Revolving versus lump sum
A term loan delivers a lump sum with a set repayment schedule. A line of credit sets a limit that an approved business may draw against, repay, and potentially draw against again under the provider's terms.
That flexibility is the main appeal. It is designed for needs that recur or that cannot be sized precisely in advance.
Typical use cases
Owners often keep a line available for cash-flow timing, unexpected repairs, short-term inventory needs, or bridging the gap between invoicing and collection.
It is generally less suited to large, long-lived purchases where a matched-term structure makes more sense.
What to review before opening one
Look closely at how interest is charged, whether unused-line or maintenance fees apply, how draws are requested, and how often the provider reviews or renews the facility.
Terms, limits, and fees are determined by the financing provider and can vary widely between programs.
This content is general information only and is not financial, legal, or tax advice. Financing availability, terms, rates, and fees are determined by the applicable financing provider.
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