Five answers cover merchant cash advance collection, refinancing, working capital terms, what a request needs and drawdown lines of credit, each with an invented example. Funding partners make every decision.
How a Merchant Cash Advance Is Collected: An Example With Office Furniture
A merchant cash advance is collected from card sales rather than through fixed monthly payments: the provider keeps a set share of each day's card sales until the agreed total is reached. It is not a loan. That makes it a weak fit for an office whose income does not run through a card terminal, and a better fit for a shop or kitchen that swipes cards all day. The merchant cash advance page puts numbers on holdbacks and factor rates.
Illustration only, invented figures: a store takes $9,000 for office furniture with an 8% holdback. A $450 card day sends $36 of it to the provider.
Can You Refinance a Business Loan? An Example With Ranges
Yes. A new loan from a funding partner can pay off an existing one, for example to lower the rate, change the term or fold two payments into one. The old note may charge for paying early, and the new one can carry its own fees, so set both against the savings.
Illustration only, invented figures: a restaurant still owes $9,000 on its ranges with 24 months left at 16%, a payment of $440.67. Refinanced at 11% over the same 24 months, the payment drops to $419.47, and the remaining payments total $508.80 less before any fees.
Is a Working Capital Loan Long Term? An Example With Wheel Balancers
A working capital loan is built for short-term needs such as payroll, supplier bills and gaps between customer payments, and the partner sets the actual term on the offer. A long-lived purchase like a pair of wheel balancers sits better on equipment financing, where the term can follow the machine's working life and the balancers can secure the payments.
What Does a Business Loan Require? An Example With Signage
Requirements differ from partner to partner. A request can rest on time in business, annual revenue, recent bank statements, the latest tax return, credit, and any collateral or quote behind the purchase.
For a retail shop ordering a new freestanding sign for its lot, the sign maker's quote is the anchor document. A partner may finance the sign as equipment and read the shop's deposits to judge the payment. Mounting a sign on the facade, pouring a footing or wiring a new circuit for the sign changes the building, and that part stays outside this site.
What Is a Drawdown Line of Credit? Start With Materials
A drawdown line of credit sets a limit the business draws from in pieces, with interest charged on what is drawn and not on the unused rest. A contractor buying material for one phase at a time is the clearest case.
Illustration only, invented figures: with a $20,000 limit, a contractor draws $12,000 for lumber and wire. At 12% a year, one month on that balance costs $120, while the untouched $8,000 costs nothing in this example. The line of credit page follows four months of draws.
By Limepeak Finance · Updated
