Business Loan Glossary: Key Terms Every Small & Medium-Sized Business Should Know
Navigating the world of business loans can be complex, especially for small and medium-sized businesses. Our comprehensive business loan glossary is here to help. Whether you're applying for a loan or managing finances, understanding key terms is crucial to making informed decisions. Explore definitions, explanations, and expert insights to simplify your business loan journey and empower your financial growth.
What is a line of credit?
A line of credit (LOC) is a flexible loan from a bank or financial institution that gives you access to a set amount of money, which you can borrow from as needed. You only pay interest on the money you actually use, not the entire credit limit, and you can repay and borrow again, similar to how a credit card works.
A line of credit (LOC) is a flexible loan from a bank or financial institution that gives you access to a set amount of money, which you can borrow from as needed. You only pay interest on the money you actually use, not the entire credit limit, and you can repay and borrow again, similar to how a credit card works.
There are different types of lines of credit, such as personal LOCs, business LOCs, and home equity lines of credit (HELOCs). They’re often used for managing cash flow, covering unexpected expenses, or financing large purchases without having to take out a lump-sum loan.