Business Line of Credit vs. Loan Comparison
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Editor’s note: At Lantern, we strive to help you make financial decisions with confidence. To do this, we occasionally feature content that includes information about our partners and their products or services. We do not provide, endorse, or guarantee any third-party product, service, information or recommendations—and our opinions are our own.
What Is a Business Loan?
Types of Business Loans
Rates: 3.5-6.25% Loan amount: $5,000-250,000 Terms: 1-7 years
Small Business Administration Loans
Rates: 5-6% for fixed rates Loan amount: $500 to $5.5 million Terms: up to 25 years
Merchant Cash Advance Loans
Rates: 1.10-1.45 Factor Rate (not an interest rate) Fees: 1-3% of loan amount Loan amount: up to $500,000 Terms: 3-24 months
What is a Business Loan?
Pros of a Business Loan
Cons of a Business Loan
What Is a Business Line of Credit?
Rates: from 3.75% Fees: 0-$150 Credit line amount: $5,000 to $250,000 Terms: 3-24 months
Pros of a Business Line of Credit
Cons of a Business Line of Credit
Exploring Business Loan Options
How much money do I need? Loans may be a better choice if a large sum is needed. What will I use the money for? Business loans generally come with restrictions attached to what the funds can be spent on. Do I need it all at once, or spread out over time? A loan amount can be disbursed as a lump sum and a line of credit tapped into only when needed. How much can I afford to pay in loan payments each month? A line of credit could require fewer payments, if only some of the approved financing gets withdrawn. How fast do I need the financed money? If you need access to funds at different times, a line of credit may offer more financing flexibility—as it can be tapped when needed. What financing options do I qualify for? If you’re not certain whether you qualify for a business loan or line of credit, you can research different lenders' requirements to get a clearer idea of the various factors they weigh.
Business Financing That Suits Your Business
Frequently Asked Questions
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