This page sets them next to each other, with worked examples on lodge room equipment and restaurant card sales, so the product can be matched to the bill before anyone calls.
A side-by-side look at the six funding products open to Jackson, WY businesses, from a revolving line to an equipment lien. Of the six, only the merchant cash advance sits outside lending: its price is set by a factor and taken from card sales.
Types of Commercial Loans Compared on Payout, Payment and Collateral
Commercial loans split first by how the money arrives: once, in a single sum, or as draws against a limit. They split again by what backs them and how the payment is set.
| Product | Payout and payment | What may secure it |
|---|---|---|
| Working capital loan | One sum; fixed installments over a short term | Unsecured, or a general lien on business assets |
| Term loan | One sum; level payments over months or years | Often business assets; terms vary by partner |
| Line of credit | Draws up to a limit; interest on the drawn balance | Unsecured, or a general lien |
| Equipment financing | Pays the seller; fixed installments | The equipment itself |
| Inventory financing | Pays for goods; paid down as they sell | The goods on hand |
| Merchant cash advance | One sum; a share of card sales is collected | Future card receivables (a purchase, not a loan) |
Real estate purchases and building construction loans are not on this list; contractors themselves can still request funding for machines, materials and payroll.
What Is a Business Term Loan? A Teton County, WY Lodge's Room Equipment Order as the Example
With a business term loan, the whole amount lands at once, and the business then owes the same installment every month until a date fixed at signing. Each installment carries some interest and some principal, and the balance reaches zero with the last one.
Illustration only, invented figures: a Teton County, WY lodge replaces the keycard locks, room safes and TVs in its guest rooms with a $63,800 order. The lodge picks a five-year schedule priced at 10.35% a year, which fixes every installment at $1,366.57. In month one, $550.28 of it is interest and the remaining $816.29 shrinks what the lodge owes. By the sixtieth installment the lodge has sent $81,994.20 altogether, $18,194.20 of it interest.
Room TVs, linens and laundry machines can be part of a term loan request; buying a lodge property or doing work on the building itself is property work outside this site.
What Is a Business Line of Credit? Limits, Draws and Paydowns in Plain Words
Think of a business line of credit as a ceiling: the business borrows beneath it whenever a cost appears, in whatever pieces it needs. Interest generally runs on what has been drawn, not on the whole limit. Paying a draw down opens that room again, for as long as the agreement keeps the line available.
- Limit: the ceiling on what can be outstanding at any moment.
- Draw: money taken from the line, all at once or in pieces.
- Paydown: payments that cut the drawn balance and open room under the limit again.
- Review or renewal: a point at which the partner may look at the account again and keep, change or close the line.
A line suits repeat costs, such as a lodge buying linens and supplies ahead of bookings it already holds.
Is Equipment Financing a Loan? How a Hydroseeder Purchase Gets Structured
Often the answer is yes, but not every form of it is a loan. Take a Teton County, WY landscaping company pricing a hydroseeder. It can request:
- An equipment loan: the company owns the hydroseeder, and the partner holds a lien until the last payment.
- An equipment finance agreement: a contract that pays for the machine over a set term, which can work much like a loan.
- A lease: the partner owns the machine and the company pays to use it, with an option to buy or return it at the end.
Each form has its own end-of-term terms and total cost, so compare the full schedule of any offer. A hydroseeder, a trailer or a compact track loader can each be the subject of a request.
What Is a Merchant Cash Advance? A Sit-Down Restaurant's Card Sales as the Example
Buying a slice of a business's future card sales is what a merchant cash advance does; it is not a loan. The provider pays a sum now and collects a fixed total from card sales until that total is reached.
Illustration only, invented figures: a sit-down restaurant in Jackson, WY accepts a $30,000 advance with a 1.32 factor, so the provider collects $39,600 in all and the advance costs $9,600. With an 11% holdback and card sales of $5,400 on a typical business day, $594.00 goes to the provider each day, and the total is collected in about 67 business days. Slower card days stretch that count; stronger ones shorten it.
Sit-down kitchens are a real presence locally: County Business Patterns placed 56 full-service restaurants with paid staff in Teton County, WY in 2023 (NAICS 722511). Any of them comparing an advance with a loan can set the total collected against the total interest of the loan, side by side.
Secured vs Unsecured Business Loans: Pledged Equipment, a General Lien, or Neither
A secured product gives the partner a claim on something specific if payments stop. In equipment financing, that is the machine; in inventory financing, the goods. A general lien reaches business assets more broadly without naming one item.
An unsecured product names no collateral, though a partner may still ask the owner to back it personally. Whether a request ends up secured, and by what, is a partner decision. A landscaping company adding a second crew's mowers and trailer may see the equipment itself named in an offer. Which of these products suits a law office payroll or a restaurant repair invoice is sorted out on the industries page. Two blog posts go further: one on what a business purchase price covers and one on collateral, liens and UCC release.
By Heathfield Commercial Capital · Updated
