Term Loan vs. Line of Credit: Maybe a High RiskBusiness Loan?

Today, business owners have moreoptions for financing than ever before. If you’re considering either a term loan or a line of credit, how can you make your choice? Where can you find a reliable high risk business loan? This article briefly explains what term loans and lines of credit are, as well as helps you find the best high risk funding for your business.


What a Term Loan Is

A term loan is a lump sum of money that you can borrow and pay it back over a determined period of time. You can make monthly, bi-monthly, weekly, or daily payments.After you’ve spent all the available amount and you need additional financing, you can apply for a new loan.


Term loans are fixed for a set amortization period, which can’t be said about lines of credit. You can renew lines of credit every 1 – 2 years. Lenders prefer collateralized loans. However, unsecured loan terms notes are also available.


You can apply for different types of term loans. These include long-term, medium-term, as well as short-term loans. By the way, the latter options are very popular. You can choose them with different repayment periods. Also, you can apply for aterm loan with a fixed rate or variable interest rates.


Only, you must start repaying the loan just right off the bat, even if you aren’t planning to use the amount right away. As for the closing costs and interest rates, these are usually higher as compared to those associated with business lines of credit.


What a Line of Credit Is

With a line of credit, you receive acertain amount of credit, which can draw on as needed. You’ll be paying interest on what you use.Lines of credit are less complicated than term loans. However, if you turn to a reputable alternative online lender, you can qualify for a line of credit without major challenges, thanks to extremely fast applications.


With a respectable alternative online lender, you can get easy approval for a high risk business loan as well. No matter you’re a new business, have no or bad credit, you won’t get into obstacles when trying to get approved for business funding.


When deciding on whether you should obtain a line of credit or a term loan, take into account the following. In case you’re in need of cash quickly, you’d better choose a line of credit through an online lender or a short-term loan. Also, if have a specific investment in mind, go for a term loan.


By the way, lines of credit usually come with a lower interest rate and closing costs as compared to a loan of comparable size. However, if you’ve made a late payment or gone over your borrowing limit, the interest rate of your line of credit may go higher to a significant extent.


Starting a business isn’t a small task at all. You should choose the right type of financing for your business so to take it to the next level with ease.



Author Bio: As the FAM account executive, Michael Hollis has funded millions by using business funding solutions. His experience and extensive knowledge of the industry has made him a finance expert at First American Merchant.

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