Loans · 5 min read
Term Loan or Line of Credit: Which Is Right for You?
Term loans solve big one-time needs like a buyout; lines of credit handle the ups and downs of cash flow.
Both products have a place, and many businesses use them together.
Term loans
A lump sum repaid over a fixed schedule — ideal for consolidating debt, paying off MCAs, purchasing equipment or funding expansion. Predictable payments make budgeting simple.
Lines of credit
A revolving limit you draw from as needed and pay interest only on what you use. Perfect for seasonal swings, inventory and unexpected expenses — and a healthy alternative to grabbing a new MCA in a pinch.
Using both
A common plan: use a term loan to buy out existing advances, then keep a line of credit open as a safety net so you never need to stack again.