# Bridging loan, term loan, or credit facility: what’s the difference? *Source: https://credicorp.co.uk/support/bridging-loan-term-loan-credit-facility/* “Bridging loan”, “term loan” and “credit facility” are often used loosely, as if they were interchangeable. They are not. Each is built for a different kind of need, and choosing the wrong one can cost you money or leave a problem unsolved. This article explains each in plain terms and shows where our own products sit. ## Term loan A term loan is the most familiar shape of borrowing: you receive a lump sum up front, then repay it in instalments over a fixed period — the “term” — until it is cleared. The amount, the term and the repayment schedule are agreed at the outset, so you know from day one what you will pay and when. Term loans suit a defined, one-off need with a known cost — buying a piece of equipment, funding a specific project — where you want predictable repayments over months or years. The defining feature is that once it is repaid, it is gone; to borrow again you take out a new loan. ## Bridging loan A bridging loan is short-term borrowing designed to “bridge” a temporary, well-defined gap — typically the gap between needing money now and having money arrive soon. It is meant to be repaid quickly, once the expected funds materialise, rather than carried over a long period. For a business, a classic use is bridging a cash-flow gap: you have invoices due to be paid, but you need to cover stock or a supplier before they land. A bridging loan covers the short interval and is then repaid. Because it is short-term and usually unsecured for smaller sums, it is expensive relative to a long-term facility — it is a tool for a short, specific gap, not for ongoing funding. If you are weighing it up, read [when not to take a short-term business loan](/support/when-not-to-take-a-short-term-business-loan/) honestly first. ## Credit facility A credit facility — often a revolving or running-credit facility — works differently again. Rather than a single lump sum, you are given access to a pre-agreed limit you can draw on, repay, and draw on again as you need to, much like an overdraft. You typically pay for what you actually use. The advantage is flexibility: a facility suits recurring or unpredictable short-term needs, where you do not want to apply for a fresh loan each time. The distinction between a one-off loan and a revolving facility is set out in [running credit vs a one-time loan](/support/running-credit-vs-one-time-loan/). ## Where our products fit Our live product is a short-term **Business Bridging Loan**: **£50 to £500 over 14 to 84 days**, repaid weekly or fortnightly. It is a bridging loan in the sense above — a small, short facility to cover a specific, temporary cash-flow gap for your company, repaid on a clear schedule. Every figure (amount, term, total amount payable, total cost of credit and a simple annualised rate) is on your Key Information Sheet (KIS) before you sign. We are also introducing a **running-credit facility** as a second product. Think of it as the credit-facility model described above — a limit you can draw on and repay as you need — but it is being introduced rather than available to everyone today, so please do not assume it is open to you yet. For what is currently on offer, always check [our business loans page](/business-loans/), which shows the amounts, terms and costs we actually provide right now. ## Choosing the right shape Match the product to the problem. For a one-off purchase with a known cost over a longer period, a term loan fits. For a short, specific gap you expect to close soon, a bridging loan fits. For recurring, unpredictable short-term needs, a facility fits. Getting the shape right is as important as getting the price right — and for a short gap, our bridging loan is built for exactly that. --- Credicorp Limited — UK lender to limited companies (Company No. 16093826). credicorp.co.uk