What makes a terry towel a Grade A towel? Grade A terry towels are new terry towels which have been produced to the specifications of our market requirements. Any Grade B towels have been removed. The power of terry towels lies in the cotton loop construction which provides more surface area in which to absorb liquids and trap dirt and debris. Tip: Washing and drying terry towels before initial use with open up the towel’s fiber and remove lint. Industrial grade terry towels are made with lower quality grades of cotton yarn and it is normal to experience some shrinkage in towel size.