Comparison
Line of Credit vs. Term Loan
A business line of credit gives you flexible, revolving access to capital, you only pay interest on what you use. A term loan gives you a one-time lump sum repaid on a fixed schedule. Each fits a different problem.
Side-by-side comparison
Business Line of Credit
Term Loan
Revolving, draw as needed
One-time lump sum
Pay interest only on used balance
Fixed payments on full balance
Best for ongoing or unpredictable needs
Best for one-time investments
Flexible repayment
Predictable monthly cost
Funds available again as you repay
Closes when paid off
Use a line of credit when
- Your cash flow is uneven or seasonal
- You need a safety net, not a lump sum
- You want to avoid paying interest you don't need
- You expect repeat short-term needs
Not sure which fits?
Apply once and compare real line of credit and term loan offers side by side.
Use a term loan when
- You're making a single large purchase
- You're financing expansion or a buildout
- You want fixed, predictable monthly payments
- You need a longer payback window
Frequently asked
Common questions about line of credit vs. term loan
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