Business Line of Credit Rates & Fees
What a business line of credit really costs — beyond the headline rate.
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The rate is the number everyone fixates on, and it’s the number that varies the most from one applicant to the next. There is no single “business line of credit rate.” What you’re quoted depends on your credit profile, revenue, time in business, whether the line is secured, and which lender you’re in front of. Anyone publishing one tidy APR as “the” rate is either guessing or selling something.
So this section does something more useful than throwing a number at you: it teaches you to read a quote. How to tell a real APR from a factor rate dressed up to look cheap, what fees hide outside the headline rate, how the interest math works when you only draw part of your line, and how the cost is treated at tax time. Where we cite ranges, they come from named sources, and anything that depends on your specific offer is flagged for you to confirm.
What a line of credit can cost — the realistic ranges
| Cost element | Typical range | What drives it |
|---|---|---|
| Bank / credit-union APR | ~8%–25% APR* | Strong credit, time in business, often collateral |
| Online / fintech APR | ~10%–60%+ APR* | Speed and looser bars cost more |
| Draw fee (per draw) | ~0%–3% of the draw* | Common on fintech lines; read the schedule |
| Origination fee | ~0%–5% upfront* | One-time, sometimes financed into the line |
| Maintenance / monthly fee | ~$0–$50/mo* | Charged on some lines whether or not you draw |
| Factor rate (MCA, not a true LOC) | ~1.1–1.5 factor* | A multiplier, not an APR — often 60%+ APR-equivalent |
| Late / NSF fee | ~$15–$39 each* | Per the lender’s fee schedule |
* Illustrative ranges, not quotes. Rates and fees are set per applicant and change constantly; verify against the lender’s live disclosure. Range context informed by the Federal Reserve, SBA, and published lender disclosures (2026); specific figures broken down on the spoke pages below.
Read the quote, not the headline
The trap I watched borrowers fall into wasn’t getting a bad rate — it was getting a confusing one. A “1.2 factor rate” sounds smaller than a “30% APR,” but they can describe similar or even worse costs depending on the term. A factor rate is a flat multiplier on the amount borrowed, so the cost doesn’t fall when you repay early the way interest does. Before you sign anything, run the real numbers in the calculator and read factor rate vs. APR. Five minutes there can save you real money.
The true cost of any line is rate plus fees, measured against how long you actually keep the money drawn. When you get an offer, ask for the all-in APR — the single number that folds origination, draw, and maintenance fees into the rate — not just the interest rate.
What’s in this section
Start with the cost concept that trips up the most owners, then read whichever spoke matches your question.
Start here
Factor rate vs. APR
The single most important cost concept to understand — how to tell a real APR from a factor rate dressed up to look cheap.
Average rates and fees
Realistic ranges and where they come from — named sources, illustrative figures flagged, nothing fabricated.
Go deeper
Is a business line of credit tax-deductible?
How the interest is treated at tax time, and the fees that may or may not be deductible.
Today’s rate environment
How the broader rate climate affects the offer you’ll actually be quoted.
Cost calculator
Estimate what a draw actually costs you — run your own numbers before you commit.
How interest works when you only draw part of your line
The thing that makes a line of credit cheaper than a lump-sum loan is that interest accrues only on what you draw, not on your full limit. Draw $20,000 of a $100,000 line and you pay interest on the $20,000. Repay it and the room opens back up, ready to draw again — the “revolving” part. That’s why a line beats taking a fresh term loan every time you have a gap. For the full mechanics, see how interest works.
A note on the numbers on this hub
Actual rates, fees, and minimums change constantly and are set per applicant, so we don’t quote fixed figures as if they were yours. The ranges above exist to calibrate your expectations — to tell you when a quote is normal, when it’s expensive, and when it’s a trap dressed up as a deal. For any specific number, confirm it against the lender’s own disclosure before you commit.
Once you understand the cost
Knowing how rates work is the point where comparison shopping pays off. Compare lenders in the reviews section, check where you stand on eligibility, or — if you’re weighing a line against a pricier product — read line of credit vs. merchant cash advance for the factor-rate context that catches owners out.
See your real numbers, not estimates
The honest way to find out what you’ll actually pay is to put your real profile in front of lenders and compare the quotes that come back — instead of guessing from a published average. A marketplace surfaces real offers from multiple lenders with one application, so you’re comparing actual quotes, not estimates.
Lendio is a marketplace, not a lender. Checking your options uses a soft credit pull that does not affect your score; if you accept an offer, a matched lender may run a hard pull at underwriting, only with your consent (per BizBee Funding, 2026).
By Marcus Delaney, former commercial loan officer. BizBee is informational and independent. We are not a lender and do not broker loans. Some links are affiliate links — see How We Make Money.