Crowngate Funding Group, a small-business funding service in Grand Island, Nebraska, compares six options: working capital, term loans, lines of credit, inventory financing, equipment financing and merchant cash advances. The table below shows how each is repaid and what it can pay for; funding partners review requests and set any terms.
Six options in one grid
| Option | Payback pattern | Pays for | What a partner weighs |
|---|---|---|---|
| Working capital | Level payments, short term | Payroll, payables, a slow month | Recent bank deposits and how customers pay |
| Term loan | Level payments, longer term | Expansion, remodel, buying a business | Cash flow history and the plan for the money |
| Line of credit | Interest on what you draw; limit refills | Recurring gaps between bills and receipts | Deposit pattern and existing debt |
| Inventory financing | Repaid as stock sells, per the agreement | Stock, parts, fuel loads | Sell-through and supplier invoices |
| Equipment financing | Installments or lease payments | Trucks, lifts, chairs, ovens | The equipment quote and its expected life |
| Merchant cash advance | Remitted from future card or bank receipts | Short-term need, card-heavy sales | Card or deposit volume |
What are the four types of business loans?
One way to list them names four: term loans, lines of credit, equipment loans and working capital loans. Inventory financing is a narrower version of working capital tied to stock. A merchant cash advance is not a loan at all; it is a sale of future receipts, and it belongs in the comparison only so you can see what it costs next to the others.
Types of commercial loans also include real-estate mortgages and construction loans for buildings. Those are property lending, and they are not among the six options here.
Secured vs unsecured business loan: how the difference shows up
A secured loan is backed by something the partner can claim if payments stop: the equipment being bought, inventory, receivables or a lien on business assets. An unsecured loan has no specific asset behind it, though partners often ask for a personal guarantee from the owner.
Equipment financing and inventory financing are usually secured by the thing purchased. Working capital and lines of credit can be either, depending on the partner. Read the security section of any offer before you sign.
Money purpose index: where each need is covered
- Payroll and supplier bills on the working capital page
- Buying stock ahead of demand on the inventory financing page
- Used, restaurant and contractor equipment on the equipment page
- Seasonal swings and recurring payables on the line of credit page
- Expansion, a second location and renovations on the term loan page
Types of working capital loan with examples, from invoice gaps to payroll bridges, are on the working capital page. Owners in specific trades can start from the industry pages instead.
How to get a business loan for a small business, in order
- Write down the purpose and the amount you think it takes.
- Download your last three to six months of business statements.
- Know your time in business and an annual revenue range; the request form asks for both.
- Compare the options above by total payback, not by payment size alone.
- Send the request; a partner reviews and decides.
The Nebraska-specific version, with the state records partners may ask about, is the guide to getting a business loan in Nebraska.
By Crowngate Funding Group · Updated
