Business Financing Options: Term Loans vs. Lines of Credit
Explore the differences between term loans and lines of credit, two vital financial tools for small businesses. Understand their advantages, uses, and which option suits your business growth or operational needs best.
Business Financing Options: Term Loans vs. Lines of Credit
Small businesses seeking funding options during periods of expansion or financial difficulty have several choices. The most common financing tools are term loans and lines of credit, each offering distinct advantages depending on your business needs. Selecting the right option depends on the intended purpose of the funds.
Term Loan: A traditional loan where a set amount is borrowed and repaid through scheduled monthly installments over a specific period.
Line of Credit: This flexible borrowing option allows businesses to access funds up to a predetermined limit, similar to a credit card, without undergoing a lengthy approval process.
Comparison: Term Loan vs. Line of Credit
The main distinction lies in payment schedules and loan amounts. Term loans provide a lump sum upfront with fixed repayment plans, while lines of credit offer flexible borrowing based on business needs, with variable rates and repayment terms.
