Five structures, and the honest case for each
Every one of these puts capital into a business. They are not interchangeable, and the wrong structure is expensive in a way that is hard to undo. Here is what each one is actually for, including where it is a bad idea.
Working capital advance
You receive a lump sum and repay it as a fixed share of daily or weekly revenue. When sales are slow the payment is smaller; when they are strong it is larger. It is the most common structure for businesses with steady card or bank deposit volume.
Good for: covering payroll through a slow stretch, buying inventory ahead of a busy season, taking a job you could not otherwise float.
Watch out for: it is the most expensive money on this page, and taking a second or third one on top of an existing advance is how businesses get into trouble. If someone offers to stack another position on what you already have, that is the moment to slow down.
Business line of credit
A limit you draw against when you need it. You pay for what you draw, not for the whole limit, and it refills as you repay.
Good for: a recurring gap rather than a one-off need. Businesses with lumpy receivables often find this cheaper than repeatedly taking advances.
Watch out for: underwriting is stricter and slower than an advance, and limits for newer businesses are often smaller than owners expect.
Equipment financing
Funding secured by the equipment itself — vehicles, machinery, kitchen fit-out, production gear. Because the asset backs the loan, terms are usually longer and costs lower than unsecured options.
Good for: anything you are buying that holds value and that the business will use for years.
Watch out for: it only works for the equipment. You cannot use it for payroll, and the funder will want to know exactly what is being bought.
Invoice factoring
You sell or borrow against invoices already issued but not yet paid. The funder advances most of the invoice value now and settles up when your customer pays.
Good for: businesses that invoice other businesses and wait 30, 60 or 90 days. It scales naturally — more invoices, more available capital.
Watch out for: in some arrangements your customer is notified and pays the funder directly. Ask about that before you sign, because it changes a relationship you may care about.
Term loans
A fixed amount repaid on a fixed schedule. The most predictable structure on this page, and generally the cheapest for businesses that qualify.
Good for: a defined project with a defined cost, when the business has enough history and documentation to support a full underwrite.
Watch out for: the most paperwork and the longest timeline. If you need money this week, this is usually not the answer.
On numbers. We do not publish rates, amounts or terms, and you should be careful with anyone who does. What a business qualifies for depends on its revenue, how long it has operated, its deposit history and what the funder makes of the file. Anyone quoting you a figure before seeing your numbers is quoting you a marketing number, not an offer.
Find out where you stand
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