Five topics, each with an example from a local trade. For anything not covered, call Wheatvale and describe the cost.
Is Merchant Cash Advance a Loan? Crew Trucks, Irrigation Parts and the Answer for Landscapers
No. The business sells a slice of its future card receipts, which makes the advance something other than a loan. A provider pays a lump sum and collects a share of each day's card receipts until the purchased amount is collected. For a landscaper whose revenue arrives mostly by check from property managers, card sales may be too thin for an advance to make sense.
Crew trucks and irrigation parts are better matched with equipment financing and a credit line, which carry stated rates that can be compared directly. The merchant cash advance page explains how the holdback works.
Can You Refinance a Business Loan? An Example With Air Compressors
Yes. Refinancing replaces an existing loan with a new one, usually to lower the payment, change the term or combine several debts. A shop that financed air compressors at a high cost when it was new may look for better terms once it has a longer record.
Check the current loan for prepayment penalties first, and compare the total cost of the new loan, including fees, against the remaining cost of the old one. Stretching the term can shrink the payment while raising the total paid.
Is Working Capital Loan Long Term? An Example With Classroom Furniture
Usually not. Working capital loans are generally short-term products, sized to a stretch of payroll, materials or rent, with terms shorter than a term loan for a purchase. Classroom furniture for a child care center lasts for years, so it typically fits equipment or term financing better than working capital.
The exact term is set by the partner. Ask for the term, the payment schedule and the total repaid.
What Does a Business Loan Require? An Example With Walk-In Coolers
A business loan typically requires time in business, revenue, bank statements, existing debts and the owner's credit. For a restaurant replacing walk-in coolers, add the installer's quote and the lease, since the landlord may need to approve work on the building.
- Recent business bank statements
- A profit and loss statement and tax returns
- A list of current loans and advances
- The quote or contract behind the cost
What Is a Drawdown Line of Credit? Start With Booth Expansion
A drawdown line of credit lets a business take money out in pieces, or draws, up to an approved limit. Interest normally runs only on what has been drawn. A salon adding booth space could draw for the build-out as each contractor invoice arrives instead of borrowing the whole amount on day one.
Some drawdown lines close once the limit is used; revolving lines reopen as the balance is paid down. Ask which kind a partner is offering. Business lines of credit covers both.
By Wheatvale Lenders · Updated