The details of drawing on and paying off your line of credit may vary from lender to lender but the general process is usually pretty similar across all options. Once you’re approved for a line of credit you have access to that full amount.
Whichever amount you choose to borrow will be considered a withdrawal from your credit line, and you’ll have a set amount of time to repay it plus interest. If your credit line is secured, you’ll need to provide collateral in the form of business or personal assets.
The term for your line of credit is how long you have to repay the amount you borrow. They will vary depending on the lender and the specific line of credit you get. Each time you borrow from your credit, the transaction will have its own terms. The repayment schedule will likely be on a 12 or 24-week schedule, and your lender will likely ask you to make payments on a weekly or monthly basis with interest.
The interest on your loan is important to consider when you’re calculating your payments. It can vary significantly depending on the lender, but the good thing to know is you’ll only have to pay interest on the amount of your credit line that you actually use.
The higher your interest rate is, the higher each of your weekly or monthly payments will be. Be sure to use the right interest rate when you use the business line of credit calculator. Average APRs for a business line of credit can be as low as 8% or as high as 80% or more.
The fees associated with your business line of credit will vary by lender and they aren’t included in our business line of credit calculator. These fees might be rolled into your weekly or monthly payment. Some common fees you may pay include an origination fee for processing the loan, an annual or monthly maintenance fee, a renewal fee or a draw fee.