Palmwick Lending, a small-business funding service in Kokomo, Indiana, covers six structures: working capital, term loans, lines of credit, inventory financing, equipment financing and merchant cash advances. This page compares what each pays for and how it is repaid, so you can match the money to the bill before lending partners review it.
What Can a Small Business Loan Be Used For? Nearly Any Business Bill
Almost any ordinary business purpose: wages, stock, equipment, a remodel, a second location, buying out a partner or buying a business. What a business loan usually cannot be used for is personal spending, and a partner will ask for the purpose in writing. The purpose also shapes the structure. Money for a two-week wage gap and money for a ten-year asset should not be repaid on the same schedule.
| Structure | Typical purpose | Payback rhythm |
|---|---|---|
| Working capital | Wages, vendor bills, rent | Short schedule, set payments |
| Term loan | Build-out, second site, purchase | Scheduled installments, set term |
| Line of credit | Uneven months, repeating gaps | Draw and repay; interest on balance |
| Inventory financing | Stock bought for resale | Installments or revolving, tied to stock |
| Equipment financing | Machines, vehicles, kitchen gear | Loan or lease, equipment as security |
| Merchant cash advance | Short gaps for card-heavy sellers | Share of receipts; not a loan |
Money Purposes and Where Each Is Covered
- Payroll and wages: the payroll section on the working capital page.
- Inventory purchases: buying stock ahead of demand.
- Used equipment: the used equipment section on the equipment page.
- Uneven or seasonal months: seasonal use of a credit line.
- Expansion or a second location: loans to expand a small business.
The Four Types of Business Loans, and the Advance That Is Not One
Lists vary, but four loan types worth knowing are term loans, lines of credit, equipment loans and short-term working capital loans. Inventory financing is often grouped with lines of credit. A merchant cash advance is sometimes listed alongside them, but it is not a loan; it is a purchase of future receipts with its own rules.
Secured vs Unsecured Business Loans: What Gets Pledged
A secured loan is backed by collateral, such as equipment, inventory, receivables or real estate, which the partner can claim if the loan is not repaid. An unsecured loan has no specific collateral, though it often comes with a personal guarantee from the owner and a lien on general business assets. A partner may price secured and unsecured offers differently, so compare the total dollar cost of each. Read the security section of any offer to see exactly what is pledged.
Can a Business Loan Be Used to Buy Property? Usually a Different Product
Commercial property purchases are usually handled with commercial real estate loans, which are a separate category from the six structures here. A term loan can sometimes fund improvements to a leased space, and equipment financing covers fixtures that are removable equipment. If a property purchase is part of buying a business, the partner reviewing the deal will say how the real estate is handled. Before signing a lease or buying in Kokomo, IN, check the zoning and permits checklist.
Industries and Local Data
Each industry page explains which structures fit that trade's cash cycle, with Howard County, IN establishment counts. The Kokomo, IN page has county-wide figures.
By Palmwick Lending · Updated
