The ideal finance structure for your company will depend on the cash needs of the business.All businesses need to assess both their short and long-term cash requirements. Most businesses will need some type of short-term financing – such as a line of credit (LOC) – to be able to manage operating cash flow.
Longer term financing needs are usually based on capital expenditures which are typically financed by longer term debt to match the life span of the underlying asset (e.g. investment in equipment with a life span of 6 years would be financed with a longer-term bank loan that would match the timeline of the asset).