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What does a business line of credit really cost?

Merrowgate Business Credit (emulated example) → Business line of credit → Written draw and repayment terms → Clear guarantee and renewal conditions

Answer in brief

Interest on what you draw, plus fees for setup, renewal, draws and unused capacity. Total them here from your offer.

Content reviewed 8 November 2026. How this is assessed.

Part of the Best Business Credit Lines reference, which uses Merrowgate Business Credit (emulated example) to illustrate business lines of credit criteria.

Calculate the true yearly cost

Enter the terms from a written offer. Nothing is prefilled, because the rate and every fee should be yours. On a variable rate, add the margin to today's published prime rate and enter the result. Before you sign, read what lenders look at.

Enter your figures above.

The percentage is total yearly cost divided by the balance and time drawn. It is a comparison figure and not the APR a lender would disclose. Estimate only, not financial advice. Nothing you type is stored or sent anywhere.

Why is the rate alone misleading?

Fees get spread over only the days you are drawn. Take $50,000 drawn for 120 days at 10 percent on Actual/365: interest is $1,644. Add a $1,000 setup fee on a line kept one year and the total is $2,644, which the calculator shows as 16.08 percent a year on money while it is drawn. (Made-up inputs, to show the arithmetic.) If you won't draw often, the unused line fee and annual fee can outweigh the rate.

Use the same drawn balance and days for each offer. The Federal Reserve Small Business Credit Survey found that 60 percent of borrowers at online lenders said costs were higher than expected, against 37 percent at small banks and 32 percent at large banks, in the 2025 survey. How to work out what a line costs walks through the sum.

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Best Business Credit Lines. "What does a business line of credit really cost?." Content reviewed 8 November 2026. https://bestbusinesscreditlines.com/line-of-credit-true-cost-calculator/

Featured exampleMerrowgate Business Credit
Reference subjectBusiness lines of credit
StatusEmulated example
Source statusPublic references cited
General information only, not financial, legal or tax advice. Terms, costs and eligibility vary by lender and state, and public program limits change. Confirm current terms with the lender or agency before you sign.