Frequently Asked Questions
Frequently Asked Questions
Business Line of Credit FAQs
A flexible funding account with a set limit you can draw from, repay, and draw again. You pay interest only on what you use.
A term loan is a one-time lump sum with fixed payments; a line of credit is revolving—use it as needed for short-term cash needs.
Typically: 6–24+ months in business, consistent revenue/cash flow, and acceptable business/personal credit. Stronger profiles get better limits and rates.
Often yes for small businesses. Some asset-based lines may reduce or waive it, but expect tighter terms.
Both exist. Many lines include a blanket lien (UCC-1) on business assets; unsecured options rely more on cash flow and credit strength.
Rates depend on revenue, credit, industry risk, and collateral. Many lines are variable (e.g., Prime/SOFR + margin); some offer fixed pricing for a period.
Possible fees: origination, draw/transaction, annual/maintenance, late/NSF, and wire/ACH. Many lines have no prepayment penalties—confirm your agreement.
Request a draw via portal; funds arrive by ACH/wire. Payments are typically weekly or monthly; interest accrues on outstanding principal only.
Simple files can be same-day to a few business days. Once open, ACH draws often land in 1–2 business days; wires can be same day (fees may apply).
Pre-qual may be a soft pull; final approval usually involves a hard pull. On-time usage can help build business credit when lenders report.
Short-Term Business Loan FAQs
A one-time lump-sum business loan repaid on a fixed schedule over a short horizon (usually 3–24 months).
Short, high-ROI needs like inventory buys, bridging receivables/payables, seasonal stock, marketing pushes, or small equipment—when you want predictable payments.
LOC = revolving (draw/repay repeatedly).
MCA = variable % of sales on purchased receivables.
Short-term loan = lump sum with fixed payments and set end date.
Terms commonly 6–18 months (range ~3–24). Amounts often tied to cash-flow—about 50–150% of average monthly deposits.
Lenders quote APR or a factor rate (e.g., 1.15). Compare total dollar payback, effective APR, and fees (origination, late/NSF, ACH).
Typical minimums: 6–12 months in business, $100k–$300k+ annual revenue, and ~550–650 FICO (varies by lender/industry).
Often a UCC-1 blanket lien on business assets and a personal guaranty for unsecured structures; specifics vary by offer.
Usually application, IDs, 3–6 months of business bank statements, and a voided check. Approvals can be same-day; funding as fast as the next business day after signing.
Fixed daily or weekly ACH debits (sometimes bi-weekly or monthly). This aids planning but requires steady cash flow.
Some lenders offer prepayment discounts; others don’t—get the payoff policy in writing. Key risks: over-borrowing, cash-flow strain from frequent debits, stacking multiple loans, and restrictive covenants.
Revenue-Based Financing FAQs
Growth capital you repay as a fixed percentage of future revenue until a pre-agreed cap (e.g., 1.3×–1.8× the amount funded) is reached.
Loans have fixed payments and interest; RBF payments flex with revenue. Equity sells ownership; RBF doesn’t dilute (though some deals include small warrants).
Businesses with predictable revenue and healthy margins (SaaS, subscription, e-commerce). Common uses: inventory, marketing/CAC, working capital for repeatable growth loops.
Often a multiple of monthly revenue/GMV or MRR (for SaaS). Typical share rate: ~1%–10% of revenue; repayment cap: ~1.2×–2.0×; soft term: 12–48 months with a long-stop date.
Cost is set by the cap multiple. Compare total dollar payback, expected payoff time, share rate, fees, and any long-stop/balloon rules; you can model an implied APR based on your revenue forecast.
Revenue scale and stability, margins, churn/retention (for SaaS), LTV/CAC, cohort performance, channel concentration, and connected data from bank/PSPs/accounting.
IDs, bank statements, read-only connections to payment processors (Stripe/Shopify/Amazon/PayPal), accounting (QuickBooks/Xero), and basic financials. Personal guarantees/collateral are less common but possible.
You remit the agreed % of revenue (monthly is common; some weekly/daily) via automated ACH. Payments rise when sales rise and fall when sales dip—seasonality extends or shortens the payoff.
Many contracts require the remaining balance up to the cap regardless of timing (limited prepay discounts). If you haven’t hit the cap by the long-stop date, a residual/balloon may be due—confirm in writing.
Over-committing revenue share, stacking multiple RBFs, opaque “revenue” definitions, aggressive remedies, high caps, heavy fees, or strict long-stop clauses. Ensure terms align with margins, seasonality, and cash buffers.
