Business Loan Terms

Affordable Terms That Make Sense

ARF Financial (“ARF”) is committed to providing your business with the loan terms that make sense for your individual business situation. Those terms will be detailed in a manner that is clear and easy to understand in your merchant loan proposal/agreement. The following overview will guide you through our financial products, and how your loan amount, rate, repayment term (“term”), and payment options are determined.

Business Loan Program Facts

Loan Amount

ARF determines how much your business is eligible to borrow based upon a percentage of your total annuals sales (total of cash and credit card sales) as follows:

  • 12-month loan term: 6% to 11%
  • 18-month loan term: up to 16.5%
  • 24-month loan term: up to 22%
  • 36-month loan term: up to 33%

For example, if your total annual sales are $1,000,000 you may qualify for a loan amount that ranges from the following, depending upon the loan term you qualify for and select:

  • 12-month loan term: $40,000 to 110,000
  • 18-month loan term: up to $165,000
  • 24-month loan term: up to $220,000
  • 36-month loan term: up to $330,000

How long you have been in business, the personal credit score of the principal owner/manager of the business and other credit factors determine where you may fall in that range.  Generally, the longer you have been in business and the higher the personal credit score of the principal owner/manager, the higher your loan amount.

When you receive a loan approval, you will typically be offered several options, each with a specific loan amount, rate and loan term.  You will be able to choose the option that best meets your needs.

ARF has a minimum loan amount of $5,000 and a maximum loan amount of $1,000,000.  ARF only makes loans for commercial or business purposes.


The rate charged for your loan is based upon the creditworthiness of your business and the personal credit of the principal owner/manager of the business.  Once again, how long you have been in business, the personal credit score of the principal owner/manager, whether they own a home and other credit factors play a role in determining the rate charged.

Rates start at 16% for a 12-month term loan, plus closing fees. The “rate” or finance charges you pay are fixed. They are not calculated as an Annual Percentage Rate (APR).

For example, if you borrow $100,000 over 12 months at a finance charge of 20% you will pay $20,000 of finance charges over the term of your loan ($100,000 multiplied by 20% or .20).  $20,000 is your cost of borrowing $100,000 over a 12-month term.  In total, you will pay back $120,000 ($100,000 of principal and $20,000 of finance charges).

ARF calls the fixed finance charge, a “Loan Payback Multiple.”

As noted in the example above, a fixed finance charge of 20% or .20 is the same as a 1.20 Loan Payback Multiple.  Over a 12-month term you will pay back $120,000 which ARF refers to as the “Total Payments” (which is calculated by multiplying the $100,000 Loan Amount, by the Loan Payback Multiple of 1.20).

Rates change based upon the loan term you choose. Your rate may increase or decrease if the term is longer than or shorter than your approved 12-month rate.  For example, if you are approved for a 20% 12-month rate (1.20 Loan Payback Multiple), your rate for shorter or longer terms will be adjusted proportionally as follows:

Example Loan Terms Change in Loan Term Example Rate Loan Payback Multiple
12-month rate Starting Point 20% 1.20
6-month rate Six Months Shorter
or 50% Less
10% 1.10
18-month rate Six Months Longer
or 50% More
30% 1.30


Your rate changes proportionate to how long you take to repay your loan, but the annualized rate, or your starting point, never changes.  Using the above example, if you qualify for and elect to take an 18-month term, you will pay 20% fixed finance charges for the first 12 months and half of that or 10% for the additional 6 months for a total of 30% for 18 months.

Generally, business owners may choose longer terms to reduce their loan payment, preserving cash flow for on-going business operations.

Your ARF loan representative will discuss with you all the options that are available to you, and which best suit your needs.

Repayment Term

The loan term you will qualify for is based upon the creditworthiness of your business and the personal credit of the primary owner/manager and may range from 12 months to 36 months.  The higher your credit worthiness the longer the terms you will be offered. ARF’s loan terms are expressed in weeks versus months. For example, a 12-month loan will have a term of 52 weeks; an 18-month loan will have a term of 78 weeks; a 24-month loan will have a term of 104 weeks and a 36-month loan will have a term of 156 weeks. Your loan term represents the amount of time you have to pay back the principal and finance charges due under your merchant loan agreement.

Closing Fees

There is an administrative charge on each loan to cover the expense of underwriting, funding and servicing your loan. That cost is 3% of your loan amount and is due upon the closing/funding of your loan.  This cost is financed in your loan and a separate payment is not required. When your loan funds, 3% is deducted from the Loan Amount and will be paid to the lender for these expenses and 97% of your loan proceeds will be deposited into your business’ checking account. For example, if you borrow $100,000, $3,000 will be paid to the lender and $97,000 will be deposited into your business’ bank account. This administrative charge is referred to as “Closing Fees” and is clearly denoted in your loan agreement.

