Business funding comes in six common structures: working capital, term loans, lines of credit, inventory financing, equipment financing and merchant cash advances, which are not loans. Windwood Funding Group, a small-business funding broker in Fayetteville, Arkansas, uses this comparison to match a need to a structure; lending partners decide and set rates and terms.
The six structures on one table
| Structure | Pays for | Comes back as | Usually secured by |
|---|---|---|---|
| Working capital | Payroll, rent, materials during a timing gap | Fixed installments over months | Often no named collateral, but a personal-guarantee clause |
| Term loan | Build-outs, expansion, refinancing | Amortized payments over years | Business assets, now and then property |
| Line of credit | Recurring, uneven costs | Payments on whatever is outstanding | Receivables or a general business lien |
| Inventory financing | Stock purchased before it sells | Paydown as the goods sell, or installments | The inventory itself |
| Equipment financing | Machines, vehicles, kitchen and clinic gear | Monthly payments or lease rentals | The equipment |
| Merchant cash advance | Brief needs at businesses that take lots of card payments | A share of future sales, remitted until the purchased amount is collected | Not a loan; a purchase of future receipts |
These are typical shapes, not promises. Each partner designs its own products, so a real offer can differ from the row above. Read the offer itself.
Match the length of the money to the life of the purchase
A useful rule: the funding should not outlive what it bought by much. Wages and flour are gone within weeks, so long-dated money for them means paying interest on something already consumed. A tenant improvement in a leased clinic or an excavator may earn for years, so squeezing it into a few months creates payments the business cannot carry. Short structures for short needs, long ones for long-lived assets.
Secured or unsecured, and what a UCC filing means
Secured funding names collateral, such as equipment, inventory, receivables or property, that the partner can claim after a default. Unsecured funding names no specific asset, but small-business versions nearly always carry a personal guarantee, and many partners still record a UCC financing statement against business assets. The filing is public and tells other creditors the partner has a claim. Ask which assets any lien covers before you sign.
Card balance or business loan?
Cards suit small, frequent purchases paid in full each month. Balances carried month to month usually cost more than an installment loan, and a card limit rarely stretches to a build-out or a machine. The rough split: card for convenience, structured funding for anything you will pay off over more than a few months.
What business funding can be used for
- Wages, rent and supplier bills while customers are still paying
- Stock bought before a busy stretch
- Machines, vehicles and fixtures
- Tenant improvements and new locations
- Paying off costlier existing business debt
Money raised for the business has to be spent on the business. Many agreements also limit owner distributions and spell out allowed uses in a use-of-proceeds clause. If you plan an unusual use, ask the partner before you sign.
Arkansas lenders, SBA loans and where a broker sits
Owners searching for business loans in Arkansas will meet banks, credit unions, online lenders and SBA-participating lenders. SBA 7(a) and 504 loans are made by participating lenders with an SBA guarantee to the lender behind them, and they come with their own paperwork and timelines. SBA loans are not something Windwood Funding Group makes or arranges. If an SBA-backed loan looks like the right fit, we will say so and suggest you approach participating lenders directly. Our Arkansas loan checklist covers the records most lenders ask for, whichever route you take.
Picking one in practice
Know the purpose but not the product? Start with the purpose. Already holding an offer? Compare its total cost and payment calendar with the structure this table suggests. How a request works explains where the partner's decision happens, and the Washington County business counts show which sectors dominate locally.
By Windwood Funding Group ยท Updated