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Question: I need equipment financing for my animal hospital. Should I get a line of credit or a term loan?

Answer: Should you borrow "short" or borrow "long"? The term of the loan is driven by the term of your borrowing need. You match the repayment plan with the use of funds. Call it the "matching" principle.

In our personal lives, it's simple. You don't permanently finance a home with a credit card. The need--housing--will last for 20-plus years, so a 20-month credit card loan is a dog of a deal. Neither does it make sense to buy your gerbil's food with a five-year loan. The need, the food (and the gerbil) will be gone long before the loan is repaid.

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