Set your credit limit and draw amount, then compare the cost of a line of credit draw against a lump sum merchant cash advance.
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
Your Selections
Side-by-Side Comparison
Line of Credit
Draw Amount
$50,000
Interest Charged
$5,008
Total Repayment
$55,008
Payment Amount
$4,584.00 / month
Unused Credit Available
$200,000
Merchant Cash Advance (Est. Factor Rate)
Loan Amount
$50,000
Total Cost
$15,000
Total Repayment
$65,000
Payment Amount
$5,416.67 / month
Cost Difference
-$9,992 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.
Understanding LOC Costs
How a Commercial Line of Credit Works
A commercial line of credit works fundamentally differently from a lump sum loan: you only pay interest on what you draw, not the full limit. Open a $1,000,000 line and draw $300,000, and you pay interest on $300,000. The remaining $700,000 sits available at no cost. Repay your draw and the credit replenishes — you can draw again without reapplying, without another credit check, and without any new paperwork. Many commercial lines are unsecured, so you tap working capital without pledging real estate or equipment as collateral. This revolving structure makes a line of credit the most flexible funding tool available to an established business.
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 lump sum merchant cash advance can cost less in total for a specific, known amount with a competitive factor rate — but it lacks flexibility: one disbursement, fixed payments, and a fresh application if you need more later. 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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