How is interest calculated on a revolving facility?

Interest is charged only on what you've drawn, not the full limit, so your actual cost depends on how much you use and for how long.

Calculators / Line of credit & overdraft calculator

Line of credit & overdraft calculator

These are revolving facilities, so there’s no fixed repayment schedule. See what you’d actually pay based on the limit and how much of it you expect to draw.

Facility type

Functionally similar; a line of credit is typically for a specific use, an overdraft sits attached to everyday transaction banking.

Credit limit$100,000

$20K$1M

Interest rate (p.a.)15.0%

9.95%30%

Expected average utilisation50%

0%100%

You only pay interest on what you draw, not the full limit. This is the whole point of a revolving facility.

Facility term24 months

3 months5 years

How long you expect to run the facility for, used to estimate the total cost below.

Est. monthly interest at your utilisation $625/mo

Est. annual interest at your utilisation$7,500

Est. annual interest if fully drawn$15,000

What flexibility is worth you$7,500/yr

Est. total interest over the term$15,000

Facilities under $250,000 on our panel typically need no property security, just a director’s guarantee at minimum. See our unsecured business loans page for what that covers.

Indicative only. Ecommerce Loans is a finance broker, not a lender. Actual rates depend on lender assessment. Interest is estimated on your expected average draw, actual cost varies with how the facility is used day to day.

Is a line of credit different from an overdraft?

“Overdraft” and “line of credit” aren’t always two different things. Plenty of lenders build essentially the same revolving facility and give it a different name purely to stand out from the next lender’s product. The functional difference is usually how it’s attached, an overdraft sits on your everyday transaction account, a line of credit is often a standalone facility for a specific purpose. Comparing headline names on your own means comparing labels, not what a facility actually does underneath. See our lines of credit and business overdrafts pages for the full detail.

Before you enquire

Unlike a term loan, there’s no fixed repayment schedule. Interest is charged only on what you’ve drawn, so your actual cost depends on how much of the limit you use and for how long, not the full limit.

Usually not under $250,000, where security is typically a director’s guarantee at minimum. Some non-bank facilities need no property security at all, though you pay for that flexibility in the rate.

Often functionally, yes. Many lenders build the same revolving facility under different names. What differs is usually how it’s attached to your banking, not the underlying mechanics.

Andrew Beckett

Founder and principal broker, Ecommerce Loans. 10+ years in Australian SME, asset, trade and consumer lending across Shift, Iron Capital, Lumi and Lend, represented through CAFBA, FBAA and MFAA.

Call 0468 902 233