Larkpine Lending Group, an Iowa City, IA small-business funding service, compares six structures on this page: working capital, term loans, lines of credit, inventory financing, equipment financing and merchant cash advances. Each is described by repayment pattern, typical uses and what funding partners usually review before deciding.
All six structures on one table
| Structure | How the money arrives | How it is repaid | Common uses |
|---|---|---|---|
| Working capital | One sum | Brief schedule, weekly or monthly payments | Payroll, rent, supplier invoices while receivables are out |
| Term loan | One sum | Level installments for a fixed term | Remodels, a second site, buying a business |
| Line of credit | Draws against a limit | Pay back draws; room comes back | Repeating gaps and lumpy months |
| Inventory financing | Funds for specific stock | As stock sells, or on set dates | Stocking up before sales happen |
| Equipment financing | Paid to the seller or lessor | Installments; the item is usually the collateral | Lifts, chairs, ranges, mowers, trucks |
| Merchant cash advance | A lump sum in exchange for future receipts | A cut of card or bank receipts | Short needs at card-heavy businesses (not a loan) |
The four types of business loans, and two more
The list is sometimes given as four: term loans, lines of credit, equipment loans and working capital loans. That list leaves out two other structures that belong in the comparison. Inventory financing is tied to goods you will resell, and a merchant cash advance is not a loan at all; it is a sale of part of your future receipts.
Types of working capital loan, with examples: a short-term installment loan for a clinic waiting on claims, a revolving line drawn for payroll at a landscaping company, or invoice-based funding for a firm with slow-paying commercial clients.
Pick by purpose: payroll, stock, equipment, seasons, expansion
- Payroll: see can a working capital loan cover payroll.
- Inventory purchases: see buying stock ahead of demand.
- Used, restaurant or contractor equipment: see equipment loans and leases.
- Uneven months: see how a business line of credit works.
- Expansion or a second location: see term loans for growth.
Types of collateral for business loans, structure by structure
Partners look at what secures the money. Equipment loans are usually secured by the equipment; inventory financing by the stock; term loans and lines of credit may be secured by business assets generally, and some partners ask for a personal-guarantee clause from the owner. A merchant cash advance is secured by future receipts rather than an asset. Ask each partner what lien it files and on what, because that affects whether you can borrow elsewhere later.
How to get a business loan for small business owners near Iowa City, IA
- Write down the purpose, the amount you think you need and the date it matters by.
- Gather the basics a partner usually reads first: time in business, revenue, recent bank activity and any existing debt payments.
- Ask for the structure that matches the purpose, not the one with the biggest number.
- Compare offers on total repaid, payment frequency and what happens if you pay early.
Not sure which industry notes apply to you? The industry pages set each structure against how a business type takes in cash.
By Larkpine Lending Group · Updated