You need to enable JavaScript to run this app.
One is a reusable limit, the other a lump sum. The right choice comes down to whether your need is recurring or one-time — here is the decision in plain terms.
A line of credit is a reusable limit you draw from as needs arise, paying only for what you actually use; a term loan is a single lump sum on a fixed repayment schedule. These two products get confused constantly, and the confusion is expensive — a mismatch means paying for capital you're not using, or reapplying every time a need recurs.
The core difference
A term loan is a one-time lump sum with a fixed repayment schedule. You know the payment, the term, and the total cost on day one. When it's repaid, it's done.
A line of credit is an approved limit you draw against as needed. You pay interest only on what's outstanding — repay a draw and that capacity is available again, without a new application.
Match the product to the shape of the need
Term loan shapes: a specific piece of equipment, a build-out, a one-time inventory buy, consolidating an expensive obligation. One event, known amount, forecastable payback.
Line of credit shapes: invoice gaps that recur monthly, seasonal troughs, surprise repairs, supplier discounts that appear on their schedule rather than yours. Recurring or unpredictable, amounts vary.
The mistakes we see
Using a term loan for a recurring gap. You end up borrowing a year of cushion up front and paying for it all year, when a line would have cost you only the weeks you actually used. Using a line for a big one-time purchase. Maxing a revolving limit on day one removes the flexibility you were paying for — a term loan prices that purchase better.
Qualifying
Both start from the same bar: 3+ months in business, $10,000+ in monthly revenue with consistent deposits, and your last 3–4 months of bank statements. One application covers both paths — underwriting will show you real numbers for each where you qualify, and your advisor will tell you plainly which structure fits.