What is the difference between a business loan and a business line of credit?

A term loan provides a fixed lump sum with scheduled repayments — best for a specific, defined purpose (equipment, expansion). A line of credit is revolving and flexible — best for ongoing working capital and variable needs. Lines of credit often carry higher interest rates than term loans but provide flexibility that a fixed loan cannot. Most businesses benefit from having both: a term loan for capital projects and a line for operations.