# Interest-only period

Months at the start of a loan when payments cover interest, not principal.

It is the cheapest breathing room in an acquisition, and it exists because the first months after closing are when revenue is least certain and cash needs are highest. The trade is that nothing is paid down in that window, so the amortisation that follows is steeper against a shorter remaining term. Ask for it explicitly rather than hoping for it: it is a term the lender can grant and rarely offers unprompted.

In numbers: On a $1M loan at 10.5%, six interest-only months cost about $8,750 a month instead of roughly $13,500 fully amortising, which frees around $28,500 of cash in the half-year when it matters most.

Source: https://searchspheresource.com/glossary/interest-only-period
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

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