Small Business Funding Guide for Owners

Most owners borrow two or three times over the life of a business and never get comfortable with it. This guide is the map we wish someone had handed us: what the money is for, which product does that job, what a lender will check, and how to read the offer that comes back. Bookmark it and come back the next time you need capital.

Before you compare products, name the job. Almost every request falls into one of five buckets, and each bucket points at a different product.

• Smoothing cash flow between payables and receivables: a line of credit.
• A one-time investment with a payback, like a second location or a big inventory buy: a term loan.
• Buying a vehicle or machine: equipment financing, secured by the asset.
• Waiting on slow-paying customers: invoice financing.
• A long-term expansion or property purchase: an SBA loan or commercial real estate loan.

Term loans give you a lump sum repaid on a fixed schedule. Lines of credit let you draw and repay repeatedly up to a limit and pay interest only on what you use. SBA loans are bank loans with a government guarantee, which means long terms and low rates in exchange for paperwork. Equipment financing uses the purchase as collateral. Invoice financing advances most of an unpaid invoice today. A merchant cash advance sells a slice of future card sales for cash now. Commercial real estate loans buy or refinance property. Business credit cards handle small, frequent spend and build your credit file.

Every lender weighs the same six things in different proportions: time in business, monthly revenue, personal and business credit, industry, existing debt, and the story your bank statements tell. Six months in business and $10,000 a month in deposits opens the door with many online lenders. Two years and $25,000 a month opens most of them. Banks want more history, more documents and usually collateral.

Applying to lenders one at a time means re-entering the same facts, uploading the same statements and answering the same calls five times over, with a hard credit pull at the end of each. A broker collects the application once, matches it to the lenders whose criteria you fit, and returns their offers together. Checking eligibility on FundLine does not affect your credit score; a hard inquiry only happens when you accept an offer and the lender finalizes it.

Every offer should answer eight questions before you sign. Amount funded, after any origination fee. Term. APR, not just a rate or a factor. Payment amount and frequency. Total payback. Fees, including draw and late fees. Prepayment terms, including whether early payoff saves you interest. And what secures the loan: a personal guarantee, a blanket lien, or a specific asset. If an offer will not put those in writing, keep comparing.

Put every payment date on the calendar, keep the funds in the business account they landed in, and track what the money bought against the payback you expected. A clean repayment history is the cheapest thing you will ever do for your next round of funding: the lender who funded you this year will usually offer more, for less, next year.