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 Nebraska, as in other states, a line of credit and a loan are distinct financial products. A loan is a lump sum of money provided by a lender to a borrower with an agreement to pay back the principal with interest over a set period. Once the loan is paid off, the financial arrangement ends. In contrast, a line of credit is a flexible borrowing option where the borrower is approved for a maximum amount and can draw funds up to that limit as needed. The borrower can then repay and re-borrow funds within the line of credit's terms. This revolving nature of a line of credit makes it similar to a credit card. 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. Nebraska state statutes and federal laws regulate both loans and lines of credit, ensuring consumer protection and fair lending practices. It's important for borrowers to understand the terms and conditions, interest rates, repayment schedules, and any fees associated with these financial products before entering into an agreement.