Business loans
How each one works, how they’re different, and a simple way to choose.
Business loans
How each one works, how they’re different, and a simple way to choose.
The short answer
A term loan gives you all the money at once. You pay it back in set payments over a set time.
A line of credit gives you a limit. You take what you need, when you need it. Pay it down, and you can use it again. See how it works.
| Term loan | Line of credit | |
|---|---|---|
| How you get the money | All at once | As you need it, up to your limit |
| Interest | On the full amount | Only on what you use |
| Payments | Set schedule | Change with your balance |
| Rate | Fixed or variable | Usually variable |
| Best for | One big cost | Costs that come and go |
Pick a term loan for one big cost with a clear payoff. For example: new equipment, a renovation, a second location, or buying out a partner. You know the amount, and set payments make it easy to plan.
See what the payments look like with our loan calculator.
Pick a line of credit when your needs go up and down. Seasonal businesses use it to get through slow months. Contractors use it to pay for materials while they wait to get paid. An unused line costs little and works like a safety net.
Many businesses have both: a term loan for the big purchase and a line of credit for day-to-day needs. Just make sure the total payments fit your cash flow.
Hit by tariffs? A tariff relief grant may cover part of the cost, and you don’t pay it back.
Not sure which you need? Tell us your plan. We’ll suggest the right fit, with offers side by side.
Neither is better. A line of credit is best for needs that come and go. A term loan is best for one big cost.
It depends on your business. Lenders look at the same things for both: cash flow, credit, time in business and security.
Yes. Many businesses use both. Just make sure the total payments fit your cash flow.
Keep reading
3 min readHow to get a business loan in Canada in 6 simple steps: what lenders check, the documents you need, which loan fits, and how to get a faster yes.
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3 min readHow to get a startup business loan in Canada: what lenders want from new businesses, the best options like CSBFP and Futurpreneur, and simple steps to apply.
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4 min readFree business loan calculator for Canadian owners. Enter the amount, rate and years to see your monthly payment, total interest and total cost in seconds.
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