diff --git a/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py b/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py
index 4680456211..9a6bcd4daa 100644
--- a/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py
+++ b/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py
@@ -135,7 +135,11 @@ def calculate_accrual_amount_for_demand_loans(
 def make_accrual_interest_entry_for_demand_loans(
 	posting_date, process_loan_interest, open_loans=None, loan_type=None, accrual_type="Regular"
 ):
-	query_filters = {"status": ("in", ["Disbursed", "Partially Disbursed"]), "docstatus": 1}
+	query_filters = {
+		"status": ("in", ["Disbursed", "Partially Disbursed"]),
+		"docstatus": 1,
+		"is_term_loan": 0,
+	}
 
 	if loan_type:
 		query_filters.update({"loan_type": loan_type})