Is a line of credit for business like a credit card or a loan?
Question:
Answer:
It's a loan. Here is the proper definition:
An arrangement in which a bank or vendor extends a specified amount of unsecured credit to a specified borrower for a specified time period. also called credit line.
Have a look at this web page for more information:
http://www.investorwords.com/2830/line_o...
Generally the same. A bank gives you a certain amount of credit, just like on a credit card. You write a check or use a debit card to access it, and pay it back. The amount of money available varies by how much you've borrowed and how much you've paid back. Most lines of credit have adjustable rates, where some credit cards have fixed rates. But unless the business is a sole proprietorship or you sign personally for the loan, they can only collect against the business assets, not you personally.
Both.
It has similarities of both.
rates are lower than credit cards.
terms are flexible based on amounts and what the line of credit is used for. some terms are 5 to 20 years.
So its a combo of the two.
A line of credit is a revolving credit account, like a credit card, but you have to go to the creditor each time you borrow against it, like a loan.
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