Understand the difference
A term loan usually advances a specified amount with a repayment schedule. A revolving line permits draws and repayments within an agreed limit, subject to its conditions. The line can support repeated operating cycles; a term structure can match a longer-lived project with a defined budget.
How to make the comparison
Compare the business’s cash pattern. A machine expected to produce value for several years may call for a different repayment horizon from inventory that sells within a season. A business can use both products for separate needs if the combined payments, security, and lender conditions remain workable.
The details that can change your decision
Revolving does not mean permanent or unconditional access. A line can be reviewed, reduced, or tied to collateral eligibility. A term loan may contain a balloon balance or prepayment charge. Compare commitment fees, interest on actual draws, renewal risk, and the cost of keeping funds unused. A fully drawn line that never reduces deserves a review of whether it is financing a lasting requirement.
Your next-step checklist
- One-time investment or recurring gap
- Repayment source and operating cycle
- Renewal versus maturity obligations
- Total costs at realistic usage levels
Crack this combination.
Which structure is commonly suited to repeated short-term cash gaps?
Keys track learning on this device and, when signed in, in your Saved files library. Every dossier stays open.
Sources & further reading
This file draws on the following references. Product availability and requirements must be confirmed with the provider.
Levr: business line of creditLevr: reviewing a debt term sheet