A line of credit is an excellent financial product for businesses that want access to cash to spend as they need it. You draw down the money your company needs while only paying interest on the capital you’ve drawn.
Before applying for a line of credit, utilize the Lendzero Line of Credit calculator to see your monthly payments.
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Before obtaining a line of credit, use our Line of Credit calculator to determine how much your business will need to pay. Just remember interest is only attributed to the funds you have drawn rather than the full line of credit.
For example, Tom’s Bakery is approved for a $100K line of credit at a 6% interest rate with a repayment term of 100 weeks.
You select to gain access to the full amount in just one draw. In this instance, the Line of Credit calculator would show you owe $4,614. You would pay this number monthly over the next 100 weeks.
The Line of Credit calculator will show you the exact amount you’ll need to repay each month.
To be clear, definitions are below.
A line of credit typically will have an origination fee upfront and then a draw fee each time you borrow from your line of credit. The draw fee will often cost in the range of 1%-3% of the amount you borrow.
If you don’t draw down on your line of credit, your lender may charge a monthly maintenance fee for non-use, which would likely be a small fee such as $20.
You will also be charged a fee if you have any late payments or if you miss any payments.
