Business Credit Line vs. Business Loan Comparison

Business Credit Line vs. Term Loan Comparison

Loan Amount ($):

Annual Interest Rate (%): Typically fixed for term loans.

Loan Term:

Origination Fee (% of loan amount):

Other Upfront Fees ($):

Prepayment Penalty:

Credit Limit Amount ($):

Annual Interest Rate (%): Often variable. Enter current estimated rate.

Annual / Maintenance Fee ($):

Draw Fee (% of amount drawn):

Fixed Draw Fee (per draw, $):

Assumed Usage for Annual Cost Estimation To compare costs, estimate how you might use the line of credit over a year.

Average Amount Drawn (per instance, $):

Average Duration Outstanding (per draw, months):

Number of Draw Cycles (draw & repay) per Year:

Metric	Term Loan	Line of Credit

Factor	Term Loan	Line of Credit

Term Loans are generally better for large, specific, planned investments where you need a fixed sum upfront and prefer predictable payments.
Lines of Credit offer flexibility for ongoing working capital, managing cash flow fluctuations, or handling unexpected short-term expenses. You only pay interest on what you use.
Compare the Total Cost of Borrowing for the term loan against the **Estimated Total Annual Cost** for the line of credit (based on your usage assumptions).
Note the difference in Interest Rate Types (fixed vs. often variable) and how that might impact future costs.
Consider the impact of Upfront Fees (term loan) vs. **Ongoing Fees** (like annual fees or draw fees for LOC).
Always review specific lender terms, as features can vary significantly.