Equipment financing is a type of loan or lease that helps a business acquire essential assets like machinery, vehicles, or technology by allowing them to spread the cost over time instead of paying the full amount upfront. The equipment itself typically serves as collateral for the loan, meaning the lender can repossess it if the loan is not repaid.  

Key aspects of equipment financing

• Purpose: To help businesses acquire physical assets like computers, manufacturing machines, office furniture, or vehicles to operate and grow. 
• Collateral: The equipment being purchased acts as the collateral for the loan. This makes it a secured loan, which can sometimes result in better terms or lower interest rates for the borrower. 
• Benefit: Businesses can preserve their working capital and cash flow by making monthly payments over a set period, rather than paying a large sum upfront. 
• Options: Financing can come in the form of a loan or a lease, depending on the business’s needs. With a loan, the business owns the equipment once it’s paid off; with a lease, the business can either lease-to-own or return the equipment at the end of the lease. 

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A merchant cash advance (MCA) is a lump sum of cash a business receives in exchange for a percentage of its future credit card sales or cash deposits. It is not a traditional loan and often has a faster approval process, a key feature being that repayment amounts fluctuate with daily sales, allowing for more flexibility during slower periods. Instead of interest, MCAs use a “factor rate” to determine the total cost, and providers typically take payments automatically from the business’s credit card processor or bank account.  

How it works

• Receive funds: A provider gives the business a lump sum of cash upfront. 
• Repayments based on sales: A fixed percentage of future credit card sales is automatically deducted to repay the advance. For example, if a business has a $10,000 MCA and a 10% holdback rate, it would pay back $100 on a day it makes $1,000 in card sales. 
• Variable payments: If sales are higher, more is repaid; if sales are lower, less is repaid, which can provide a cushion during slow periods. Some providers may use a fixed daily or weekly withdrawal from a bank account, especially for businesses with less credit card sales. 
• Factor rate: The cost is calculated using a factor rate (e.g., 1.25 to 1.5), not traditional interest. This means there is a set fee, and there is often no discount for paying the advance back early. 

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A working capital loan is a short-term loan a business can use to cover its day-to-day operational expenses and cash flow gaps, such as payroll, inventory, and rent. These loans provide flexible funds to manage seasonal fluctuations, unexpected costs, or growth, and they are not typically for long-term investments in assets like equipment. 

How they work

• Funding operational needs: 

The primary purpose is to fund the difference between a company’s current assets and current liabilities, which is the money needed to run the business smoothly between paying suppliers and receiving payments from customers. 

• Flexible use: 

Unlike loans for specific assets, the use of a working capital loan is often not restricted, allowing businesses to apply the funds wherever the need is greatest. 

• Short-term nature: 

These are short-term loans, though the repayment structure and terms can vary depending on the type of loan. 

• Repayment options: 

Repayment can be structured in different ways, such as daily or weekly payments from credit card receipts, or through more traditional structured repayment plans. 

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A term loan is a loan from a lender that provides a lump sum of money to be paid back, with interest, over a set period of time. This repayment is made in regular, fixed intervals, such as monthly. Term loans are used for various purposes, including business expansion, equipment purchases, and working capital. 

Key features of a term loan

• Repayment: Borrowers pay back the loan in fixed, regular payments (e.g., monthly) over a specific time frame.
• Lump sum: The entire loan amount is given to the borrower upfront.
• Interest rates: Interest rates can be fixed, remaining constant throughout the loan’s life, or variable, changing with market conditions.
• Purpose: Commonly used by businesses for major investments like buying equipment, real estate, or financing long-term growth strategies.
• Security: Some term loans are secured by collateral, such as property or equipment, while others can be unsecured.
• Duration: The “term” refers to the length of the loan, which can be short-term (1-2 years) or long-term (up to 25 years). 

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A small business loan is a type of debt that provides capital to a business for needs like starting up, purchasing new equipment, managing inventory, or expanding operations. These loans can be obtained from various lenders and may be partially guaranteed by organizations like the Small Business Administration (SBA), which can help businesses get more flexible terms, lower down payments, and standard qualification processes. But there are other sources that we can use which may be easier to qualify for.