Merchant Cash Advance FAQs
It’s an upfront lump sum in exchange for a fixed percentage (“holdback”) of your future sales until a set total payback (factor/multiple) is reached.
An MCA isn’t a loan with interest and amortization; it’s a purchase of receivables with variable, revenue-linked remittances and a fixed total payback.
Factor rate (e.g., 1.35) sets the total you’ll repay (funded × factor). Holdback is the % of sales remitted (e.g., 8%–15%) until you hit that total.
Either via daily/weekly ACH debits (with periodic “true-ups”) or a processor split that diverts the holdback % from your card batches automatically.
Approvals can be same day with basic docs: application, IDs, 3–6 months of bank/processor statements, and a voided check.
Typically 3–12+ months in business, consistent monthly revenue/deposits, limited NSFs, and stable average balances. Personal credit matters but revenue health matters more.
Remittances rise when sales rise and fall when sales dip. Ensure the holdback fits your margins and seasonality so you can cover COGS and operating expenses.
Some funders offer early-pay discounts, but many require the remaining balance up to the factor—confirm the payoff policy in writing.
High total cost, stacking multiple positions, weak/absent reconciliation language, aggressive remedies (e.g., COJ clauses), and hidden fees. Read the contract carefully.
Short-term term loans (fixed payments), business lines of credit (revolving, often cheaper), revenue-based financing (broader revenue definition, capped payback), or invoice/equipment financing depending on your use case.
Equipment Funding FAQs
Financing (loan or lease) used to acquire business equipment—secured by the equipment itself and repaid over time from your cash flow.
New/used machinery, vehicles, medical/dental devices, construction gear, restaurant/kitchen equipment, IT/servers, POS systems, and more (including many soft costs like installation and taxes).
- Loan: you own the asset; fixed payments; interest; lien on equipment.
Lease: you pay to use the asset; options at end (FMV, 10% option, or $1 buyout); often lower payments during term.
Ticket sizes from ~$10k to multi-million; terms ~24–84 months (sometimes longer for heavy equipment), usually fixed payments.
Loans show APR; leases often show a payment “factor.” Always compare total dollar cost, implied APR, fees, and end-of-term (EOT) options.
Time in business (stronger ≥2 years), stable revenue/bank statements, reasonable credit (personal guaranty common), and a vendor quote/invoice with make/model/serials.
Simple deals can fund in 24–72 hours after approval & delivery/acceptance. Typical docs: application, IDs, bank statements/financials (depth by size), insurance binder, vendor invoice.
Often yes. Many programs include shipping, installation, and taxes; used gear is financeable with inspections and potentially shorter terms or higher down payments.
Depends on structure:
- $1 buyout: you own it.
- Fixed-percent (e.g., 10%): purchase at set residual.
- FMV: buy at fair market value, return, or renew. (Watch for evergreen auto-renewals—give notice on time.)
- Risks: evergreen clauses, unclear FMV, hidden fees, mismatched term vs asset life, under-insuring, and obsolescence.
- Best practices: match term to useful life, verify fees/EOT in writing, maintain insurance, keep maintenance logs, and get UCC/title releases at payoff.
SBA 7(a) FAQs
A lender-originated business loan partially guaranteed by the SBA, used for day-to-day operating needs (inventory, payroll, marketing, etc.).
Similar underwriting, but the SBA guaranty lets lenders approve more files, offer longer terms, and cap pricing within SBA limits.
- Allowed: operating expenses, inventory, payroll, rent, marketing, and eligible refinancing.
- Not allowed: personal use, speculative/passive investments, illegal purposes, certain tax issues without an approved plan.
Amounts range from small to multi-million (subject to program caps). Rates are benchmark (e.g., Prime/SOFR) + SBA-capped spread. Terms for working capital commonly up to 10 years.
Either. You can do a term loan or a revolving/non-revolving working capital line under CAPLines (e.g., Working Capital CAPLine).
Expect a blanket UCC-1 on business assets; lenders take available collateral when prudent. Personal guarantees are typical for owners ≥20%.
For-profit U.S. small businesses meeting SBA size standards, with adequate cash flow, reasonable leverage, owner experience, and satisfactory credit. Lenders test DSCR (often ≥1.15x) and “credit elsewhere.”
SBA forms, ownership/BOI info, 3 years business & personal tax returns (as applicable), YTD financials, projections (for startups/growth), bank statements, AR/AP agings, and a debt schedule.
PLP (Preferred Lender) files can move in weeks; complex files or non-PLP submissions can take longer due to SBA concurrence and third-party checks.
Often yes—if it provides a documented “substantial benefit” (better rate/term/cash flow) and meets SBA refinancing rules; you’ll need payoff letters and compliance with SBA guidelines.
