A line of credit is different from a loan in that a loan is a fixed sum of money repaid over a fixed term (period of time), and a line of credit is a revolving account a creditor can borrow against, withdrawing funds up to the maximum amount of the line of credit, and paying-down the line of credit at any time, with the balance fluctuating over time. Thus, a line of credit is more similar to a credit card account, but is usually provided by a local bank based on the debtor’s personal or business relationship with the bank.

In Louisiana, as in other states, a line of credit and a loan are distinct financial products. A loan is a lump sum of money that is borrowed and must be repaid over a set period, with interest, according to the terms of the loan agreement. In contrast, a line of credit is a flexible borrowing option that allows the borrower to draw funds up to a certain limit, repay them, and borrow again as needed. The balance can go up or down over time, depending on the borrower's withdrawals and payments. Interest is typically charged on the amount of money borrowed, not on the entire credit line available. Lines of credit can be secured or unsecured and are often offered by banks with which the borrower has an existing personal or business relationship. The specific terms and regulations governing lines of credit in Louisiana would be outlined in the loan agreement and are subject to state statutes as well as federal laws such as the Truth in Lending Act, which requires lenders to disclose credit terms to consumers.