As a business owner, it’s about constant decision making — some big, some small — all that impacts your business growth. One of the most crucial decisions? Choosing the right kind of financial support.
At a time when markets are unpredictable and unexpected expenses can hit you at any time, understanding your credit options is more important than ever. Two of the most common credit tools available to MSMEs today are term loans and lines of credit. Each serves a different purpose — and choosing the right one can ease your stress and improve how you manage your business.
Let’s simplify both options so you can make an informed decision that fits the way your business operates.
What Is a Term Loan?
A term loan is a fixed sum of money borrowed for a specific purpose, paid back over a defined period in regular EMIs.
Best for: Big-ticket, one-time expenses
Use cases include:
- Buying new equipment or vehicles
- Expanding or renovating your shop
- Investing in new technology or machinery
- Covering setup costs for a new outlet or branch
With fixed interest rates and a structured repayment plan, term loans are predictable and easier to plan for, especially when you know how much money you need and what it’s for.
What Is a Line of Credit?
A line of credit offers ongoing access to funds, up to a pre-approved limit. You withdraw only what you need and pay interest only on the used amount — not the entire limit.
Best for: Day-to-day business needs and unexpected expenses
Use cases include:
- Purchasing inventory during peak sales periods
- Handling delays in customer payments
- Paying staff or seasonal workers
- Managing recurring operational expenses
It’s like having a safety net for your cash flow — especially useful when business income varies from month to month.
Term Loan vs Line of Credit: At a Glance
| Business Need | Term Loan ✅ | Line of Credit ✅ |
| One-time large purchases | ✅ Yes | ❌ Not suitable |
| Flexible daily operations | ❌ No | ✅ Yes |
| Predictable, fixed repayments | ✅ Yes | ❌ Varies |
| Seasonal staff or temporary expenses | ❌ Not ideal | ✅ Yes |
| Emergency or surprise cash flow needs | ❌ Not ideal | ✅ Yes |
When to Choose What?
Choose a Term Loan if:
- You need a lump sum for a defined project
- You’re comfortable with regular EMI payments
- You want long-term credit with clear terms
Choose a Line of Credit if:
- Your business needs fluctuate monthly
- You want to pay interest only on what you use
- You need the flexibility to draw and repay as needed
Why MSMEs Need to Be Smart About Credit Today
Small businesses are operating in a fast-changing world. Customer habits, supplier costs, and seasonal trends can change overnight. That’s why MSMEs need credit solutions that are just as agile as they are.
Choosing the right type of credit:
- Helps avoid unnecessary debt
- Frees up working capital when it’s needed most
- Gives you breathing room to focus on growth
How MyShubhLife Makes Credit Work for MSMEs
At MyShubhLife, we understand the daily realities of running a small business. That’s why our credit solutions are built to be flexible, fast, and tailored for MSMEs.
Here’s how we help:
- Less-paperwork process — Digital and easy to use
- Quick approvals — no waiting, no running around
- Credit access via trusted merchant platforms
- Support for both term loans and credit lines, depending on your business needs
Final Word: Credit That Moves with Your Business
Your business journey is unique — and so are your financial needs. Whether you’re planning a renovation or need backup funds for sudden expenses, the right kind of credit can make all the difference.
Access MyShubhLife directly from your trusted merchant app — discover fast, flexible solutions designed for real business needs.
Because when your credit fits your hustle, growth becomes just a little easier.