Business Line of Credit
Flexible capital,
drawn as needed.
drawn as needed.
Draw interest accrues only on the outstanding balance. Repay and redraw as your cash cycle demands.
Draw Parameters
Amount Drawn from Credit Line70% $175K
10%100% (full)
Interest-Only Draw Period12 mo
1 mo59 mo
Payment Structure
Draw Period Payment (interest-only)$1,385/mo
Repayment Period Payment$4,397/mo
Draw Period (12 mo)$16,625 interest
Repayment Period (48 mo)$36,034 interest
Total Interest Paid$52,659
Total Repaid (principal + interest)$227,659
Unused Credit Available$75K
Balance over time — LOC (solid) vs Loan (dashed)
When to Choose a LOC
Borrow only what you need — interest on drawn amount only
Revolving: repay and redraw as cash flow demands
Flexible draw period protects against uncertainty
Lower effective cost if you don't draw the full limit
Variable rate risk — payments may increase
Interest-only draw period can delay principal paydown
Requires strong credit; annual renewal not guaranteed
Less predictable payment schedule than a term loan
Term Loan
Fixed payments,
predictable cost.
predictable cost.
Interest accrues on the full principal from day one. Same payment every month — fully predictable cash flow planning.
Payment Structure
Fixed Monthly Payment$5,009/mo
Year-1 Interest Paid$17,298
Year-1 Principal Paid$42,816
Balance After Year 1$207,184
Total Interest Paid$50,569
Total Repaid (principal + interest)$300,569
vs. LOC — extra interest cost-$2,090
Balance over time — LOC (solid) vs Loan (dashed)
When to Choose a Term Loan
Fixed rate and payment — fully predictable cash flow
Immediate access to full amount; no draw management
Builds equity and credit history with every payment
No renewal risk — terms locked at close
Interest accrues on full principal from day one
Less flexible — can't redraw repaid principal
Prepayment penalties possible depending on lender
Higher interest cost if you didn't need all the funds
Line of Credit Schedule
| Year | Payment | Interest | Principal | Balance |
|---|---|---|---|---|
| Year 1 | $16,625 | $16,625 | $0 | $175,000 |
| Year 2 | $52,759 | $14,711 | $38,048 | $137,251 |
| Year 3 | $52,759 | $10,934 | $41,824 | $95,755 |
| Year 4 | $52,759 | $6,783 | $45,975 | $50,141 |
| Year 5 | $52,759 | $2,221 | $50,538 | $0 |
| Total | $227,659 | $52,659 | $175,000 |
Term Loan Schedule
| Year | Payment | Interest | Principal | Balance |
|---|---|---|---|---|
| Year 1 | $60,114 | $17,298 | $42,816 | $207,184 |
| Year 2 | $60,114 | $13,974 | $46,140 | $161,045 |
| Year 3 | $60,114 | $10,392 | $49,722 | $111,323 |
| Year 4 | $60,114 | $6,532 | $53,582 | $57,741 |
| Year 5 | $60,114 | $2,373 | $57,741 | $0 |
| Total | $300,569 | $50,569 | $250,000 |