If you're a business owner, you may have considered applying for a revolving line of credit. This type of financing can be a flexible and accessible way to access funds when you need them. However, before committing to a revolving line of credit, it's important to do the math and understand the terms of the loan. In this article, we'll explore how to calculate the interest and payment on a revolving line of credit and provide tips for applying for this type of financing. Revolving line of credit calculator. Interest rates for revolving lines can range widely. The interest rate a lender offers you will depend on multiple factors, including your personal credit score, business revenue, and the amount of credit you request. Whatever terms a lender offers you, it’s important to do the math before you commit to a revolving line of credit. You want to make sure that payments on the account won’t put your business in a financial bind. A free online calculator can help you crunch the numbers. Terms and explanation Here are the essential pieces of information you’ll need to enter and notice as outputs on our revolving line of credit calculator. Amount seeking This refers to the borrowing limit or the maximum amount of money a lender will allow you to borrow. You can withdraw funds as needed, so you don’t have to borrow the entire approved amount. Loan term The loan term is the amount of time you’ll take to pay back the money you withdraw. A longer term will lower your monthly payments, but be more expensive in the long run. Interest rate The amount you’ll pay to be able to pull funds from a business line of credit is your interest rate. The better your credit score, the lower your interest rate will be. Estimated daily repayment This is what you’ll pay on a daily basis to repay your business line of credit. Total repayment Total repayment is your overall cost of borrowing. It includes principal and interest and can give you an idea of the total cost of your line of credit. How to calculate interest on a line of credit. In general, you pay interest only on a revolving line of credit if you carry a balance on the account. But there may be fees associated with the account that apply on a monthly or annual basis as well. So be sure to add that cost into your budget calculations. Depending on your terms, a lender may calculate revolving line of credit interest based on your principal balance—aka the amount of balance outstanding for the previous billing cycle (often 30 days). You’ll usually only pay interest on the funds you withdraw from the revolving line of credit account. Unlike credit cards, you likely won’t pay interest on interest. The lender may calculate your interest based on a whole year and display it as a percentage. From there, the revolving line of credit interest formula is the principal balance multiplied by the interest rate, multiplied by the number of days in a given month. This number is then divided by 365 to determine the interest you’ll pay on your revolving line of credit. Revolving Line of Credit Interest Formula(Principal Balance X Interest Rate X Days In Month) / 365 When you know the basic figures, calculating the interest for a revolving line of credit is straightforward. Business lines of credit are built to be simple due to their flexibility and accessibility. They remain a great option for many types of small businesses. How to apply for a revolving line of credit. If you’re interested in a revolving line of credit, it’s easy to see what sort of revolving line of credit your business can be approved for online. Looking over your financing options through Lendio is simple and fast, and the process often doesn’t require a hard credit check. Disclaimer: The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. Any content provided by our authors are of their opinion and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything.The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.