Bridgeton, NJ Business Loan Questions and Answers for Practices, Grocers and Salons

"Terms" means two things. The term is the length of the loan, such as 60 months. The terms are everything the offer sets: the rate, the term, the payment amount and schedule, any collateral or guarantee, and what happens if the loan is paid off early.

For a dental office financing operatory cabinetry, the term can follow the life of what is bought. Cabinetry lasts for years, so a multi-year term fits it. The term loans page has a worked example for two operatories.

A merchant cash advance sits outside the loan category altogether: it is not a loan. A provider buys part of the business's future card sales and collects it as a share of daily card deposits until an agreed total is reached. Its cost comes from a factor rate, not an annual interest rate.

A store that needs refrigerated cases could use an advance, but a case is a long-lived machine, and equipment financing ties the payment to that life. The merchant cash advance page explains when an advance fits.

Amortization is how a term loan's balance falls to zero through equal payments. Each payment covers that month's interest on the remaining balance, and the rest pays down principal, so the interest part shrinks with every payment.

Illustration only, invented figures: a restaurant finances $12,000 of fryers over 24 months at an annual rate of 10%. The payment is $553.74. In the first month, $100.00 goes to interest and $453.74 to principal; by the last payment, interest is down to $4.58. Total interest over the loan is $1,289.76.

A bulk buy is a one-time purchase of stock at a discount. A grocer can fund it with inventory financing, a draw on a line of credit, or, when card sales are steady, a merchant cash advance. The test is simple: the discount on the goods should be larger than what the money costs.

Shelving or coolers bought to hold the extra stock are equipment, not inventory. The funding options page sorts each cost to its product.