 TITLE: Business Loan or Business Line of Credit: Which Is Best for You? CONTENT: How Are Business Loans and Lines of Credit Different?\n-----------------------------------------------------\nBoth business loans and lines of credits can provide the capital your business needs, but there are some important differences between them.\nA business line of credit is revolving credit, allowing you to carry a balance that accrues interest. If you don't use the line of credit, you don't have to make any payments. Once you draw from the credit line, as long as you make the minimum payment each month, you can either pay your balance in full or pay whatever you can afford. (Just keep in mind that your unpaid balance will accrue interest.)\nA business loan is installment credit. You receive a lump sum and make fixed monthly payments on it. You must start repaying the loan right away, whether or not you use the money immediately.\nUnlike personal loans, most business loans are limited to specific uses. You can't use the proceeds of an equipment loan to pay your employees, for example. A business line of credit, however, can be used for any business purpose you choose.\nBusiness loans are generally available in larger amounts than business lines of credit. However, loans are more likely to require collateral and generally have stricter criteria for approval. END