A line of credit varies from a conventional loan since you do not have to use it, but you can use it as a buffer or a fall-back choice if you have unanticipated cash flow disputes carried about by late paying to expenses, unplanned for expenditures, or merely by seasonal cycles.
The key difference is that a business loan is drawn once, for a precise purpose and is obtained in advance you need it. A line of credit, on the other hand, can be attained before you need it and used several times for day-to-day happenings, but you see fit – paying bills, acquiring inventory, substituting a broken piece of equipment, marketing activities, generating payroll, other such.
One more difference is that loan repayments are fixed and paid on a monthly basis, and are utilized when business holders need to borrow huge amounts of capital to fund spreading out and growth happenings.