This page compares the six funding types Jadebrook Commercial Capital helps Watauga County, North Carolina owners request: business term loans, lines of credit, equipment financing, working capital, inventory financing and merchant cash advances. It covers what each pays for, what secures it, how it is paid back or collected, and the questions that separate a line of credit from a term loan or a working capital sum.
Types of Commercial Loans, Matched to the Expense They Cover
| Funding type | Pays for | Paid back or collected | Security a partner can ask for |
|---|---|---|---|
| Business term loan | A business or practice purchase, a partner buyout, a remodel | Fixed monthly installments | Business assets; personal guarantee |
| Line of credit | Recurring gaps: wages, supplies, case costs | Interest on the drawn balance; limit reopens as paid | Receivables; business assets |
| Equipment financing | A hood, a lift, a chair, a loader | Fixed payments, or lease payments | The equipment itself |
| Working capital | A one-time cash gap | Short fixed schedule | Deposits and business assets |
| Inventory financing | Stock, parts, bulk food | As goods sell, or on a schedule | The inventory |
| Merchant cash advance | A lump sum against future card sales | A share of card sales collected as they settle | Future card receipts; not a loan |
Each partner sets its own pricing and terms, so the table compares structure rather than cost. The cost of any offer is its total dollar figure: every payment and fee added together, set against the sum received.
How Many Types of Business Loans Are There? The Six Compared Here and Why
Lists of business loan types run from four to a dozen depending on how finely they divide products. The six on this site cover the purposes a small business funds directly: buying something that lasts (term loans and equipment financing), carrying a gap between paying and being paid (lines of credit and working capital), buying goods for resale (inventory financing), and turning future card sales into cash now (a merchant cash advance, which is a purchase of receipts rather than a loan).
Commercial real estate mortgages, startup loans and SBA programs are left out because Jadebrook does not arrange them. An owner who needs one of those can still use this comparison to see where the remaining needs fit.
Business Line of Credit vs. Working Capital Loan for a Claim-Payment Gap
Both answer a gap between paying bills and collecting income, but they behave differently. A working capital loan advances one sum on a short fixed schedule; a line of credit sets a limit the business draws against when it needs to, paying interest only on what is drawn. Illustration only, invented figures: a clinic with an invented $60,000 limit draws $18,000 to cover wages while insurers take 45 days to pay claims. At an invented annual rate of 11.5%, interest on that draw for 45 days comes to about $255 (our arithmetic), and the full limit is open again once the draw is paid down.
If the gap happens once, such as a single large materials order, a working capital sum matches it and ends when it is paid off. If the gap returns every month, the line fits better because it stays open between uses.
Business Line of Credit vs. Term Loan: Revolving Draws or One Fixed Sum
A term loan suits a purchase made once. Illustration only, invented figures: an invented $85,000 term loan over 60 months at an invented annual rate of 10.0% carries a payment of about $1,806 and about $23,360 of interest over its life (our arithmetic). Interest runs on the full balance from the first month, which suits a remodel that earns from the day it opens but wastes money on a gap that closes in a few weeks.
The reverse also holds: using a revolving line for a long-lived purchase leaves the limit tied up for years and can leave a business without room for the gaps the line was meant to cover. Matching the product to the length of the need settles much of the decision.
What Are the Four Types of Business Loans, and Where a Cash Advance Fits
Many lists name four: term loans, lines of credit, equipment loans and government-backed loans. This site replaces the fourth with working capital and inventory financing, and adds the merchant cash advance with a clear label, because an advance is not a loan at all. A provider buys a share of a business's future card sales and collects it as those sales settle, at a cost set by a factor rather than an interest rate.
Small Business Line of Credit or Loan for Lab Bills and Supply Orders
Recurring supply bills, such as a dental office's lab invoices or a restaurant's weekly food order, are paid long before the patient's insurer or the diner's card batch settles. A line of credit sized to a typical month of those bills covers them and is paid down as collections arrive. An equipment loan with an invented $64,000 price, $6,400 down, 60 months and an invented annual rate of 9.0% would cost about $1,196 a month (our arithmetic), illustration only: a reminder that equipment and supplies call for different structures even in the same office.
Owners comparing two types for one purpose can call (828) 373-9338 and ask how each would be paid back from that purpose's income; the FAQ covers terms, refinancing and draws.
By Jadebrook Commercial Capital ยท Updated