Funding types
Know what you are being offered.
Four products cover most of what independent providers offer small businesses. They are not interchangeable, and the fastest one is rarely the cheapest. Here is what each one actually is.
Short-term loan
A short-term business loan gives you a lump sum with a set payback schedule, usually somewhere between a few months and two years. Underwriting leans on your business bank deposits rather than a perfect credit file, so approvals tend to be faster than a bank.
Best for
- Working capital
- Inventory and materials
- Marketing pushes
- Covering a slow season
Pros
- Faster approvals than a bank
- Flexible underwriting
- Predictable payment schedule
Trade-offs
- Shorter terms mean larger payments
- Costs more than a bank loan
- May require a personal guarantee
Line of credit
A business line of credit sets a limit you can draw against, repay, and draw again. It is the closest thing to a safety net for uneven cash flow, because you only carry a balance when you actually use it.
Best for
- Uneven cash flow
- Payroll gaps
- Buying materials before a job pays
- Emergency repairs
Pros
- Only pay for what you draw
- Reusable once repaid
- Good for recurring short gaps
Trade-offs
- Limits are usually smaller than a term loan
- May carry draw or maintenance fees
- Can be reduced by the provider
Equipment & vehicle financing
Equipment and vehicle financing funds a specific purchase — a truck, an excavator, a walk-in cooler, a dental chair. Because the equipment secures the deal, providers can often approve larger amounts and longer terms than unsecured options.
Best for
- Trucks and trailers
- Heavy equipment
- Kitchen or shop build-outs
- Replacing a failed machine
Pros
- Keeps working capital free
- Often longer terms
- Collateral can improve approval odds
Trade-offs
- Only funds the equipment
- The asset can be repossessed
- May need a down payment
Merchant cash advance
A merchant cash advance is a purchase of a portion of your future receivables. You receive funds up front and repay a fixed total through daily or weekly debits. It is the fastest option to fund and the most expensive, so it fits short, well-defined gaps rather than long-term needs.
Best for
- Same-week needs
- Short, defined gaps
- Businesses with steady daily deposits
Pros
- Fastest to fund
- Credit score matters less
- Approval leans on deposits
Trade-offs
- Highest cost of the four
- Daily or weekly debits pressure cash flow
- Taking a second one on top can spiral
Slower options worth knowing about
SBA loans
Partially guaranteed by the Small Business Administration and offered through participating lenders. The lowest cost of the options here and the slowest — expect weeks of paperwork, tax returns, and financials. Square Deal Funding does not place SBA loans and is not affiliated with any government agency.
Bank term loans
Traditional multi-year loans from a bank or credit union. Strong credit, time in business, and full financials are usually required. Worth pursuing if you can wait and you qualify.