Business Line of Credit FAQs
A flexible funding account with a set limit you can draw from, repay, and draw again. You pay interest only on what you use.
A term loan is a one-time lump sum with fixed payments; a line of credit is revolving—use it as needed for short-term cash needs.
Typically: 6–24+ months in business, consistent revenue/cash flow, and acceptable business/personal credit. Stronger profiles get better limits and rates.
Often yes for small businesses. Some asset-based lines may reduce or waive it, but expect tighter terms.
Both exist. Many lines include a blanket lien (UCC-1) on business assets; unsecured options rely more on cash flow and credit strength.
Rates depend on revenue, credit, industry risk, and collateral. Many lines are variable (e.g., Prime/SOFR + margin); some offer fixed pricing for a period.
Possible fees: origination, draw/transaction, annual/maintenance, late/NSF, and wire/ACH. Many lines have no prepayment penalties—confirm your agreement.
Request a draw via portal; funds arrive by ACH/wire. Payments are typically weekly or monthly; interest accrues on outstanding principal only.
Simple files can be same-day to a few business days. Once open, ACH draws often land in 1–2 business days; wires can be same day (fees may apply).
Pre-qual may be a soft pull; final approval usually involves a hard pull. On-time usage can help build business credit when lenders report.
Short-Term Business Loan FAQs
A one-time lump-sum business loan repaid on a fixed schedule over a short horizon (usually 3–24 months).
Short, high-ROI needs like inventory buys, bridging receivables/payables, seasonal stock, marketing pushes, or small equipment—when you want predictable payments.
LOC = revolving (draw/repay repeatedly).
MCA = variable % of sales on purchased receivables.
Short-term loan = lump sum with fixed payments and set end date.
Terms commonly 6–18 months (range ~3–24). Amounts often tied to cash-flow—about 50–150% of average monthly deposits.
Lenders quote APR or a factor rate (e.g., 1.15). Compare total dollar payback, effective APR, and fees (origination, late/NSF, ACH).
Typical minimums: 6–12 months in business, $100k–$300k+ annual revenue, and ~550–650 FICO (varies by lender/industry).
Often a UCC-1 blanket lien on business assets and a personal guaranty for unsecured structures; specifics vary by offer.
Usually application, IDs, 3–6 months of business bank statements, and a voided check. Approvals can be same-day; funding as fast as the next business day after signing.
Fixed daily or weekly ACH debits (sometimes bi-weekly or monthly). This aids planning but requires steady cash flow.
Some lenders offer prepayment discounts; others don’t—get the payoff policy in writing. Key risks: over-borrowing, cash-flow strain from frequent debits, stacking multiple loans, and restrictive covenants.
Revenue-Based Financing FAQs
Growth capital you repay as a fixed percentage of future revenue until a pre-agreed cap (e.g., 1.3×–1.8× the amount funded) is reached.
Loans have fixed payments and interest; RBF payments flex with revenue. Equity sells ownership; RBF doesn’t dilute (though some deals include small warrants).
Businesses with predictable revenue and healthy margins (SaaS, subscription, e-commerce). Common uses: inventory, marketing/CAC, working capital for repeatable growth loops.
Often a multiple of monthly revenue/GMV or MRR (for SaaS). Typical share rate: ~1%–10% of revenue; repayment cap: ~1.2×–2.0×; soft term: 12–48 months with a long-stop date.
Cost is set by the cap multiple. Compare total dollar payback, expected payoff time, share rate, fees, and any long-stop/balloon rules; you can model an implied APR based on your revenue forecast.
Revenue scale and stability, margins, churn/retention (for SaaS), LTV/CAC, cohort performance, channel concentration, and connected data from bank/PSPs/accounting.
IDs, bank statements, read-only connections to payment processors (Stripe/Shopify/Amazon/PayPal), accounting (QuickBooks/Xero), and basic financials. Personal guarantees/collateral are less common but possible.
You remit the agreed % of revenue (monthly is common; some weekly/daily) via automated ACH. Payments rise when sales rise and fall when sales dip—seasonality extends or shortens the payoff.
Many contracts require the remaining balance up to the cap regardless of timing (limited prepay discounts). If you haven’t hit the cap by the long-stop date, a residual/balloon may be due—confirm in writing.
Over-committing revenue share, stacking multiple RBFs, opaque “revenue” definitions, aggressive remedies, high caps, heavy fees, or strict long-stop clauses. Ensure terms align with margins, seasonality, and cash buffers.
Merchant Cash Advance FAQs
It’s an upfront lump sum in exchange for a fixed percentage (“holdback”) of your future sales until a set total payback (factor/multiple) is reached.
