Lakeshire Business Funding, a small-business funding broker in Duluth, Minnesota, compares six options here: working capital, term loans, lines of credit, inventory financing, equipment financing and merchant cash advances. Each is described by purpose, repayment pattern and usual collateral. Lending partners, not Lakeshire, decide whether to fund and set the rate and terms.
All six options, row by row
| Option | Usually suits | Repayment pattern | Usual security |
|---|---|---|---|
| Working capital | A short timing gap in operating costs | Fixed installments over months, often weekly or daily | General lien on business assets, or none specific |
| Term loan | A project or purchase with a set price | Equal installments over a set term | Business assets; real estate in some cases |
| Line of credit | Costs that recur in uneven amounts | Pay down whatever has been drawn; repaid amounts can be drawn again | Receivables, inventory, a general lien, or none |
| Inventory financing | Goods paid for ahead of sale | As goods sell, or on set dates | The inventory itself |
| Equipment financing | Machinery, work vehicles, fixtures | Monthly payments spread over the item's working life | The equipment being bought |
| Merchant cash advance (not a loan) | Businesses with steady card or deposit flow | Remitted as a share of sales or a fixed debit until a set total is collected | Future receivables sold to the funder |
Partners write their own versions of each product, so a real offer can differ from the general pattern in the table. Treat it as a map, not a quote.
Matching the term to what the money buys
The funding should not outlive the thing it pays for, and it should not end long before that thing has earned its keep. Money that covers next month's payroll should not take five years to repay, and a building improvement that lasts a decade is awkward to pay off in a few months. Working capital and merchant cash advances are short-horizon tools. Term loans and equipment financing stretch further. A line of credit sits in between: draws are meant to be paid down as cash comes in, but the line itself can stay open for as long as the partner keeps renewing it.
Secured, unsecured and what can count as collateral
Collateral is anything a lender can claim if the debt is not repaid. For business funding that often means equipment, inventory, receivables, cash accounts, vehicles or real estate. Many business lenders also file a UCC financing statement, a public notice of their claim on some or all business assets; the Minnesota UCC search guide shows how to look up filings against your own business.
An unsecured product has no specific asset pledged, but it is rarely free of strings. Expect a personal guarantee from each major owner, and sometimes a general lien anyway. Ask any partner exactly what is being pledged, by whom, and whether a lien will be filed.
Where SBA loans fit
SBA-backed loans are made by participating banks, credit unions and other lenders, with a portion of each loan backed by the U.S. Small Business Administration. SBA lending is not part of what Lakeshire Business Funding does. If that route interests you, the Minnesota borrowing guide explains how to prepare, and a free small business advisor can help you approach a participating lender.
What partners tend to look at first
- Bank statements: deposits, balances and how often the account runs low.
- Credit: the business's history and usually each owner's personal credit.
- Standing: how long the business has operated and whether its Minnesota filings are current.
- Existing debt: current payments, liens and any advances still being collected.
- Purpose: what the money buys and how that leads to repayment.
Each partner keeps its own checklist, and it can change from one request to the next.
Costs to line up on any offer
Put every offer on the same footing before choosing. For loans, ask for the APR or interest rate and every fee. For a merchant cash advance, ask for the factor rate and the total remittance. In all cases write down the total you would pay back, the payment size and frequency, what you would actually receive after fees, and whether paying early reduces the cost. How a request moves covers this comparison step in more detail.
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