Loans vs. lines

Compare the difference between two credit products offered by lenders.

Loan

You borrow a certain amount of money from a lender and agree to repay it with interest over a certain period of time. Loans are typically used to make large, one-time purchases. The lender may ask you for documentation to confirm the cost of what you intend to buy.

A business loan application with the word “Approved” stamped on it.

Line of credit

A flexible way to borrow money at any time. Helpful for managing cash flow. The bank agrees to lend you up to a certain amount on an ongoing basis. You can use as much as you need (up to your limit) and pay back at least a minimum amount every month. You pay interest only on the amount you borrow.

Click the Next button to discover what lenders want to see from prospective small business borrowers.