Advertisement
Business

Business Line of Credit vs Term Loan: Which Fits Payroll Gaps

By Rachel Thorne, Small Business Advisor • Oct 14, 2026 • 5 min read
Business Line of Credit vs Term Loan: Which Fits Payroll Gaps

English · Bahasa Indonesia

Use LOC for timing

Payroll and inventory gaps that reverse when receivables land fit lines of credit. Interest should accrue only on draws.

Use term loans for assets

Equipment and expansion with clear ROI fit amortizing term debt. Match tenor to useful life.

Underwriting prep

Clean books, stable deposits, and a draw policy beat charismatic pitch decks. Ask about covenants before you celebrate the limit.