Below is a practical overview of common structures used by companies with $15k+ in monthly revenue. Each has distinct benefits and considerations.
1) Term Loans
Best for: expansion, equipment, hiring, marketing campaigns with forecastable ROI.
How it works: Receive a lump sum and repay over a set schedule (often monthly) with fixed or variable interest. Terms can range from 1–7 years for general working capital and longer for real estate-backed loans.
- Typical APR: Prime+ margins at banks; online term loans vary by credit, revenues, and time in business.
- Documentation: Financial statements, bank statements, tax returns, debt schedule, and sometimes collateral.
Learn more in our detailed guide: term loan for small business or explore product details at Term Loan.
2) Business Line of Credit
Best for: managing cash flow gaps, seasonality, just-in-time inventory, emergency reserves.
How it works: Access a revolving limit and pay interest on amounts drawn. Useful when expenses are irregular. Lines often re-evaluate annually.
- Repayment: Interest-only during draw periods, then principal amortization or revolving terms.
- Tip: Keep utilization moderate to support future credit limit increases.
Read our guides: business line of credit and product page Business Line of Credit. For broader strategy, see flexible funding guide.
3) SBA 7(a) and SBA Express
Best for: longer terms and potentially lower rates if you qualify. Can support working capital, equipment, and acquisition financing.
- 7(a): Common flagship program that can fund a wide range of uses.
- Express: Streamlined version with smaller maximum limits and faster turnarounds than standard SBA processes.
Explore program specifics in our SBA loan and SBA Express loan guides.
4) Equipment Financing and Leasing
Best for: machinery, vehicles, point-of-sale systems, and technology upgrades.
How it works: The equipment itself serves as collateral. Financing may cover 80–100% of the asset cost depending on credit, asset type, and vendor terms.
- Advantage: Preserves working capital and aligns payments with the asset’s useful life.
- Consideration: Understand end-of-term options (buyout, return, or renewal) if leasing.
See our deep dive: equipment financing rates & terms and the product overview at Equipment Financing.
5) Invoice Factoring (Receivables Financing)
Best for: businesses that invoice other businesses (B2B) and wait 30–90 days for payment.
How it works: Sell or advance against your invoices for immediate working capital. The cost is tied to the time outstanding and customer credit quality.
- Advantage: Unlocks cash tied up in A/R without new debt on balance sheet in certain structures.
- Consideration: Factor fees vary by debtor quality and aging; ensure customer relationships remain positive.
Read: invoice factoring guide.
6) Revenue-Based Financing
Best for: recurring-revenue businesses that prefer flexible payments tied to monthly sales.
How it works: Capital is repaid as a percentage of future revenue until a pre-agreed total is reached. There’s no fixed maturity date; higher revenue months accelerate repayment.
- Advantage: Payment flexes with sales; non-dilutive alternative to equity in some cases.
- Consideration: Compare the implied annualized cost to other options.
Explore more: Revenue-Based Financing.
7) Merchant Loans (Merchant Cash Advances)
Best for: high card-sales businesses that need speed and can support daily/weekly remittances.
How it works: Often called a merchant cash advance, this structure provides funds in exchange for a portion of future card sales or fixed daily/weekly debits until a factor amount is repaid.
- Advantage: Fast underwriting and minimal documentation compared with traditional loans.
- Consideration: The factor rate can produce a higher effective APR; remittances are frequent and impact cash flow.
Learn the mechanics and costs here: merchant cash advance.
8) Short-Term Online Loans
Best for: time-sensitive opportunities where speed matters more than cost (e.g., urgent inventory buys).
How it works: Lump sums with terms typically 3–18 months, frequent repayments, and streamlined underwriting.
See an overview: Short-Term Online Loan.
9) Construction and Project Financing
Best for: contractors, developers, and specialty trades requiring draw schedules and progress-based funding.
How it works: Funds are disbursed in stages based on milestones. Requires strong documentation, budgets, and timelines.
Learn more: Construction Loan.
