PMF Put each proposal on the same basis
Start with the net cash your business receives after any withheld charges or payoffs. Then list total scheduled payments, financing cost, payment frequency and term. Identify estimates and variable amounts. A factor rate is not an annual interest rate, and a smaller payment may simply extend the commitment. Compare complete offers with the same use of funds and timing in mind.
Ask how the agreement works after funding
Find out who provides the financing, who services it and how to get help with an account question. Ask about personal guarantees, security interests, early payoff treatment, renewal conditions and restrictions on additional financing. If a broker or referral party is involved, ask how compensation works and whether any charge is paid by your business. Get material terms in writing before deciding.
An offer comparison worksheet
- Net proceeds available for the actual business expense.
- Total scheduled repayment and the timing of every payment.
- Fees paid upfront, withheld or charged over the term.
- Early payoff amount and whether early payment reduces cost.
- Security, guarantees, conditions and any existing debt being replaced.
A lower payment can come with a larger total cost
Illustrative planning example. Two offers provide similar cash. One has a smaller periodic payment but runs longer and collects more overall. Another requires a faster payment schedule. Compare both the total cost and the effect on the business’s slowest cash weeks; neither number should be judged in isolation.
Local business resource
California publishes commercial financing disclosure rules covering key cost and payment information. Use the disclosures applicable to your specific offer. California commercial financing disclosure regulations.
Questions business owners ask
What should a business loan broker explain?
The proposed structure, the parties involved, the information needed, any applicable compensation and the terms you are being asked to accept. A useful conversation should make the financing easier to understand, including the conditions that remain before funds are available.
What should I bring to PMF LA for a comparison?
Bring the complete written proposal, intended use of funds, deadline, existing payment obligations and recent business bank statements. We can discuss the cash-flow questions and relevant alternatives without relying on a headline rate alone.