 TITLE: Business Loan or Business Line of Credit: Which Is Best for You? CONTENT: Similar to a credit card, a business line of credit allows you to borrow up to a set limit. You pay interest only on the amount you've borrowed. You can choose to pay off the full amount every month or only the minimum payment, but just as with a credit card, any balance you carry will accrue interest. As you repay the money you've borrowed, you can draw on those funds again, up to your credit limit, without having to reapply or get reapproved.\nBusiness lines of credit are designed for short-term financial needs. For example, a retailer might use a line of credit to buy extra inventory and pay seasonal employees during the holiday shopping season. You can also get a business line of credit to use as an \"emergency fund,\" even if you don't have an immediate need for it. If an emergency arises, you can quickly access funds from the line of credit. If you don't draw any funds, there is nothing to repay.\nBusiness lines of credit are available from banks, direct online lenders and even through the SBA, whose business line of credit program is called CAPLines. Business lines of credit are smaller than loans, generally maxing out at around $250,000. Many banks don't want to make small loans, so if you need $250,000 or less, a line of credit can be a good option. END