An MCA isn’t a loan with interest and amortization; it’s a purchase of receivables with variable, revenue-linked remittances and a fixed total payback.
Factor rate (e.g., 1.35) sets the total you’ll repay (funded × factor). Holdback is the % of sales remitted (e.g., 8%–15%) until you hit that total.
Either via daily/weekly ACH debits (with periodic “true-ups”) or a processor split that diverts the holdback % from your card batches automatically.
Approvals can be same day with basic docs: application, IDs, 3–6 months of bank/processor statements, and a voided check.
Typically 3–12+ months in business, consistent monthly revenue/deposits, limited NSFs, and stable average balances. Personal credit matters but revenue health matters more.
Remittances rise when sales rise and fall when sales dip. Ensure the holdback fits your margins and seasonality so you can cover COGS and operating expenses.
Some funders offer early-pay discounts, but many require the remaining balance up to the factor—confirm the payoff policy in writing.
High total cost, stacking multiple positions, weak/absent reconciliation language, aggressive remedies (e.g., COJ clauses), and hidden fees. Read the contract carefully.
Short-term term loans (fixed payments), business lines of credit (revolving, often cheaper), revenue-based financing (broader revenue definition, capped payback), or invoice/equipment financing depending on your use case.
Equipment Funding FAQs
Financing (loan or lease) used to acquire business equipment—secured by the equipment itself and repaid over time from your cash flow.
New/used machinery, vehicles, medical/dental devices, construction gear, restaurant/kitchen equipment, IT/servers, POS systems, and more (including many soft costs like installation and taxes).
- Loan: you own the asset; fixed payments; interest; lien on equipment.
Lease: you pay to use the asset; options at end (FMV, 10% option, or $1 buyout); often lower payments during term.
Ticket sizes from ~$10k to multi-million; terms ~24–84 months (sometimes longer for heavy equipment), usually fixed payments.
Loans show APR; leases often show a payment “factor.” Always compare total dollar cost, implied APR, fees, and end-of-term (EOT) options.
Time in business (stronger ≥2 years), stable revenue/bank statements, reasonable credit (personal guaranty common), and a vendor quote/invoice with make/model/serials.
Simple deals can fund in 24–72 hours after approval & delivery/acceptance. Typical docs: application, IDs, bank statements/financials (depth by size), insurance binder, vendor invoice.
Often yes. Many programs include shipping, installation, and taxes; used gear is financeable with inspections and potentially shorter terms or higher down payments.
Depends on structure:
- $1 buyout: you own it.
- Fixed-percent (e.g., 10%): purchase at set residual.
- FMV: buy at fair market value, return, or renew. (Watch for evergreen auto-renewals—give notice on time.)
- Risks: evergreen clauses, unclear FMV, hidden fees, mismatched term vs asset life, under-insuring, and obsolescence.
- Best practices: match term to useful life, verify fees/EOT in writing, maintain insurance, keep maintenance logs, and get UCC/title releases at payoff.
SBA 7(a) FAQs
A lender-originated business loan partially guaranteed by the SBA, used for day-to-day operating needs (inventory, payroll, marketing, etc.).
Similar underwriting, but the SBA guaranty lets lenders approve more files, offer longer terms, and cap pricing within SBA limits.
- Allowed: operating expenses, inventory, payroll, rent, marketing, and eligible refinancing.
- Not allowed: personal use, speculative/passive investments, illegal purposes, certain tax issues without an approved plan.
Amounts range from small to multi-million (subject to program caps). Rates are benchmark (e.g., Prime/SOFR) + SBA-capped spread. Terms for working capital commonly up to 10 years.
Either. You can do a term loan or a revolving/non-revolving working capital line under CAPLines (e.g., Working Capital CAPLine).
Expect a blanket UCC-1 on business assets; lenders take available collateral when prudent. Personal guarantees are typical for owners ≥20%.
For-profit U.S. small businesses meeting SBA size standards, with adequate cash flow, reasonable leverage, owner experience, and satisfactory credit. Lenders test DSCR (often ≥1.15x) and “credit elsewhere.”
SBA forms, ownership/BOI info, 3 years business & personal tax returns (as applicable), YTD financials, projections (for startups/growth), bank statements, AR/AP agings, and a debt schedule.
PLP (Preferred Lender) files can move in weeks; complex files or non-PLP submissions can take longer due to SBA concurrence and third-party checks.
Often yes—if it provides a documented “substantial benefit” (better rate/term/cash flow) and meets SBA refinancing rules; you’ll need payoff letters and compliance with SBA guidelines.
