When a fixed schedule makes sense
A term loan, generally, is a set amount repaid on a fixed schedule over a set period. It fits a purchase that will earn over years: a second shop, a kitchen remodel, a delivery vehicle, a new service bay.
Huntington Beach has about 198,711 residents across 28.33 square miles, bordered by Seal Beach, Westminster, Fountain Valley, Costa Mesa, Newport Beach and the Pacific. A business that has outgrown its first unit, or one that wants to take space in a busy center, is a typical term-loan story. The decision is large, one-time and has a clear payback test.
The stress test
Before you commit to any fixed payment, test it against the weakest month, not the average one. Coastal businesses are especially exposed because the weakest month can be half the strongest.
| Test | Question | Passing looks like |
|---|---|---|
| Thin-month test | Can the payment be met from the weakest recent month of deposits? | With room for payroll and rent |
| Ramp test | What if the new space takes six months longer to fill? | The payment is still manageable |
| Scope test | Is any of the request really operating cash? | It is sized and labeled separately |
| Alternative test | Would a line of credit or revenue-linked repayment fit better? | You have compared them |
Illustration: a second location
For illustration only, imagine a Huntington Beach restaurant opening a second site for $160,000: $95,000 for kitchen and build-out, $25,000 for deposits and permits, and $40,000 for opening payroll and stock. A fixed schedule is easy to model, but the temptation is to project a July-level business for the whole year. A cautious version assumes the new site sells half of what you hope in its first three months and checks that the payment is still covered. The numbers are a planning example, not our terms or typical results.
Choosing the size of the request
Resist rounding up. A larger amount means a larger payment, and the extra rarely earns anything. List each cost, add a small contingency for permits and delays, and stop there. If part of the money is for the first months of rent and payroll, label it as such. It is usually better to fund working cash separately, through a working-capital request, than to hide it inside a build-out figure.
Applying
We fund $25,000 to $5,000,000, with funding in as little as 24 hours after approval. FICO 500+ is considered, we ask for about three months of business bank statements and no tax returns are required. The five-minute application uses a soft credit pull; sole proprietors can apply. Apply to start.
If the need is one machine, see equipment financing. For flexible cash, see a line of credit. See also Orange County.