As a manufacturer, you need access to capital to keep your business running smoothly. But should you get a term loan or line of credit? Understanding the key differences will help you determine the best financing option.
What is a Business Line of Credit?
A line of credit provides revolving access to capital up to a set limit. You only pay interest on the amount drawn. The balance fluctuates based on your needs.
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Benefits for Manufacturers
- Flexibility - Draw funds as needed instead of getting a lump sum
- Lower risk - Pay interest only on what you use
- Ongoing access - Reuse the line as you pay down the balance
- Fast funding - Can be approved more quickly than loans
What is a Term Loan?
With a term loan, you receive the full amount upfront and make fixed monthly payments including interest and principal. The term length can range from a few months to several years.
Benefits for Manufacturers
- Larger amounts - Can qualify for more capital
- Fixed payments - Predictable monthly expenses
- Set timeline - Loan matures on a set end date
Which is Better for Manufacturers?For most manufacturers, a line of credit offers more benefits:
- Manage cash flow fluctuations
- Access funds for short term needs
- Avoid taking on unnecessary debt
However, a term loan may be better if you need to purchase equipment or real estate.Get Affordable Financing for Your Manufacturing BusinessOur quick and easy lines of credit provide manufacturers with ongoing access to working capital. Apply in minutes!Contact us today to discuss your options. Our financing experts can help you determine the best type and amount to fit your needs.
