Business Line of Credit vs Loan: Which Is Better?

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If you’re a business owner looking to expand your operations, you may be exploring financing options. Two common choices are a business line of credit (LOC) and a business loan. Both can help fund your operations but differ in key areas such as funding amounts, interest rates, repayment terms, and flexibility. Generally, a business line of credit works best for managing short-term or fluctuating expenses, while a business loan is ideal for larger, long-term investments.

What is a line of credit?

A business line of credit offers flexible access to funds, allowing you to borrow, repay, and borrow again up to a predetermined limit, similar to a credit card. It’s well-suited for short-term needs like managing ...