Six structures cover most business funding: working capital, term loans, lines of credit, inventory financing, equipment financing and merchant cash advances, which are not loans. Rainhaven Business Funding, a small-business funding broker in Columbia, Tennessee, compares them for Maury County owners and introduces requests to lending partners, which decide and set terms.
All six structures on a single grid
| Structure | Pays for | Repaid or collected as | Commonly secured by |
|---|---|---|---|
| Working capital | Wages, rent and supplies while receivables are outstanding | Fixed installments across a few months | Sometimes nothing specific, though a personal guarantee clause is common |
| Term loan | A build-out, another location, or folding older debts into one | Amortized payments over a multi-year term | Business assets, occasionally real estate |
| Line of credit | Costs that recur at uneven intervals | Interest and principal on the drawn part only | Customer invoices, stock or a general business lien |
| Inventory financing | Merchandise bought before it sells | Paydowns as goods sell, or installments | The inventory itself |
| Equipment financing | Loaders, ovens, chairs, vans and fixtures | Monthly payments across the asset's working life | The equipment being bought |
| Merchant cash advance | Brief gaps at businesses with heavy card sales | A holdback of daily receipts or a fixed remittance | Not a loan; future receipts are sold to the funder |
The last row is the odd one out. A merchant cash advance is a purchase of future receipts, so it carries a factor rate and a holdback instead of an interest rate and a schedule of installments.
Short-lived needs, short funding; long-lived assets, longer funding
A sound rule: the funding should not outlive the thing it buys, and it should not run out before that thing pays for itself. Bridging a payroll week with a five-year loan leaves you paying interest long after the gap closed. Buying a skid steer with a few months of working capital squeezes the payments into a window far shorter than the machine's working life. Match the term to the purchase and most choices settle themselves.
Secured, unsecured and the UCC filing in between
Secured funding names collateral the partner can claim if payments stop: the equipment, the stock, the receivables or sometimes property. Unsecured funding names no particular asset but often comes with a personal guarantee clause from the owner, and it tends to cost more for the same reason. Many partners also file a UCC financing statement, a public notice of their claim on business assets, which other lenders will see later. Ask whether a filing covers one asset or everything the business owns before you sign; the collateral article walks through the common types.
The four types of business loans, and the two that are not loans
A common question is what the four types of business loans are. Lists vary, but the usual four are term loans, lines of credit, equipment loans and short-term working capital loans. Inventory financing sits close to a secured line, and leases and merchant cash advances are not loans at all, which is why this page counts six structures rather than four.
Uses partners will consider, and one they will not
- Payroll and supplier bills while invoices are outstanding
- Merchandise ahead of the months it sells
- Equipment, work vehicles and kitchen or clinic fixtures
- A build-out, a move or a second location
- Refinancing costlier short-term balances into one schedule
Household expenses, a personal car or paying yourself out of borrowed money are a different matter: partners lend to businesses for business purposes, and Rainhaven works only on that kind of request.
Banks, SBA lenders and brokers in Tennessee: who does what
Owners searching for business loans in Tennessee will meet banks, credit unions, online lenders and SBA lenders. Rainhaven is none of those. It is a broker that introduces requests to lending partners and does not arrange SBA loans; for SBA programs, start with the free advisers in the Maury County directory. As for how hard a small business loan is to get in Tennessee, there is no honest single answer, because each partner sets its own criteria; preparation, clear records and a structure that fits the purpose help more than anything a broker can say.
Picking a structure in practice
Write one sentence on what the money pays for and one on which income repays it. If the cost is one-off and long-lived, look at term loans or equipment financing. If it repeats, look at a line of credit. If the gap has an end date, look at working capital. How a request moves explains what happens after that first sentence.
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