The cost of this type of loan is very high. When a vendor won't ship inventory on open account and you can't afford to pre-pay, ask if your supplier will accept a bank letter of credit. If it will, then discuss the requirements for an letter of credit with your banker. Medium-Term Loans are usually for a period of one to five years and are used to finance plant expansion and equipment. For these loans, banks are very concerned about collateral and will probably require additional collateral from companies with perceived risk.
Banks often have equipment leasing company affiliations.
Leasing a piece of equipment means a lower monthly payment when compared to a term loan. Long-Term Loans are for five years or more and are usually the hardest type of loan to secure. They are typically made for property acquisition, major expansion and some start-up companies with strong collateral. Used when buying buildings and property, with the bank usually loaning up to 75 percent of the property value. LBOs are typically orchestrated by major brokerage houses or LBO specialists.