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 New Hampshire (NH), a line of credit and a loan are recognized as distinct financial products. A loan in NH is a lump sum of money provided to a borrower with an agreement to repay the principal with interest over a set period. This is a one-time transaction until the loan is paid off or refinanced. On the other hand, a line of credit in NH operates as a revolving account, similar to a credit card, where the borrower is approved for a maximum amount and can draw funds up to that limit as needed. Payments are made on the amount borrowed, and as the balance is paid down, more credit becomes available up to the original limit. The balance on a line of credit can go up and down over time, based on the borrower's withdrawals and payments. Lines of credit can be secured or unsecured and are often offered by local banks, with terms based on the borrower's personal or business relationship with the bank. The specific terms and conditions of lines of credit, including interest rates and fees, are governed by the agreement between the borrower and the financial institution, and must comply with applicable state and federal regulations, including the New Hampshire Consumer Protection Act and the Truth in Lending Act at the federal level.