A line of credit is a loan that allows businesses to borrow a certain amount of money at any time, up to the credit limit set by the lender. Working capital loans are loans that companies use to finance their day-to-day operations, such as inventory, payroll, or rent.
Both types of financing can be used for various purposes, but loans are more typically used to finance short-term needs, while businesses can use lines of credit for both short- and long-term needs.