A worked-by-hand construction line of credit worksheet from Groveleaf Capital in Asheboro, North Carolina: daily interest on draws, unused-line fees, terming out a balance and equipment payments, all with invented figures.
The Inputs a Construction Line of Credit Worksheet Uses
- The annual interest rate on the offer, and whether it is fixed or tied to an index.
- The amount of each draw and the date it is taken.
- The date each draw is paid back, usually when the job's draw arrives.
- Any fee on the unused part of the limit.
- Draw fees, annual fees and the review date.
Every number in the examples below is invented. Replace them with the figures on an actual offer.
Daily Interest on One Draw: The Formula for Randolph County, NC Contractors
Interest on a draw = amount x annual rate x days outstanding / 365. Some offers divide by 360 instead, which raises the interest slightly; check which the offer uses.
Illustration only, invented figures: an invented $38,000 draw at an invented 11.5% for 42 days costs $503 (our arithmetic).
A Four-Draw House Schedule Worked by Hand in Asheboro, NC
| Draw | What it pays for | Amount | Days out | Interest |
|---|---|---|---|---|
| Draw 1 | Foundation and framing lumber | $38,000 | 42 | $503 |
| Draw 2 | Roofing, windows and doors | $27,000 | 35 | $298 |
| Draw 3 | Mechanical rough-ins | $31,000 | 30 | $293 |
| Draw 4 | Drywall and finishes | $24,000 | 28 | $212 |
| Total | $120,000 | $1,305 |
Illustration only, invented figures: four invented draws over one house cost $1,305 in interest in all (our arithmetic). If the builder's draws arrive late, every row's days grow and the interest with them.
Commercial Line of Credit Calculator: The Unused-Line Fee
Some lines charge a fee on the part of the limit not in use. Illustration only, invented figures: on an invented $150,000 limit over the invented 135-day schedule above, the average balance drawn works out to about $30,689; a 0.25% annual fee on the unused average of about $119,311 costs about $110 for the period (our arithmetic).
Small, but worth adding to the total before comparing offers.
Terming Out a Balance: A Construction Business Loan Calculator Step
When a job ends with part of the line still drawn, some partners allow the balance to be converted to a term loan. Illustration only, invented figures: an invented $60,000 termed out over 36 months at an invented 10.0% gives a payment of about $1,936 a month (our arithmetic), using the standard payment formula: payment = balance x r / (1 - (1 + r)^-n), where r is the monthly rate and n the number of months.
Construction Equipment Financing Calculator for Randolph County, NC Contractors: Skid Steers
The same formula prices a machine. Illustration only, invented figures: an invented $64,000 skid steer with 10% down leaves $57,600 to finance; over 48 months at an invented 9.0% the payment is about $1,433 a month (our arithmetic). Equipment financing explains loans and leases.
Comparing a Line With Working Capital for the Same Job in Asheboro, NC
A working capital loan pays interest on the full amount for its whole term. A line pays only on what is drawn for as long as it is drawn. For a job with four draws spread over months, the line's interest in the worksheet above is far smaller than a lump sum held for the same period, but lines carry review dates and fees that a fixed loan does not. Compare the totals.
Approval, Limits and Late Builder Draws: What These Hand Calculations Leave Out
It cannot tell you whether a partner will approve the line, what limit it sets, or whether the rate will change. It also ignores the cost of a builder paying late, which shows up as more days on every row. For the full picture of lines, see business lines of credit; for crews and trades, see construction business loans.
Interest Rate Changes on a Variable Construction Line
If the rate is tied to an index, each draw's interest depends on the rate in force while it is out. Illustration only, invented figures: had the invented rate above been one point higher for the whole schedule, the four invented draws would cost about $1,419 instead of $1,305 (our arithmetic). Run the worksheet at a higher rate as a check on how much room the job has.
Checklist Before Signing a Construction Line Offer in Randolph County, NC
- Write down the rate, the day count (365 or 360) and how the rate can change.
- List every fee: origination, draw, unused, annual.
- Note the review date and any clean-up period at zero balance.
- Run your own draw schedule through the formula above.
- Compare the total with a working capital or term loan offer for the same job.
By Groveleaf Capital · Updated
