Set your credit limit and draw amount, then compare the cost of a line of credit draw against a lump sum merchant cash advance.
Start from a funded scenario
Line of Credit Details
Need a larger line? Talk to a specialist. Larger lines available when revenue, cash flow, and story qualify.
Interest is only charged on the amount you draw, not the full credit limit.
Repayment Terms
Interest only on the drawn balance while you carry it, then the principal back at the end. How a revolving line usually gets used.
Your Selections
Side-by-Side Comparison
Line of Credit
Draw Amount
$50,000
Interest Charged
$6,000
Total Repayment
$56,000
Payment Amount
$500.00 / month
Then $50,500 at payoff
Cost Per Day on the Drawn Balance
$16.44
Unused Credit Available
$200,000
Factor-Rate Advance — Total Dollars
Advance Amount
$50,000
Total Cost
$15,000
Total Repayment
$65,000
Payment Amount
$5,416.67 / month
Cost Difference
-$9,000 vs LOC
Your Result
with a line of credit vs a merchant cash advance for this draw
Plus you can draw again without reapplying once you repay.
This calculator is for informational purposes only and does not constitute a loan offer. Actual rates, terms, and approval depend on your business profile and lending partner. We recommend applying so a funding specialist can provide expert guidance tailored to your situation.
The Math
How this calculator gets to the number
On interest-only, the cost is the balance you're carrying times the rate, divided across the year: balance × rate ÷ 365 gives the cost of holding that money for one more day. The tool charges that per payment period, then hands the principal back in the final period. Draw $300,000 at the slider's default rate and you're paying about $99 a day to hold it — which is the number worth comparing against whatever the money is buying you.
On amortizing, it's the standard payment formula — the level payment that retires the draw over the term, where each payment covers the period's interest first and the remainder comes off the balance. Early payments are mostly interest. The final one is adjusted to clear the balance exactly, which is what a real schedule does.
The comparison column prices a factor-rate advance in total dollars against the same amount. It stays in dollars on purpose: converting a factor rate to an APR makes two products look comparable on a number that only one of them actually has.
What it assumes
- The rate is whatever you set on the slider — nothing is published or implied.
- Interest accrues on the drawn balance only, never on the unused limit.
- No draw fees and no unused-line fee.
- The factor-rate column uses a 1.30 factor on the same amount.
What it does not model
- Variable-rate resets — most lines are indexed and will move.
- Lender-specific fees: origination, draw, maintenance, prepayment.
- Redrawing mid-term, which is the whole point of a line and changes the carry.
- Anything about whether you qualify, or at what rate.
Funded, In Detail
Structures We’ve Funded in Working Capital
Example structures, written up in full — the structure, the numbers, and the timeline.
Understanding LOC Costs
How Much a Business Line of Credit Costs, and How It Works
The cost of a business line of credit is the drawn balance times the rate, divided by 365, per day you carry it. Draw $300,000 for a 90-day gap and you pay 90 days of carry on $300,000; the unused part of the limit costs nothing. Open a $1,000,000 line and draw $300,000, and you pay interest on $300,000 while $700,000 sits available. Repay the draw and the credit comes back without reapplying, without another credit check, and without new paperwork. Revenue-based lenders size a line at roughly 10 to 15 percent of annual gross revenue off four to six months of business bank statements, so a business doing $4M a year lands around $400K to $600K, approved in one to five days and drawn in 1 to 3 days when you need it.
A line of credit outperforms a lump sum loan when your capital needs are irregular or unpredictable — seasonal inventory builds, bridging gaps between invoicing and payment, covering payroll across a slow quarter, or jumping on a time-sensitive acquisition or contract. Drawing exactly what you need, when you need it, costs less than borrowing a fixed amount and paying interest on money sitting in your account. A factor-rate advance quotes one fixed total for one disbursement; the calculator prices it in dollars next to the draw so you can see what that speed costs against carrying only what you use. The calculator above shows the exact dollar difference for your scenario.
The hidden value of an open line of credit is optionality. Having a $1,000,000 line you never fully use still gives you instant access to capital for emergencies, opportunities, or cash flow gaps. The cost of maintaining an unused line is typically zero — most products charge no maintenance fees and no draw fees. Think of it as business insurance you don't pay for until you need it. When a supplier offers a discount for early payment, a competitor's equipment portfolio comes up for sale, or a client delays a $500,000 invoice — your line of credit lets you act immediately instead of scrambling.
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