Business funding comes in structures that are repaid in different ways: installments, revolving balances, payments as stock sells, or a share of future sales. Orchardmark Financial, a small-business funding broker in Scranton, Pennsylvania, compares six of them for Lackawanna County owners and sends requests to lending partners, which decide and set the terms.
All six structures in a single table
| Structure | How it is paid back | Usually suits | Collateral |
|---|---|---|---|
| Working capital | Set installments over a short term | Payroll and bills during a timing gap | Frequently a blanket lien plus a personal guarantee |
| Term loan | Level payments over a set term | Build-outs, expansion, refinancing | Business assets, sometimes real estate |
| Line of credit | Interest on what is drawn; repayments free up the limit | Recurring costs that change in size | Varies; some lines are unsecured |
| Inventory financing | On a schedule or as the goods sell | Stock bought ahead of sales | The inventory itself |
| Equipment financing | Monthly payments; leases may end with a buyout | Machines, vans, clinical and kitchen gear | The equipment |
| Merchant cash advance | Collected as a share of sales or a fixed debit; not a loan | Card-heavy businesses with no other option | Rights to future receivables |
A merchant cash advance sits in the table for comparison only. It is not a loan, it is not repaid in the loan sense, and its cost is fixed by a factor rate rather than an interest rate.
Short term or long term
Funding should run roughly as long as the thing it pays for keeps earning. A gap that closes in weeks belongs with working capital or a credit line; a kitchen refit or a dental operatory that earns for years belongs with a term loan or equipment financing. Paying for a long-lived asset with short-term money squeezes cash every week, and funding a short gap with a five-year loan means paying interest long after the gap has closed.
Secured or unsecured
Secured funding is tied to a named asset, such as the equipment, the inventory or property. Unsecured funding has no specific asset behind it, but it often comes with a blanket lien filed against business assets and a personal guarantee from the owner. Before you sign, ask what the lien covers, whether a guarantee is required and what happens to both once the balance is paid.
Business loan versus credit card
A card is quick for small, irregular purchases you can clear within the billing cycle. Carried balances, cash advances on a card, and large one-time purchases usually cost more on a card than through a structure built for them. A rough rule: if the balance would still be there in three months, compare a line of credit or a term loan before using the card.
What you can use business funding for
- Payroll and payroll taxes during a slow stretch or a receivables delay.
- Inventory and raw materials bought ahead of sales.
- Equipment, vehicles and technology.
- Leasehold improvements, build-outs and second locations.
- Refinancing costlier existing debt.
Partners want the purpose spelled out, and most will not fund personal expenses through a business account. The purpose also decides the structure, which is why it is the first thing we ask about.
Where SBA loans fit for Pennsylvania owners
Searches for SBA loans in Pennsylvania are common. SBA-backed loans are made by banks and other lenders that take part in SBA programs; Orchardmark Financial does not arrange them. For free help comparing them with other options, the Lackawanna County small business resources guide lists where owners look for advising.
By Orchardmark Financial · Updated
