Here’s a quick guide to the most common types of business financing, so you can go forward confidently into the funding process.
Term Loan
Term loans are a type of traditional bank loan that normally involve amounts under $500,000, a longer repayment schedule, and often, a down payment. The loan structure depends on the lender’s evaluation of the company’s financials, including their business credit score, so it’s easier for established firms to get term loans.
Good ☑️
- for established businesses
- for getting favorable rates
Term Loan
If you’re looking to purchase equipment for your business, such as a new sewing machine, or even a commercial truck, equipment financing is a specific type of product for that purpose. Instead of having to put up collateral or a personal guarantee, in most cases, equipment financing allows you to use the equipment as collateral.
Good ☑️
- for businesses looking to make big purchases
MCA
Merchant cash advances provide a quick cash infusion (usually within 24 hours) that is repaid with a percentage of daily sales made by credit and debit cards. When sales are higher, a larger portion of the cash advance is paid back. They are primarily used when speed and convenience are priorities, and are the most common type of funding that new businesses can qualify for.
Bonus:What is a Merchant Cash Advance?
Good ☑️
- for businesses with no business credit history
- for businesses poor credit
- for speed & convenience
LoC
A business line of credit allows a company to borrow cash as needed up to a maximum amount. They’re similar business credit cards, but usually come with higher limits. This buffer can resolve cash flow shortfalls, which is especially useful in emergencies or when navigating temporary or seasonal fluctuations.
Good ☑️
- for businesses who want flexible funding as needed
- for speed & convenience
Cash Flow
“Working capital loan” is a blanket term used for funding designed to cover cash flow gaps. These can include short-term loans, lines of credit, and invoice financing. There are also special products for e-commerce. Invoice financing is most commonly used for working capital. It extends cash based on the company’s outstanding invoices and receivables in exchange for a fee.
Bonus:Ecommerce Working Capital Guide
Best 🏆
- for businesses who want to finance everyday operations
Business
Business credit cards come in a range, from those that help you build business credit, to those that reward businesses with excellent credit. If you’re a new business owner, or your business has a poor to average credit score, we’ve hand-selected seven of our top picks for building credit and growing your business.
Bonus:Best Business Credit Cards
Best 🏆
- for businesses who want to build credit while financing everyday expenses
We’re your financial sidekick, here to help you get bigger & better.
Free business credit tools – Learn about building business credit, and watch your pre-qualified offers grow alongside your score.
Free business credit score – You shouldn’t 👏 have 👏 to pay 👏 for your 👏 own data 👏
Lending Advisors who go above & beyond – Call, text, email. They’re here to personally answer all your questions, help you renew your funding, and advocate for your best rates.
Tillful Funding Support
Frequently asked questions
Everything you need to know about Tillful Funding
Which business financing options are right for me?
The answer to this is very individual — it depends on your business type and what your needs are. When you apply through Tillful Funding, your Lending Advisor will walk you through your best options. Read more here.
How do I get approved?
Getting approved varies by lender. Some best practices for increasing your chances is to increase your business credit score, make sure you have at least 3 months of bank statements from a business bank account, have at least 6 months time in business, have minimal negative revenue months, and have minimal poor marks such as bankruptcies and liens.
Does Tillful do a hard pull?
No, Tillful never does a hard pull. Some of our lenders do require hard pulls to approve applicants. We will always ask for your consent before telling a lender that they can move forward with a hard inquiry.
Is Tillful the lender?
No, Tillful does not currently extend our own financing products. Instead, our Lending Advisors match small business owners with their best options from our network of lenders. This means you can rate shop in one place.
What factors do lenders look for?
Lenders vary in the factors that they look for. Generally, solid revenue and cash flow performance, longer time in business, and good business (and sometimes personal) credit are all factors that lenders look favorably upon. Learn more about how lenders assess risk.
Why don’t I qualify for funding?
There could be many reasons why a lender declines an applicant, including reasons that have little to do with the applicant’s eligibility. Even if you have a pre-approval, it’s not guaranteed you’ll get a final offer. We recommend taking 3 months to increase revenue, smooth over any cash flow patterns, and work on increasing your business credit score before applying again. Our Lending Advisors can help walk you through the necessary steps to get you ready.
Some business owners may consider alternative funding options to finance their business if they’ve been turned down for loans in the past, have yet to build their business credit, have poor credit, or are unsure of how much funding they really need for their business.
Some alternative funding options include: grants, venture capital, angel investments, pitch competitions or bootstrapping.
Speak with our Lending Advisors to help walk you through the necessary steps to get you ready.
Still have questions?
Our team is here to help.
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We’ll focus on getting you funded at the best rates. You can get back to your business.
