Set your credit limit and draw amount, then compare the cost of a line of credit draw against a lump sum working capital loan.
Line of Credit Details
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
$50,000
Working Capital Loan (1.25 Factor)
Loan Amount
$50,000
Total Cost
$12,500
Total Repayment
$62,500
Payment Amount
$5,208.33 / month
Cost Difference
-$7,492 vs LOC
A line of credit saves you $7,492 compared to a working capital loan for this amount
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.
See What You Qualify For →Understanding LOC Costs
How Business Line of Credit Costs Work
A business 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 $100,000 line and draw $30,000, and you pay interest on $30,000. The remaining $70,000 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. This revolving structure makes a line of credit the most flexible funding tool available to small businesses.
A line of credit outperforms a lump sum loan when your capital needs are irregular or unpredictable. Seasonal inventory purchases, bridging gaps between invoicing and payment, covering payroll during a slow month, or jumping on a time-sensitive opportunity — these are all situations where 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. If you know the exact amount and can plan ahead, a lump sum may offer a lower total cost.
A lump sum working capital loan can cost less in total for a specific, known amount — especially if the factor rate is competitive and you need the full amount all at once. But it lacks flexibility: you get one disbursement, make fixed payments, and if you need more capital later, you apply again from scratch. The calculator above shows you the exact dollar difference for your specific scenario so you can make an informed choice.
The hidden value of an open line of credit is optionality. Having a $100,000 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 5% discount for early payment, or a piece of equipment goes on sale, or a client delays a $50,000 payment — your line of credit lets you act immediately instead of scrambling.
Free Guide
How to Read a Business Loan Offer
Factor rates, APR, origination fees, and the red flags that cost business owners thousands.
FAQ
Frequently Asked Questions
Explore
Related Loan Products
More Tools
Try Another Calculator
See What You Qualify For
Pre-qualify to see real line of credit offers from 70+ lending partners. No credit impact. Takes 60 seconds.
See What You Qualify For →Business Line of Credit Calculator — Compare Draw Costs
Use the Basecamp Funding line of credit calculator to estimate interest charges and monthly payments on business line of credit draws from $1,000 to $500,000. Compare the cost of a revolving line of credit vs a lump sum working capital loan side by side. Free to use with no email or signup required.