Bellgrove Lenders, a small-business funding broker in Appleton, Wisconsin, compares six options here: working capital, term loans, lines of credit, inventory financing, equipment financing and merchant cash advances (not a loan). The table shows how each is repaid or collected. Whether a request is approved, and on what terms, is up to the lending partner.
Six options, one table
| Option | How the money comes back | Typical uses | What partners tend to review |
|---|---|---|---|
| Working capital | Fixed installments over a short term; the partner sets the schedule | Payroll, materials, a slow-paying customer | Recent bank deposits, existing debts |
| Term loan | Equal installments of principal and interest over a set term | Build-outs, expansion, refinancing | Tax returns, financial statements, credit history, collateral |
| Line of credit | Repay what you draw; interest on the drawn balance | Recurring, uneven costs | How cash moves month to month, credit, and at times collateral |
| Inventory financing | Repaid as goods sell or on set dates | Stock for a large order or a new line | Inventory records, sales history, existing liens |
| Equipment financing | Loan or lease payments over the asset's useful life | Machines, kitchen lines, clinical equipment, vans | The quote, the asset, time in business, credit |
| Merchant cash advance | Collected as a share of sales or fixed debits; not a loan | Quick cash for businesses with steady card sales | Card and bank receipts |
Use the table as a starting point, not a verdict. A partner's own product rules decide what is available for a specific business.
Short term or long term
Match the life of the funding to the life of what it pays for. A payroll gap that closes when an invoice is paid should not sit on a five-year schedule, and a remodel that earns its keep over years should not be squeezed into a few months of heavy payments. Working capital and merchant cash advances run short; term loans and equipment financing run longer; a credit line stays open for repeated use.
Collateral: what partners can claim, and when
Collateral is something of value a partner can claim if the business does not pay. Common examples:
- The equipment being bought, in equipment financing
- The goods on hand, in inventory financing
- Receivables owed to the business
- Other business assets, through a blanket lien recorded as a UCC filing
- Real estate, in some larger term loans
Funding described as unsecured may still come with a personal guarantee from the owner and a general lien on business assets. Read both sections of any offer. Whether collateral is needed at all is the partner's call and depends on its product and its review of the business.
Where SBA loans and startups fit
SBA-backed loans are made by lenders that take part in the SBA's programs. Bellgrove Lenders is not an SBA lender and does not arrange SBA loans; the Wisconsin loan readiness guide explains how to prepare whichever route you take. A business with little or no operating history gives any partner less to review, so expect more questions about the owner, the plan and any collateral.
Which row describes your business?
Call (920) 260-3971 and describe the cost. If two options could fit, we lay out how each would be repaid so you can compare the total cost before anything goes to a partner.
By Bellgrove Lenders · Updated
