As with any finance product, line of credit interest rates vary from lender to lender. Depending on your business situation, the lender will approve your credit limit and interest rate which applies each time you draw funds.
Generally speaking, you will only pay interest on the portion of funds you draw. For example, if you had a $25,000 line of credit and you withdrew $10,000, you would only be responsible for paying interest on the $10,000, not the entire $25,000. This gives you greater flexibility and should cost you less than short term business loans.
Bear in mind that you will need to keep meeting your interest payments on any amount you draw until it’s paid back, so it can get costly if you only pay the interest and not the principle.
On the flip side, you wouldn’t need to pay any interest during times when you do not access any of the funds.