as much as on rate: guaranty fees, advance rates against collateral, draw periods and annualised factoring costs all sit on top of the interest rate. These calculators put the whole facility — not just the note — into one view.

Concept Explanation

Commercial lenders look at the source of repayment first and the collateral second. Revolving facilities price on utilisation and committed balances, asset-based lines advance a percentage of eligible collateral, and government-guaranteed loans trade a fee for a longer term and a lower rate.

Applications

▸Comparing a term loan with a line of credit for a working-capital need
▸Sizing a borrowing base from receivables and inventory
▸Measuring the all-in cost of invoice factoring against a bank facility
▸Modelling the SBA guaranty fee and amortisation on a small-business loan

Benefits

  • •Shows the full cost of the facility including fees and unused-line charges
  • •Converts each collateral class into available borrowing power
  • •Reveals the cash-flow pattern across draw and repayment periods
  • •Makes government-guaranteed structures comparable with conventional credit

Limitations

  • •Advance rates, eligible collateral definitions and covenants vary by lender
  • •Financial covenants, reporting requirements and cross-default clauses are not modelled
  • •Personal guarantees and lien positions affect pricing beyond the numbers shown
  • •Business credit is underwritten on the business plan and management, not only on ratios

Best Practices

  • •Ask what happens to pricing if utilisation stays low for a quarter
  • •Model the facility at 80% of the borrowing base you think you have
  • •Compare the annualised cost of any alternative financing with a bank line before signing
  • •Check whether the guaranty fee can be financed or must be paid at closing

Common Misconceptions

Myth: The lowest rate is the cheapest facility
Truth: Commitment fees, servicing charges and collateral reporting can make a low-rate facility more expensive.
Myth: Government guarantees mean relaxed underwriting
Truth: The guarantee transfers risk to the agency; lenders still apply their own credit standards.

Practical Tips

  • •Draw only what the working-capital cycle requires; interest starts immediately.
  • •Ask about a clean-up requirement and whether the facility renews annually.

Common Mistakes

Treating a line of credit as permanent capital
Most lines are reviewed annually and can be reduced or withdrawn.
Ignoring the conversion payment
The post-draw payment is often two to three times the interest-only payment.

Assumptions

This calculator makes the following assumptions to provide estimates:

Draws are made once at the start: Staged draws change the interest cost but not the structure.

Limitations

Be aware of these limitations when using this calculator:

Limitation: Advance rates, eligible collateral definitions and covenants vary by lender
Limitation: Financial covenants, reporting requirements and cross-default clauses are not modelled
Limitation: Personal guarantees and lien positions affect pricing beyond the numbers shown
Limitation: Business credit is underwritten on the business plan and management, not only on ratios

Frequently Asked Questions

Answers to common questions about this calculator.

What is a commitment fee?
A charge on the unused portion of the line, typically 0.25%–0.5% a year, which pays the lender for keeping the facility available.
What happens at the end of the draw period?
The drawn balance converts to a term loan — the payment usually rises substantially.
Who uses the line of credit calculator?
It is used by borrowers comparing line of credit offers, by advisers checking a quote before a client signs, and by lenders and brokers sanity-checking a payment, ratio or fee structure. It sits in the Specialty Loans group of the Loans & Lending section of Atlascalcs.
How accurate is the line of credit calculator?
Every figure follows directly from the inputs using standard amortisation mathematics, so it is accurate to the quality of the values you enter. Lenders round payments and apply their own day-count conventions, so expect small differences against a formal statement or payoff quote.
How current are the rates and thresholds used here?
The calculator uses the figures you enter, so update the rate to your actual offer or current market quote. Ratio thresholds, poverty guidelines and programme rules reflect the conventions described in the references and change periodically.
Does rounding change the results?
Every calculation runs on full precision and rounds only for display. Lenders round payments to the nearest cent or dollar, so expect a small difference between these figures and a formal statement or payoff quote.
Should I use the payment or the total cost to compare offers?
Use the payment to judge cash flow and the finance charge or APR to judge cost. When two offers differ on both, the all-in cost over the period you expect to hold the loan is the decisive measure.
Can I use this calculator for a business or commercial loan?
Yes. The payment, amortisation, ratio and cost calculators apply the same amortisation mathematics to commercial loans; the difference is in the fees, covenants and collateral rules, which you should enter explicitly.
What information should I have ready before applying?
Your exact rate and term, the fee schedule, any required add-ons, and your gross income and existing monthly obligations. With those five numbers every figure on this page can be tied back to a lender quote.

Related Calculators

Explore more calculators related to this topic.

Related Guides

Deepen your understanding with these educational resources.

Glossary

Technical terms used in mortgage calculations explained in plain language.

Revolving credit
A facility you can draw on, repay and draw on again, such as a credit card or line of credit.
Commitment fee
A fee charged on the unused portion of a committed credit line.
APR (Annual Percentage Rate)
The yearly cost of credit expressed as a rate, including interest and most upfront finance charges.
Amortisation
Repaying a debt through a schedule of payments that gradually shifts the split from interest to principal until the balance reaches zero.

Authoritative References

Trusted sources and standards referenced by this calculator.

Applicable Standards

Level-payment (simple-interest) amortisation, payments assumed in arrearsAPR computed by discounting the actual payment stream to net proceedsDebt ratios computed on gross income for lender comparisonsMoney rounded for display only; all calculations run at full precision

Was This Calculator Helpful?

Page Information

Last Updated:

2026-09-21

Version:

2.0.0

License:

Free to use for educational and professional purposes.