Elmline Commercial Capital, a small-business funding broker in Longview, TX, compares six funding structures for Gregg County owners: working capital, term loans, lines of credit, inventory financing, equipment financing and merchant cash advances, which are not loans. Each differs in repayment, collateral and best use. Lending partners make every credit decision and set every rate and term.
All six structures, column by column
| Structure | How it is repaid | Suits | Usually secured by |
|---|---|---|---|
| Working capital | Fixed payments over a short schedule | Payroll, supplier bills, a gap before receivables clear | Business assets or a general lien, often with a personal guarantee |
| Term loan | Equal installments covering principal and interest | A build-out, an acquisition, a planned expansion | Business assets, sometimes real estate |
| Line of credit | Interest on drawn balance; paydowns free up the limit | Recurring costs of uneven size | Receivables, a blanket lien, or unsecured for strong files |
| Inventory financing | Paid down as goods sell | Stock bought ahead of demand | The inventory itself |
| Equipment financing | Fixed payments over the asset's useful life | Machinery, work vehicles, kitchen lines, clinical gear | The equipment being bought |
| Merchant cash advance | Remitted from future sales; not a loan | Businesses paid mostly by card that need cash quickly | A purchase of future receivables, often with a UCC filing |
The table describes common structures, not offers. Individual lending partners vary in what they accept, require and charge.
Short horizon or long horizon
A rough rule: the financing should not outlast the thing it pays for. A shortfall in a slow month is gone in a few weeks, so it suits short working capital or a draw on a line. A dozer or a kitchen hood earns for years, so equipment financing spread over its working life matches cost to use. Stretching short needs across long terms tends to pile up interest; squeezing long-lived purchases into short terms tends to choke monthly cash.
Secured or unsecured
Secured funding names collateral that the lender can claim if payments stop: the equipment itself, inventory, receivables or a blanket lien over business assets recorded with a UCC financing statement. Unsecured funding names no specific asset, but it is rarely unsecured in practice, because many partners ask owners for a personal guarantee instead. When you compare offers, list what each one can reach if things go wrong, not only what it costs.
Loans versus a business credit card
A business credit card is convenient for small, frequent purchases that you clear within the statement cycle. For larger sums that stay outstanding, a term loan or a line of credit usually carries a defined schedule and a stated cost that is easier to plan around. Many owners use both: the card for fuel and supplies, a line or loan for the bigger swings.
Permitted uses for business funding
Lending partners generally fund business purposes: payroll, supplies, inventory, equipment, leasehold improvements, refinancing older business debt, buying out a partner or expanding. They generally will not fund personal spending, and some restrict particular uses in the contract itself. Say what the money is for at the start; partners ask, and the answer drives the structure.
Where SBA loans fit
SBA-backed loans are made by participating lenders, with a partial guarantee from the U.S. Small Business Administration. SBA loans are outside Elmline Commercial Capital's work: we are not an SBA lender and do not place SBA requests. If an SBA loan suits your plans, a participating bank or credit union is the place to ask, and East Texas small business resources lists free advisers who can help you prepare.
Before you choose
Start with three questions: what the money pays for, how long that thing will earn, and what pattern your revenue follows across a year. Bring the answers to a call and we can usually narrow six structures to one or two.
By Elmline Commercial Capital · Updated