Business Line of Credit FAQs
A flexible funding account with a set limit you can draw from, repay, and draw again. You pay interest only on what you use.
A term loan is a one-time lump sum with fixed payments; a line of credit is revolving—use it as needed for short-term cash needs.
Typically: 6–24+ months in business, consistent revenue/cash flow, and acceptable business/personal credit. Stronger profiles get better limits and rates.
Often yes for small businesses. Some asset-based lines may reduce or waive it, but expect tighter terms.
Both exist. Many lines include a blanket lien (UCC-1) on business assets; unsecured options rely more on cash flow and credit strength.
Rates depend on revenue, credit, industry risk, and collateral. Many lines are variable (e.g., Prime/SOFR + margin); some offer fixed pricing for a period.
Possible fees: origination, draw/transaction, annual/maintenance, late/NSF, and wire/ACH. Many lines have no prepayment penalties—confirm your agreement.
Request a draw via portal; funds arrive by ACH/wire. Payments are typically weekly or monthly; interest accrues on outstanding principal only.
Simple files can be same-day to a few business days. Once open, ACH draws often land in 1–2 business days; wires can be same day (fees may apply).
Pre-qual may be a soft pull; final approval usually involves a hard pull. On-time usage can help build business credit when lenders report.
Short-Term Business Loan FAQs
A one-time lump-sum business loan repaid on a fixed schedule over a short horizon (usually 3–24 months).
Short, high-ROI needs like inventory buys, bridging receivables/payables, seasonal stock, marketing pushes, or small equipment—when you want predictable payments.
LOC = revolving (draw/repay repeatedly).
MCA = variable % of sales on purchased receivables.
Short-term loan = lump sum with fixed payments and set end date.
Terms commonly 6–18 months (range ~3–24). Amounts often tied to cash-flow—about 50–150% of average monthly deposits.
Lenders quote APR or a factor rate (e.g., 1.15). Compare total dollar payback, effective APR, and fees (origination, late/NSF, ACH).
Typical minimums: 6–12 months in business, $100k–$300k+ annual revenue, and ~550–650 FICO (varies by lender/industry).
Often a UCC-1 blanket lien on business assets and a personal guaranty for unsecured structures; specifics vary by offer.
Usually application, IDs, 3–6 months of business bank statements, and a voided check. Approvals can be same-day; funding as fast as the next business day after signing.
Fixed daily or weekly ACH debits (sometimes bi-weekly or monthly). This aids planning but requires steady cash flow.
Some lenders offer prepayment discounts; others don’t—get the payoff policy in writing. Key risks: over-borrowing, cash-flow strain from frequent debits, stacking multiple loans, and restrictive covenants.
Revenue-Based Financing FAQs
Growth capital you repay as a fixed percentage of future revenue until a pre-agreed cap (e.g., 1.3×–1.8× the amount funded) is reached.
Loans have fixed payments and interest; RBF payments flex with revenue. Equity sells ownership; RBF doesn’t dilute (though some deals include small warrants).
Businesses with predictable revenue and healthy margins (SaaS, subscription, e-commerce). Common uses: inventory, marketing/CAC, working capital for repeatable growth loops.
Often a multiple of monthly revenue/GMV or MRR (for SaaS). Typical share rate: ~1%–10% of revenue; repayment cap: ~1.2×–2.0×; soft term: 12–48 months with a long-stop date.
Cost is set by the cap multiple. Compare total dollar payback, expected payoff time, share rate, fees, and any long-stop/balloon rules; you can model an implied APR based on your revenue forecast.
Revenue scale and stability, margins, churn/retention (for SaaS), LTV/CAC, cohort performance, channel concentration, and connected data from bank/PSPs/accounting.
IDs, bank statements, read-only connections to payment processors (Stripe/Shopify/Amazon/PayPal), accounting (QuickBooks/Xero), and basic financials. Personal guarantees/collateral are less common but possible.
You remit the agreed % of revenue (monthly is common; some weekly/daily) via automated ACH. Payments rise when sales rise and fall when sales dip—seasonality extends or shortens the payoff.
Many contracts require the remaining balance up to the cap regardless of timing (limited prepay discounts). If you haven’t hit the cap by the long-stop date, a residual/balloon may be due—confirm in writing.
Over-committing revenue share, stacking multiple RBFs, opaque “revenue” definitions, aggressive remedies, high caps, heavy fees, or strict long-stop clauses. Ensure terms align with margins, seasonality, and cash buffers.
Merchant Cash Advance FAQs
It’s an upfront lump sum in exchange for a fixed percentage (“holdback”) of your future sales until a set total payback (factor/multiple) is reached.