Weekly Payment

Your loan will have a weekly payment and the amount of that payment will be identified on the first page of your merchant loan agreement. This payment is determined by dividing your loan’s total payments by your loan term. For example, if you borrow $100,000 at a 1.20 loan payback multiple over a 52-week term, then your total payments will be $120,000. If you divide $120,000 by 52 (number of weeks in your loan term), the result will equal $2,307.69 which represents your fixed weekly payment amount.


ARF collects its weekly payments by automated clearinghouse payments (ACH), withdrawn directly from the business account that you will authorize ARF to collect from at the time you sign your loan agreement.  The first weekly payment due on your loan will generally be the first Wednesday after your loan funds.  All weekly payments are collected on Wednesday of each week, unless you request a special accommodation for a different day of the week.

Finance Charge Schedule

Each loan has a Finance Charge Schedule that details the cumulative amount of finance charges due each week during the term of your loan. This schedule will be included in your loan documents.

Early Payoff

You may receive a discount for paying off early depending on the type of loan you have.  ARF requires a minimum amount of finance charges to be paid on each loan which is referred to as “Yield Maintenance”.  Yield Maintenance generally relates to the minimum amount of cumulative finance charges that must be paid through a certain week of the loan term if you elect to pay-off early.  To qualify for an early pay off discount, a borrower must be in full compliance with the terms of their merchant loan agreement.  The early payoff provision is set forth in either Section 8 of your merchant loan agreement or in an amendment to the merchant loan agreement.  Your personal loan consultant or the ARF Finance Department can provide you with an early payoff quote at any time during the loan term.  ARF does not allow partial principal payments.

Line of Credit

ARF offers a Line of Credit on most loans for your convenience.  The Line of Credit works as follows:

  • First, ARF determines your approved loan amount, rate and term.
  • You may take all or part of that approved amount at the rate and term you desire (minimum of $5,000 but some loan products have higher minimums).
  • If you do not take all your loan approval amount at first, then you may access the remaining balance of your loan approval over a 6-month period at the same terms that you chose on your first draft (same rate and loan term). For example, if you receive a $200,000 approval at a loan payback multiple of 1.30 over 78 weeks and you take $100,000 in your first draft, then all subsequent drafts must be at a loan payback multiple of 1.30 over 78 weeks.
  • You may take up to 5 drafts in total on your Line of Credit including your first draft.
  • Each draft will be a separate loan with its own loan amount, rate, term, total payments, weekly payment and ACH start date.
  • The Line of Credit is available for 6 months but your outstanding drafts may be refinanced and consolidated during that time allowing the 6-month period to restart with new Line of Credit availability.
  • You must be in compliance with the terms of your merchant loan agreement and there cannot be a material change in your business or creditworthiness in order to receive an additional draft on your Line.

Flex Pay Product

ARF provides a unique product that allows you to defer part of your principal repayment into the future thereby reducing your initial finance charges (Loan Payback Multiple) and your weekly payment.  This product provides similar terms as noted above but provides for a Flex Pay balance that is deferred into the future and is due on the last day of the loan’s initial term.  Flex Pay balances (amount you can defer) may range from 25% to 50% of your loan’s principal.  The Flex Pay balance may be refinanced, paid when due or you may elect to do nothing and continue to pay your weekly payment until the Flex Pay balance and related finance charges are paid in full (over an extended term).  Paying the Flex Pay balance when due will prevent additional finance charges from accruing during the extended term.  This product was designed to allow a business owner to make an investment from loan proceeds now and defer part of their loan repayment until their project, remodel or expansion is complete.

Personal Guarantee

The primary owner or principal manager of the business must sign a personal guarantee that states that if for any reason the business fails to meet its obligations under the merchant loan agreement that he or she will personally assume responsibility for the repayment of the loan. In some cases, additional owners or affiliated entities may also be required to provide a guaranty.  This is often done to make the borrower more creditworthy in order to approve a loan or to improve the terms of the loan offered to the business.


ARF Financial LLC is a licensed California lender and is regulated by the State of California.  Additionally, ARF is a third-party servicer for several state chartered banks in California and Washington State.  ARF may fund your loan directly or submit your loan to one of its partner banks for funding. In the event your loan is funded by a bank, ARF will act as the exclusive servicer of your loan. No matter which lender funds your loan, all customer service and communications with you will be handled by ARF.

Seasonal Amortizations

If your business is seasonal then ARF can modify your weekly payments to coincide with your high and low seasons.

Need Additional Funds

If at any time during your loan term you need additional working capital please contact your ARF personal loan consultant.  ARF is committed to securing the financing you need, no matter when you need it.

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