Two businesses can borrow the same sum and have completely different experiences, because structure — not just size — determines how well credit fits a need. The clearest choice is often between a term loan and a revolving line of credit.
How each behaves
- A term loan advances a lump sum repaid over a set period — predictable, amortising, and suited to a defined one-off need.
- A line of credit is a limit you draw on and repay repeatedly — flexible, revolving, and suited to recurring or fluctuating needs.
Matching structure to need
Use a term loan for a discrete, longer-lived purchase — equipment, a fit-out, an acquisition — where the benefit and the repayments both stretch over years. Use a line of credit for working-capital timing gaps that open and close with the operating cycle, where you want to borrow only when you need to.
Pay for flexibility when you need it, and for certainty when you don’t. The wrong structure quietly taxes a business every month.
Many businesses end up with both — a term facility for the big, fixed commitments and a revolving line for the day-to-day rhythm — so each need is funded by the structure that fits it best.