Business Loans
Working Capital vs Term Loan
Use a line of credit for recurring, cyclical needs you draw and repay over time. Use a term loan for a one-time purpose like equipment or an acquisition, repaid on a fixed schedule. Matching structure to need lowers cost and risk.
| Recurring, cyclical gap | Line of credit |
| One-time investment | Term loan |
| Interest paid on | Line: what you draw · Term: the full amount |
| Repayment | Line: flexible · Term: fixed schedule |
Mismatching them is a common, expensive mistake: financing a permanent asset with a short-term line creates constant rollover pressure, while financing a seasonal gap with a term loan leaves you paying for money you are not using.
Many businesses pair both — a line for the cycle, a term loan for the project.
Frequently asked questions
Can I have both?
Yes, and many businesses do.
Which is easier to obtain?
Smaller lines often close faster; larger term loans involve more underwriting.