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Small Business Financing
Line Of Credit vs. Term Loan Comparator
A line of credit often carries a higher rate than a term loan, but you only pay interest on what you actually draw. Which one wins depends entirely on how the money actually gets used.
Reading This Tool
How To Use This Calculator
Enter the financing amount, each option's rate, and how much of the line of credit you'd realistically keep drawn.
A term loan charges interest on the full balance from day one, amortizing down over a fixed schedule. A line of credit only charges interest on what's actually drawn, which matters enormously if you don't need the full amount outstanding all the time.
Your Inputs
Total Interest Cost
-Term Loan Total Interest
$0
Line Of Credit Total Interest
$0
Difference
$0
Total Interest Paid Over The Period
Ignores annual fees, standby charges on undrawn line of credit balances, and any rate variability over the period, both product types often carry variable rates tied to prime. Also ignores the flexibility value of a line of credit for irregular cash needs, which a pure interest comparison can't fully capture.