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Should I Choose a Business Loan or a Line of Credit?

A business needs constant money flow, as money is the blood of any business. If you do not have working capital or cash flow, your business will be stagnant and slowly it will affect your work flow and your business start moving towards loss. You may have enough savings to bear the cost of business, you may gain profit from business or you have to arrange the money from some other sources.

You can manage the financing by taking a loan. But, before that you need to have an in-depth knowledge of multiple types of business loan. You may get an online business loan and the line of credit. Both are reliable source of money.

You can select any of the two, but before that learn the major differences:


There are so many advantages of business loan. If you apply for a business loan, your purpose of money will be only for specialized purpose, like for maintaining the business cash flow, purchasing inventory, financing transportation, etc. In case of line of credit facility, you will get money whenever you need the fund. Many businesses prefer line of credit facility as the source of continuous finance for different business purposes.


The repayment of the business loan involves a periodic cycle. However, the line of credit repayment depends on the limit of the funds utilized. So, in case of line of credit, you just pay the interest as the EMI on the amount used and not on the principal component.

To know more differences and take the final decision, read:

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