The formulas
- Interest = average daily balance x rate x days / basis
- Unused fee = (limit - average daily balance) x fee rate x days / basis
- All-in cost = total charge / balance x basis / days
How it works
Business lines of credit charge interest on the average daily balance drawn. Many banks use Actual/360, which divides the annual rate by 360 and charges it for each actual day. Over a full year that yields 365/360 times the quoted rate.
An unused line fee, also called a commitment fee, charges for the undrawn part of the line. A lightly used line costs more per dollar drawn than its quoted rate. Leave limit and fee blank if your line has no unused fee.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
How is the average daily balance found?
Add the balance at the end of each day in the period and divide by the number of days.
Why does Actual/360 cost more?
Each day is charged 1/360 of the annual rate, and a year has 365 days.
Does the rate float?
Most lines are priced at a benchmark plus a spread. Enter the rate in effect for the period.
Formulas on this page are the standard definitions.
Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.