An MCA isn’t a loan with interest and amortization; it’s a purchase of receivables with variable, revenue-linked remittances and a fixed total payback.
Factor rate (e.g., 1.35) sets the total you’ll repay (funded × factor). Holdback is the % of sales remitted (e.g., 8%–15%) until you hit that total.
Either via daily/weekly ACH debits (with periodic “true-ups”) or a processor split that diverts the holdback % from your card batches automatically.
Approvals can be same day with basic docs: application, IDs, 3–6 months of bank/processor statements, and a voided check.
Typically 3–12+ months in business, consistent monthly revenue/deposits, limited NSFs, and stable average balances. Personal credit matters but revenue health matters more.
Remittances rise when sales rise and fall when sales dip. Ensure the holdback fits your margins and seasonality so you can cover COGS and operating expenses.
Some funders offer early-pay discounts, but many require the remaining balance up to the factor—confirm the payoff policy in writing.
High total cost, stacking multiple positions, weak/absent reconciliation language, aggressive remedies (e.g., COJ clauses), and hidden fees. Read the contract carefully.
Short-term term loans (fixed payments), business lines of credit (revolving, often cheaper), revenue-based financing (broader revenue definition, capped payback), or invoice/equipment financing depending on your use case.
Equipment Funding FAQs
Financing (loan or lease) used to acquire business equipment—secured by the equipment itself and repaid over time from your cash flow.
New/used machinery, vehicles, medical/dental devices, construction gear, restaurant/kitchen equipment, IT/servers, POS systems, and more (including many soft costs like installation and taxes).
- Loan: you own the asset; fixed payments; interest; lien on equipment.
Lease: you pay to use the asset; options at end (FMV, 10% option, or $1 buyout); often lower payments during term.
Ticket sizes from ~$10k to multi-million; terms ~24–84 months (sometimes longer for heavy equipment), usually fixed payments.
Loans show APR; leases often show a payment “factor.” Always compare total dollar cost, implied APR, fees, and end-of-term (EOT) options.
Time in business (stronger ≥2 years), stable revenue/bank statements, reasonable credit (personal guaranty common), and a vendor quote/invoice with make/model/serials.
Simple deals can fund in 24–72 hours after approval & delivery/acceptance. Typical docs: application, IDs, bank statements/financials (depth by size), insurance binder, vendor invoice.
Often yes. Many programs include shipping, installation, and taxes; used gear is financeable with inspections and potentially shorter terms or higher down payments.
Depends on structure:
- $1 buyout: you own it.
- Fixed-percent (e.g., 10%): purchase at set residual.
- FMV: buy at fair market value, return, or renew. (Watch for evergreen auto-renewals—give notice on time.)
- Risks: evergreen clauses, unclear FMV, hidden fees, mismatched term vs asset life, under-insuring, and obsolescence.
- Best practices: match term to useful life, verify fees/EOT in writing, maintain insurance, keep maintenance logs, and get UCC/title releases at payoff.
SBA 7(a) FAQs
A lender-originated business loan partially guaranteed by the SBA, used for day-to-day operating needs (inventory, payroll, marketing, etc.).
Similar underwriting, but the SBA guaranty lets lenders approve more files, offer longer terms, and cap pricing within SBA limits.
- Allowed: operating expenses, inventory, payroll, rent, marketing, and eligible refinancing.
- Not allowed: personal use, speculative/passive investments, illegal purposes, certain tax issues without an approved plan.
Amounts range from small to multi-million (subject to program caps). Rates are benchmark (e.g., Prime/SOFR) + SBA-capped spread. Terms for working capital commonly up to 10 years.
Either. You can do a term loan or a revolving/non-revolving working capital line under CAPLines (e.g., Working Capital CAPLine).
Expect a blanket UCC-1 on business assets; lenders take available collateral when prudent. Personal guarantees are typical for owners ≥20%.
For-profit U.S. small businesses meeting SBA size standards, with adequate cash flow, reasonable leverage, owner experience, and satisfactory credit. Lenders test DSCR (often ≥1.15x) and “credit elsewhere.”
SBA forms, ownership/BOI info, 3 years business & personal tax returns (as applicable), YTD financials, projections (for startups/growth), bank statements, AR/AP agings, and a debt schedule.
PLP (Preferred Lender) files can move in weeks; complex files or non-PLP submissions can take longer due to SBA concurrence and third-party checks.
Often yes—if it provides a documented “substantial benefit” (better rate/term/cash flow) and meets SBA refinancing rules; you’ll need payoff letters and compliance with SBA guidelines.
