When a term loan beats a line of credit

When the need is a single, sized purchase

If you know exactly what you are funding and how much it costs — a machine, a vehicle, a fit-out, a defined marketing campaign — a term loan is purpose-built. You get the full amount at once, pay it off on a schedule and know the total cost from the start. A line is overkill for a one-and-done spend, and its flexibility earns you nothing when there is nothing recurring to flex around. See term loan vs revolving facility.

When you want the cost nailed down

A line's cost depends on how you use it, which makes precise budgeting harder. A term loan gives a fixed instalment and a fixed total — invaluable when you are planning a project's finances, pitching to a board, or simply want no surprises. If certainty matters more than flexibility, the loan wins. Work out the exact figures with the loan repayment calculator.

When you'd otherwise never clear the balance

A revolving line's flexibility can be a trap: it is easy to keep a balance rolling indefinitely, treating short-term credit as permanent debt. A term loan imposes a schedule that clears the debt by a fixed date, enforcing the discipline that keeps borrowing costs down. For a business that struggles to repay unless made to, that structure is a feature, not a limitation.

The Credicorp view

Credicorp offers both, so we have no axe to grind: for a defined purchase, a firm budget or the discipline of a fixed end date, a business loan is often the better tool — lent to the company with no personal guarantee. For recurring, unpredictable gaps, a Credicorp Flex line fits better. Register to apply. Educational content, not financial advice.