Business Line of Credit Payoff Calculator: Months to Zero Out
See how long a business line of credit takes to zero out at a fixed monthly payment, and how much of what you pay is pure interest rather than principal.
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year payoff schedule
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Time to pay off | Total interest | Total paid |
|---|---|---|---|
| $25k · 10% · $600/mo | 4y 4m | $5,837.71 | $30,837.71 |
| $60k · 12% · $1,500/mo | 4y 4m | $17,008.00 | $77,008.00 |
| $10k · 14% · $400/mo | 2y 6m | $1,892.39 | $11,892.39 |
| $150k · 8% · $3,000/mo | 5y 2m | $33,067.04 | $183,067.04 |
How This Calculator Works
Enter the current drawn balance, the LOC's variable rate, and the fixed monthly payment. The calculator charges interest on the balance each month, subtracts the payment, and counts the months until the balance reaches zero. The calculator assumes you don't draw more during the payoff window.
The Formula
Debt Payoff Time
B = balance, P = fixed monthly payment, r = monthly rate (APR ÷ 12), n = months to clear
Worked Example
A $25,000 business LOC at 10% APR paid down at $600 a month clears in 52 months and adds about $5,838 in interest. Most LOCs require only interest-only minimum payments — at 10% on $25,000 that's $208 a month, which never touches principal. Always pay above the interest-only minimum to actually pay down the balance.
Key Insight
Business LOCs are designed for revolving use — borrow, repay, borrow again — not amortization. Treating one as a term loan and paying it off completely is fine, but it also locks up an asset (available credit) when the balance is zero. Some businesses keep a small balance to maintain active credit and demonstrate use for renewal; others zero out to minimize interest. Choice depends on your future capital needs.
Frequently Asked Questions
What's the minimum LOC payment?
Most business LOCs require interest-only minimum payments. On a $25,000 balance at 10% APR, that's roughly $208/month — which keeps the LOC current but never reduces principal. Pay above the minimum to actually pay down.
Should I pay off the LOC completely?
Depends on future capital needs. Zeroing out minimizes interest but locks up an asset (available credit). Maintaining active usage helps with renewal underwriting. Many businesses keep a small balance ($1,000 to $5,000) cycling through to demonstrate active use.
Can I redraw after paying down?
Yes — that's the structural difference between a LOC and a term loan. The LOC remains available up to the credit limit even after paydown. Term loans, once paid off, are gone.
What rate should I expect?
Bank business LOCs: prime + 1 to 3 points (currently 9% to 11.5%). Online business LOCs (Kabbage, Bluevine, OnDeck): often 15% to 30% effective APR. Fee structures vary and can push the true cost above the nominal rate.
Are LOC interest payments tax deductible?
Yes — interest on business debt is deductible against business income on Schedule C or the corresponding business return. The LOC must be used for business purposes; personal-use draws don't qualify.
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Data Sources & Benchmarks
This calculator draws on 1 independent, dated source. The starting values for loc interest rate are taken from the benchmarks below and refresh whenever the snapshots are updated.
Methodology & Review
The payoff is simulated month by month: interest is charged on the drawn balance at the variable rate, the fixed payment is deducted, and the months are counted until the balance reaches zero. Annual fees and minimum-draw requirements are not modeled. Many business LOCs allow re-draws — the calculator assumes you do not draw more during the payoff.
Written by Ugo Candido · Last updated May 17, 2026.