Friday, June 12, 2026New York · LondonSOFR 5.32Prime 8.50
Capital Desk · OpenVol. VII · No. 26
Business Term Loan vs Line of Credit.
A term loan is a one-shot lump sum on a fixed amortization. A line of credit is revolving capital you draw against and repay. The right choice is almost entirely about how the cash will be used, not which is 'better.'
| Dimension | Business Line of Credit | Summit |
|---|---|---|
| Pricing | Prime + 1–6% on drawn balance | 8–30% APR fixed on full balance |
| Funding range | $10K – $500K (fintech), $1M+ (bank) | $25K – $5M |
| Best use | Recurring cash-flow gaps, seasonal inventory, AR financing | Equipment buy, acquisition, build-out, debt consolidation |
| Repayment | Pay only on drawn amount, revolver replenishes | Fixed monthly principal + interest |
| Fees | Draw fees, annual fees, sometimes maintenance | Origination 2–5%, no draw fees |
| Approval speed | 1–7 days | 1–14 days |
Verdict
Recurring or unpredictable cash needs → LOC. One-time, defined-purpose capital → term loan. Many operators run both: a small LOC for working capital plus a term loan for the asset they're acquiring.