Business Line of Credit FAQs
A flexible funding account with a set limit you can draw from, repay, and draw again. You pay interest only on what you use.
A term loan is a one-time lump sum with fixed payments; a line of credit is revolving—use it as needed for short-term cash needs.
Typically: 6–24+ months in business, consistent revenue/cash flow, and acceptable business/personal credit. Stronger profiles get better limits and rates.
Often yes for small businesses. Some asset-based lines may reduce or waive it, but expect tighter terms.
Both exist. Many lines include a blanket lien (UCC-1) on business assets; unsecured options rely more on cash flow and credit strength.
Rates depend on revenue, credit, industry risk, and collateral. Many lines are variable (e.g., Prime/SOFR + margin); some offer fixed pricing for a period.
Possible fees: origination, draw/transaction, annual/maintenance, late/NSF, and wire/ACH. Many lines have no prepayment penalties—confirm your agreement.
Request a draw via portal; funds arrive by ACH/wire. Payments are typically weekly or monthly; interest accrues on outstanding principal only.
Simple files can be same-day to a few business days. Once open, ACH draws often land in 1–2 business days; wires can be same day (fees may apply).
Pre-qual may be a soft pull; final approval usually involves a hard pull. On-time usage can help build business credit when lenders report.
Short-Term Business Loan FAQs
A one-time lump-sum business loan repaid on a fixed schedule over a short horizon (usually 3–24 months).
Short, high-ROI needs like inventory buys, bridging receivables/payables, seasonal stock, marketing pushes, or small equipment—when you want predictable payments.
LOC = revolving (draw/repay repeatedly).
MCA = variable % of sales on purchased receivables.
Short-term loan = lump sum with fixed payments and set end date.
Terms commonly 6–18 months (range ~3–24). Amounts often tied to cash-flow—about 50–150% of average monthly deposits.
Lenders quote APR or a factor rate (e.g., 1.15). Compare total dollar payback, effective APR, and fees (origination, late/NSF, ACH).
Typical minimums: 6–12 months in business, $100k–$300k+ annual revenue, and ~550–650 FICO (varies by lender/industry).
Often a UCC-1 blanket lien on business assets and a personal guaranty for unsecured structures; specifics vary by offer.
Usually application, IDs, 3–6 months of business bank statements, and a voided check. Approvals can be same-day; funding as fast as the next business day after signing.
Fixed daily or weekly ACH debits (sometimes bi-weekly or monthly). This aids planning but requires steady cash flow.
Some lenders offer prepayment discounts; others don’t—get the payoff policy in writing. Key risks: over-borrowing, cash-flow strain from frequent debits, stacking multiple loans, and restrictive covenants.
Revenue-Based Financing FAQs
Growth capital you repay as a fixed percentage of future revenue until a pre-agreed cap (e.g., 1.3×–1.8× the amount funded) is reached.
Loans have fixed payments and interest; RBF payments flex with revenue. Equity sells ownership; RBF doesn’t dilute (though some deals include small warrants).
Businesses with predictable revenue and healthy margins (SaaS, subscription, e-commerce). Common uses: inventory, marketing/CAC, working capital for repeatable growth loops.
Often a multiple of monthly revenue/GMV or MRR (for SaaS). Typical share rate: ~1%–10% of revenue; repayment cap: ~1.2×–2.0×; soft term: 12–48 months with a long-stop date.
Cost is set by the cap multiple. Compare total dollar payback, expected payoff time, share rate, fees, and any long-stop/balloon rules; you can model an implied APR based on your revenue forecast.
Revenue scale and stability, margins, churn/retention (for SaaS), LTV/CAC, cohort performance, channel concentration, and connected data from bank/PSPs/accounting.
IDs, bank statements, read-only connections to payment processors (Stripe/Shopify/Amazon/PayPal), accounting (QuickBooks/Xero), and basic financials. Personal guarantees/collateral are less common but possible.
You remit the agreed % of revenue (monthly is common; some weekly/daily) via automated ACH. Payments rise when sales rise and fall when sales dip—seasonality extends or shortens the payoff.
Many contracts require the remaining balance up to the cap regardless of timing (limited prepay discounts). If you haven’t hit the cap by the long-stop date, a residual/balloon may be due—confirm in writing.
Over-committing revenue share, stacking multiple RBFs, opaque “revenue” definitions, aggressive remedies, high caps, heavy fees, or strict long-stop clauses. Ensure terms align with margins, seasonality, and cash buffers.
Merchant Cash Advance FAQs
It’s an upfront lump sum in exchange for a fixed percentage (“holdback”) of your future sales until a set total payback (factor/multiple) is reached.
