This page sets the six funding types Aspenspring Business Loans handles for Durango, Colorado owners next to each other: lines of credit, term loans, equipment financing, working capital, inventory financing and merchant cash advances. It covers the four loan types banks make, term loan versus line of credit, secured and unsecured debt, and borrowing compared with bringing in investors.
At a glance
- Employer establishments, La Plata County, CO
2,447 (County Business Patterns 2023)
- Employers with fewer than five employees
60.7% (County Business Patterns 2023)
- Businesses without paid employees
7,649 (Nonemployer Statistics 2024)
What Are the Four Types of Business Loans Banks Make?
Banks and credit unions sort business lending into four families. Term loans pay out one amount for a stated purpose and are paid back on a schedule. Lines of credit set a limit the business draws on and pays down. Equipment loans are secured by the machine or vehicle they buy. Commercial real estate loans buy or build property, which this site does not arrange.
| Funding type | What it pays for | How the money goes back |
|---|---|---|
| Business line of credit | Gaps that return: wages, materials, rent while invoices are out | Interest only on what is drawn; each payment reopens that much of the limit |
| Term loan | A buyout, a remodel, a second location | Fixed payments over a set number of months |
| Equipment financing | Machines, vehicles, kitchen lines, dental chairs | Fixed payments; the item secures the loan or stays with the lessor |
| Working capital | A one-off gap such as a slow quarter or a large order | Short schedule, sometimes weekly or daily payments |
| Inventory financing | Stock bought before it sells | Settled item by item as stock sells, or on a set calendar |
| Merchant cash advance | Any need, in exchange for future card sales | A share of card receipts is collected until the agreed total is met; not a loan |
Small Business Term Loan vs Line of Credit for a Firm Under Five Employees
With 60.7% of La Plata County, CO employers below five employees in 2023 (County Business Patterns 2023), the term-or-line question is a small-firm question. A term loan suits a cost that happens once: the full amount arrives on day one and interest runs on all of it from then on. A line suits costs that come and go: the owner draws only what a given month needs and pays interest only on that.
Illustration only, invented figures: a $90,000 term loan at an invented 11% over 60 months carries a payment of about $1,957 a month and about $27,409 of interest over the full term (our arithmetic). A line with the same limit that averages a third of it drawn charges interest on that third only, but the price per dollar and any annual fee can differ, so compare the total cost of each on the owner's real draw pattern.
How Many Types of Business Loans Are There Beyond the Bank Four?
Outside the bank families, three more types fill specific gaps. Working capital loans from specialty funders cover a short gap and read bank deposits more than tax returns. Inventory financing lends against stock, sometimes with the goods themselves pledged. A merchant cash advance is not a loan at all: a provider buys a share of future card sales and collects it as those sales settle.
Counting products, then, there are seven common forms once commercial real estate is added back, and six on this site. Counting structures, there are only two: money paid back on a schedule regardless of sales, and money collected as a share of sales. Every offer belongs to one of those two, and the second has no fixed end date.
Secured vs Unsecured Business Loans: What a Partner Can Claim
A secured loan names collateral the funder can claim if payments stop: the excavator for an equipment loan, receivables or stock for an asset-based line, sometimes a blanket lien on all business assets. An unsecured loan names no specific asset, but it can still carry a personal guarantee, which reaches the owner's own assets.
- Read the security clause and list every asset it covers.
- Find out whether a personal guarantee is part of the offer and how far it reaches.
- Ask whether a lien will be filed with the Colorado Secretary of State and what it covers.
- Check whether paying off early releases the collateral and costs anything extra.
Business Loan vs Investors: Giving Up Payments or Giving Up a Share
Borrowing keeps ownership whole and costs payments; an investor takes a share of ownership and future profit in place of payments. A loan has an end date. An investor's stake does not, and it can bring a say in decisions. For a small business with steady deposits and a clear use for the money, borrowing leaves control with the owner; for a business with no revenue yet, an investor may be the only option open.
Illustration only, invented figures: an owner who sells 25% of the firm to raise $90,000 gives up 25% of every future year's profit, with no end date, while a loan of the same $90,000 ends once the last payment clears. Which costs more depends on how much profit the business goes on to make, so run both against a realistic forecast.
Choosing Among the Six for a Request From La Plata County, CO
Start with the use. A purchase with a working life points to equipment financing; a cost that happens once points to a term loan; a gap that returns points to a line of credit; stock points to inventory financing. A merchant cash advance belongs in the comparison only after its total cost is set beside those options. How a request moves covers the next steps, and the Colorado acquisition guide covers buying an existing business.
Construction counted 357 employer establishments in La Plata County, CO in 2023, professional, scientific and technical services 320 and retail trade 285 (County Business Patterns 2023). A builder, a consultancy and a gift shop each need a different mix of these six, which is why the funding type follows the use, not the industry label. Licensing questions for a new location go to the Durango, CO license guide.
Two articles sit naturally beside this comparison: what goes into a business loan application and what moves small business loan rates.
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