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Line of credit vs. term loan: what’s the difference?

A line of credit can offer revolving access to capital, while a term loan generally provides a lump sum repaid on a schedule.

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How a line of credit works

A business line of credit typically offers a limit from which eligible borrowers may draw, repay and potentially draw again under the agreement.

How a term loan works

A term loan generally disburses a set amount with a defined repayment schedule. It can be suitable for a specific purchase or investment with a known cost.

Compare the full terms

Look beyond the stated rate: consider fees, draw requirements, repayment frequency, prepayment provisions and total financing cost.

CLIENT EXPERIENCES

What our clients say.

Funded in Less Than 24 Hours!

“The process was unbelievably easy—I had funds in my account just one day after applying. Fast, simple, and hassle-free.”

— Marcus T.

Line of Credit Approved in 3 Days

“Getting a line of credit is usually a headache, but Fundu made it totally stress-free. Simple process and approved in three days!”

— Sarah L.

Same-Day Funding, Even With a 541 Credit Score

“I needed a 90-day advance fast. Despite my 541 credit score, Fundu got me approved and funded the very same day.”

— David R.

Individual client experiences. Results vary; approval, funding speed and terms depend on provider underwriting, eligibility and documentation. No specific outcome is guaranteed.

QUESTIONS & ANSWERS

Questions about Line of credit vs. term loan: what’s the difference?

What is the main difference between a credit line and a term loan?

A credit line provides an approved borrowing limit with draw rules. A term loan generally provides a lump sum with an agreed repayment schedule.

Is every line of credit revolving?

No. Confirm whether repaid funds become available again, along with renewal and draw terms.

Which costs should I compare?

Review total cost, fees, payment frequency, repayment term, guarantees and any early payoff provisions for each offer.

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