Best lines of credit for start-ups July 2022 – Forbes Advisor

A commercial line of credit is a type of financing that allows businesses to access capital to cover operating and other ongoing expenses. Lines of credit are similar to credit cards in that the borrower can access cash up to a certain limit, repay it over time, and then withdraw the same funds repeatedly during the drawdown period.

Unlike a business loan, which is disbursed in a lump sum, borrowers can access lines of credit as needed, and interest only accrues on the outstanding balance. The best business lines of credit offer competitive interest rates, low fees, and flexible loan terms.

Business line of credit vs business loan

There are a few key differences between business lines of credit and business loans. Commercial lines of credit are revolving, meaning you can borrow money again after you pay it back. Business loans, on the other hand, are one-time loans with interest accruing on the total loan amount from disbursement.

Business lines of credit are also more flexible than business loans and can be used for a variety of purposes. In contrast, business loans are often limited to a specific use, such as the purchase of equipment. Line of credit borrowing limits can also increase, allowing financing to grow with a business as it expands, rather than having a fixed loan amount.

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