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An SBA loan is a small-business loan that is issued by a private lender but partially guaranteed by the U.S. Small Business Administration (SBA). This government backing reduces risk for the lender, allowing them to offer potentially more competitive terms and higher amounts than traditional loans, often for businesses that may not qualify otherwise. These loans can be used for various purposes, including startup costs, working capital, equipment, and real estate. These loans typically have some very favorable terms

Key features of SBA loans

• Government guarantee: The SBA guarantees a portion of the loan, which lowers the risk for the lending institution.
• Private lenders: The loans are issued by banks and other financial institutions, not directly by the SBA (except in certain disaster situations).
• Variety of uses: Funds can be used for working capital, purchasing equipment or real estate, or other business expansion needs.
• Competitive terms: The SBA’s guarantee can lead to longer repayment terms, lower down payments, and competitive interest rates.
• Eligibility requirements: To qualify, businesses must meet SBA size standards, have a sound business purpose, and be able to repay the loan.
• Common loan types: Popular programs include the 7(a) loan program (for general business purposes), the 504 loan program (for fixed assets like real estate and equipment), and microloans (for smaller needs). 

These loans typically have some very favorable terms but can take longer to apply and be tricky to navigate. Talk to us today to get your application started.

This funding refers to the process of acquiring the necessary capital to purchase, develop, renovate, or refinance a property or portfolio of properties so that you can generate a return on investment. This capital can come from various sources, and the strategy typically involves a blend of debt and equity. 

Key aspects of real estate investment funding include:

• Securing Capital: The primary goal is to obtain the money needed to complete a transaction, whether from a single source or multiple contributors.
• Sources: Funding can be broadly categorized into:
  • Debt Financing: Borrowing money from a lender (such as Nexton Financial) with the agreement to repay the loan with interest. This is a common form of leverage in real estate investing.
  • Equity Financing: Raising capital in exchange for an ownership stake in the property or investment entity. This can come from personal cash, partners, or pooled investment vehicles (we also work with many Private Lenders who are willing to provide funds for equity into your project)

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Purchase order (PO) financing is a financial tool that allows your business to fulfill a large customer order by using a third-party lender to pay the suppliers. We can pay the supplier directly for the goods, and once your customer receives and pays for the order, we deduct our fees and give the remaining balance to you. This process helps businesses secure cash flow to take on large orders that they couldn’t otherwise afford.

How it works

• A business receives a purchase order from a customer but lacks the immediate cash to pay for the required goods. 
• The business applies for PO financing from a lender. The lender evaluates the creditworthiness of the business’s customer and supplier, not just the business itself. 
• The PO financing company provides funds directly to the supplier to cover the cost of producing or acquiring the goods. 
• The supplier delivers the goods to the business, which then ships them to the customer. 
• The customer pays the PO financing company directly for the order. 
• The financing company deducts its fees from the customer’s payment and remits the remaining balance to the business. 

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This financing is the process of getting funding to start or expand a franchise business. This can include loans for startup costs like franchise fees, equipment, and real estate, as well as ongoing needs like working capital. Funding can come from traditional lenders, the franchisor, or government-backed programs like the SBA. 

What it covers

• Startup costs: Initial fees to purchase the franchise, real estate, and equipment.
• Renovations and improvements: Store remodels, building improvements, and signage.
• Ongoing expenses: Working capital to cover day-to-day operational needs and inventory.
• Acquisition: Financing to buy an existing franchise from the franchisor or another franchisee. 

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A fix and flip loan is a short-term loan for real estate investors used to purchase a property and finance its renovation with the goal of selling it for a profit. These loans cover both the purchase and the repair costs, are typically for 6 to 18 months, and often have flexible terms and different qualification requirements than traditional mortgages. They rely more on the property’s potential profit and estimated value after repairs (ARV) than on the borrower’s credit score alone, though a good credit score is still beneficial.  

How they work

• Purchase and renovation: 

The loan provides capital for both buying a rundown property and covering the renovation expenses. 

• Short-term: The loan is designed for a quick turnaround, typically 6 to 18 months, to complete the renovation and sell the property. 
• Interest-only payments: Some loans feature interest-only payments, and funds for renovations are disbursed in “draws” after an inspection of the completed work. 
• Profit-focused: Qualification often depends less on traditional criteria like income and more on the project’s potential profitability and the property’s estimated value after repairs (ARV). 
• Exit strategy: A clear plan for selling or refinancing the property at the end of the loan term is a key requirement. 
• Refinancing: At the end of the project, the loan is either repaid from the sale of the property or refinanced into a longer-term loan. 

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