Funding partners, not Riverview, make each decision.
Six funding types, each built for a different bill. A term loan and equipment financing suit fixed-price items, a line of credit suits costs that repeat, inventory financing suits stock, working capital suits short gaps, and a merchant cash advance is collected from card sales. Funding partners review each request and decide.
What is a business term loan? Tested on a delivery van for a Tarboro, NC furniture store
A business term loan is one sum paid back in level installments over a fixed number of months. It suits a cost with a known price and a long useful life, such as a delivery van for an invented Tarboro, NC furniture store that hauls its own sofas and beds to customers' homes.
Say the invented van costs $42,650 and the store takes 60 months at an annual rate of 10.9%. Each invented installment comes to $925.19, so five years of them come to $55,511.40, $12,861.40 of it interest (our arithmetic). The store knows the payment for five years, which is the main reason to choose a term loan.
The term loans page works through other fixed-price items and how the term length moves the interest.
What is a business line of credit? A Tarboro, NC car audio installer's speaker and amplifier orders
A business line of credit is a limit the owner draws on when a bill lands, with interest charged only on the amount drawn. Paying it down reopens the limit. It fits costs that repeat but do not arrive on a set date.
An invented Tarboro, NC car audio installer pays $6,435 for speakers, amplifiers and wiring kits ahead of a run of booked installs and expects the install payments to clear the draw after 33 days. At an annual rate of 14.4%, that invented draw costs about $83.78 in simple interest (our arithmetic). When the next order comes, the same limit is there again. Payroll and supplier bills at a wholesaler, worked on a loan and on a line, fill a longer article.
Equipment financing that ends in ownership, or a lease that does not: a Tarboro, NC bakery's spiral mixer
Equipment financing can be a loan or a lease, and the paperwork says which. With an equipment loan or finance agreement, the bakery owns the mixer and the partner may hold a lien on it until the last payment. With a lease, the partner owns the mixer and the bakery pays to use it, with a choice at the end to return it, renew or buy.
- Loan or finance agreement: the bakery owns the mixer; payments build toward ownership
- Lease: the partner owns it; the end-of-term options are written into the lease
- Either way, the mixer can serve as the collateral
- The spiral mixer counts as equipment; wiring a dedicated outlet for it is property work this site does not fund
The lien or the lease contract, not the mixer, is what tells the two apart. The equipment financing page works through six cases, from a studio mixing console to a used skid steer. An owner choosing among the six for the first time can begin with where to start a first request.
What is a merchant cash advance, worked on a Tarboro, NC barbershop's card sales
Under a merchant cash advance the barbershop sells the provider a slice of card receipts it has not yet taken in, and no loan is created. The barbershop gets the money up front, and the provider takes its agreed total back as a fixed percentage of each day's card receipts, called the holdback. The merchant cash advance page sets three holdback settings side by side on one advance.
Take an invented Tarboro, NC barbershop that receives $9,200 with a 1.32 factor. In this invented case the provider collects $12,144.00 in total, so the cost of the advance is $2,944.00. At the shop's invented $640.00 of card sales a day, a 9% holdback sends about $57.60 to the provider per business day; at that pace the invented total clears in about 211 business days (our arithmetic, rounded up).
Slower card days stretch that count; the total collected stays $12,144.00 in this invented case, because the factor, not the calendar, sets what the barbershop hands over.
What is inventory financing? Floor models at a Tarboro, NC appliance store
Inventory financing pays for goods a business will sell, and the goods themselves can secure the money. An invented Tarboro, NC appliance store orders $26,500 of floor models, washers, ranges and refrigerators to display and sell.
On a 9-month schedule priced at 12.2% a year, the store would owe an invented $3,096.14 each month, $27,865.26 across the 9 (our arithmetic). A partner may instead set the paydown to each unit as it sells. Either way, the question to ask is how long the stock takes to turn into sales.
Floor models can sit for weeks, so the store should match the term to how long a unit takes to sell, not to the order date. The inventory financing page follows one reorder from the supplier bill to the last paydown.
How each of the six options takes its money back from a Tarboro, NC business
| Funding type | How it collects | What may secure it |
|---|---|---|
| Term loan | Level payments on a schedule the partner sets, for a fixed term | Business assets, a guarantee, or neither, by partner |
| Working capital | Fixed payments over a short schedule | Unsecured or backed by a general lien, by partner |
| Line of credit | Interest runs on what is drawn; each paydown frees room again | A guarantee or business assets, by partner |
| Inventory financing | Paydowns as stock sells, or a set schedule | The stock being financed |
| Equipment financing | Monthly loan or lease payments | The item itself |
| Merchant cash advance | A holdback from each day's card sales | The purchased future card sales; not a loan |
The secured column is a general description; each partner writes its own terms. Reading how a product collects, daily, weekly or monthly, matters as much as the rate, because the collection date has to line up with when money comes in. What sits behind each secured row, and when a lender asks for nothing pledged, is the subject of the collateral article.
Working capital has its own page: working capital loans.
By Riverview Business Loans · Updated