An MCA isn’t a loan with interest and amortization; it’s a purchase of receivables with variable, revenue-linked remittances and a fixed total payback.
Factor rate (e.g., 1.35) sets the total you’ll repay (funded × factor). Holdback is the % of sales remitted (e.g., 8%–15%) until you hit that total.
Either via daily/weekly ACH debits (with periodic “true-ups”) or a processor split that diverts the holdback % from your card batches automatically.
Approvals can be same day with basic docs: application, IDs, 3–6 months of bank/processor statements, and a voided check.
Typically 3–12+ months in business, consistent monthly revenue/deposits, limited NSFs, and stable average balances. Personal credit matters but revenue health matters more.
Remittances rise when sales rise and fall when sales dip. Ensure the holdback fits your margins and seasonality so you can cover COGS and operating expenses.
Some funders offer early-pay discounts, but many require the remaining balance up to the factor—confirm the payoff policy in writing.
High total cost, stacking multiple positions, weak/absent reconciliation language, aggressive remedies (e.g., COJ clauses), and hidden fees. Read the contract carefully.
Short-term term loans (fixed payments), business lines of credit (revolving, often cheaper), revenue-based financing (broader revenue definition, capped payback), or invoice/equipment financing depending on your use case.
Equipment Funding FAQs
Financing (loan or lease) used to acquire business equipment—secured by the equipment itself and repaid over time from your cash flow.
New/used machinery, vehicles, medical/dental devices, construction gear, restaurant/kitchen equipment, IT/servers, POS systems, and more (including many soft costs like installation and taxes).
- Loan: you own the asset; fixed payments; interest; lien on equipment.
Lease: you pay to use the asset; options at end (FMV, 10% option, or $1 buyout); often lower payments during term.
Ticket sizes from ~$10k to multi-million; terms ~24–84 months (sometimes longer for heavy equipment), usually fixed payments.
Loans show APR; leases often show a payment “factor.” Always compare total dollar cost, implied APR, fees, and end-of-term (EOT) options.
Time in business (stronger ≥2 years), stable revenue/bank statements, reasonable credit (personal guaranty common), and a vendor quote/invoice with make/model/serials.
Simple deals can fund in 24–72 hours after approval & delivery/acceptance. Typical docs: application, IDs, bank statements/financials (depth by size), insurance binder, vendor invoice.
Often yes. Many programs include shipping, installation, and taxes; used gear is financeable with inspections and potentially shorter terms or higher down payments.
Depends on structure:
- $1 buyout: you own it.
- Fixed-percent (e.g., 10%): purchase at set residual.
- FMV: buy at fair market value, return, or renew. (Watch for evergreen auto-renewals—give notice on time.)
- Risks: evergreen clauses, unclear FMV, hidden fees, mismatched term vs asset life, under-insuring, and obsolescence.
- Best practices: match term to useful life, verify fees/EOT in writing, maintain insurance, keep maintenance logs, and get UCC/title releases at payoff.
SBA 7(a) FAQs
A lender-originated business loan partially guaranteed by the SBA, used for day-to-day operating needs (inventory, payroll, marketing, etc.).
Similar underwriting, but the SBA guaranty lets lenders approve more files, offer longer terms, and cap pricing within SBA limits.
- Allowed: operating expenses, inventory, payroll, rent, marketing, and eligible refinancing.
- Not allowed: personal use, speculative/passive investments, illegal purposes, certain tax issues without an approved plan.
Amounts range from small to multi-million (subject to program caps). Rates are benchmark (e.g., Prime/SOFR) + SBA-capped spread. Terms for working capital commonly up to 10 years.
Either. You can do a term loan or a revolving/non-revolving working capital line under CAPLines (e.g., Working Capital CAPLine).
Expect a blanket UCC-1 on business assets; lenders take available collateral when prudent. Personal guarantees are typical for owners ≥20%.
For-profit U.S. small businesses meeting SBA size standards, with adequate cash flow, reasonable leverage, owner experience, and satisfactory credit. Lenders test DSCR (often ≥1.15x) and “credit elsewhere.”
SBA forms, ownership/BOI info, 3 years business & personal tax returns (as applicable), YTD financials, projections (for startups/growth), bank statements, AR/AP agings, and a debt schedule.
PLP (Preferred Lender) files can move in weeks; complex files or non-PLP submissions can take longer due to SBA concurrence and third-party checks.
Often yes—if it provides a documented “substantial benefit” (better rate/term/cash flow) and meets SBA refinancing rules; you’ll need payoff letters and compliance with SBA guidelines.
