🏦 Although both provide access to business funding, they work differently. Business Term Financing provides a lump sum that is repaid over an agreed term with scheduled principal and interest payments. A Business Line of Credit is a revolving credit facility that allows a business to draw funds up to an approved credit limit, repay outstanding balances, and generally draw funds again while the line remains available under the agreement.
🧾 Example (for illustration only): A business needs access to $100,000. With Business Term Financing, the business receives the full $100,000 at closing and repays it through scheduled payments over the loan term. With a Business Line of Credit, the business is approved for a $100,000 credit limit but may initially draw only $25,000, paying interest on the amount drawn. As principal is repaid, that credit generally becomes available to draw again, subject to the terms of the credit agreement.
⚠️ Important: This example is for educational purposes only. Actual financing structures, interest rates, fees, repayment obligations, credit limits, eligibility requirements, and terms vary by lender and agreement.