Prairiespring Advances, a small-business funding service in Portland, Maine, answers owner questions: whether equipment financing is debt or a loan, what a working capital loan is, and how to judge a merchant cash advance.
Is Equipment Financing Debt in Portland, ME?
An equipment loan is debt: the business borrows to buy the equipment and owes the balance until it is paid. A lease is a contract to pay for using the equipment; under current accounting standards a lease can also appear on the balance sheet as a liability. Partners reviewing later requests count both payments when they check whether the business can carry more.
So yes, treat equipment financing as an obligation when you plan. The equipment financing page sets out loan and lease types.
Is Equipment Financing a Loan, or Something Else?
It depends on the paperwork. An equipment loan is a loan secured by the equipment; you own it from the start. A lease leaves ownership with the lessor during the term, with a buyout, renewal or return at the end. A nominal-buyout lease works much like a loan, while a fair-market-value lease works more like renting.
What Is Working Capital Loan in Portland, ME?
A working capital loan is a lump sum for day-to-day costs, such as payroll, rent and supplier bills, repaid over a short fixed schedule. It fills a gap between paying out and getting paid. It is not meant for equipment or renovations. More detail is on the working capital page.
Is Merchant Cash Advance Good? The Short Answer for Portland, ME
It can be a workable tool for a business with steady card sales and an urgent, short need, and an expensive one in nearly every other case. An advance is not a loan: the funder buys future receipts and collects them as sales come in. Before signing, write down the total to be remitted in dollars and compare it with a loan or line for the same sum. If the business qualifies for those, price them first.
Is Merchant Cash Advance Halal for a Cumberland County, ME Business?
That is a question for a scholar or an Islamic finance adviser, not for a funding service. Some owners ask because an advance is structured as a sale of receipts rather than an interest-bearing loan. Others note that the discount, penalties and collection terms still raise concerns. Bring the actual agreement to the adviser, because terms differ between funders.
Is Merchant Cash Advance Legal? What Portland, ME Owners Should Know
Merchant cash advances are sold widely as commercial purchases of future receipts. Whether a given agreement complies with the rules that apply to it is a legal question about that contract.
Read any advance with your own adviser. The merchant cash advance page explains how they work and compares them with revenue-based financing.
By Prairiespring Advances · Updated