The question
Does one sourced cost-and-term line, with equipment loans, equipment leases, and merchant cash advances kept distinct, beat the finance skill's current funding-mode cost comparison on contractor working-capital questions?
What we did
We read the live finance skill (version 1.6) on the public skill path and in the repo. Funding mode today has no cost-and-term paragraph of its own. The comparison it actually uses is the bundled illustration: a $50,000 merchant cash advance at a 1.35 factor, collected over 126 business days, described as roughly 126% APR, set next to a $50,000 SBA 7(a) loan at a 13.5% cap over 10 years, about $761 a month. Equipment financing is one row: the machine secures the loan. That line does not distinguish a loan from a lease, and it does not say when a product cannot be used for working capital.
We fetched official public sources on 2026-11-11 (Asia/Jerusalem) and wrote a replacement paragraph. Every number in that paragraph is either an official cap or survey figure with a URL, or a labeled illustration. Indicative only. Not a quote, an offer, an approval, or a guarantee.
We then scored the old illustration against the new paragraph on eight fixed, realistic contractor questions, using a written rubric: sourced, distinct products, accurate, actionable, and compliant. This is a small sample. The same author wrote the new paragraph, the questions, and the scores. These were written answers, not live chats.
What the sources actually said
- SBA's lender page sets variable 7(a) maximums at base rate plus 6.5% on loans of $50,000 or less, plus 6.0% up to $250,000, plus 4.5% up to $350,000, and plus 3.0% above that. Most 7(a) terms are 10 years or less, unless the loan finances real estate or long-lived equipment. SBA also describes Contract CAPLines and a Working Capital Pilot line (up to 60 months) that can support contract costs or borrowing against receivables and inventory. Source: https://www.sba.gov/sba-lenders/
- The Wall Street Journal U.S. prime rate was 7.00% as of the November 10, 2026 Money Rates page, effective September 17, 2026. Source: https://www.wsj.com/market-data/bonds/moneyrates
- The Federal Reserve's H.15 bank prime loan rate was 7.00% on November 3 through November 9, 2026. Source: https://www.federalreserve.gov/releases/H15/
- At a 7.00% prime rate, the variable cap on a $50,000-or-smaller 7(a) loan is 13.50%. The existing $761 monthly illustration on $50,000 over 10 years still matches that cap ($761.37).
- An SBA 504 loan is long-term, fixed-rate financing for major fixed assets. SBA states it cannot be used for working capital or inventory. Source: https://www.sba.gov/loans/504-loans/
- The Federal Reserve Banks' 2026 Report on Employer Firms (findings from the 2025 Small Business Credit Survey; 6,525 employer firms; a convenience sample, not a random sample) found that 38% of firms applied for a loan, line of credit, or merchant cash advance, including 8% who applied for an MCA. Among those credit applicants, 12% applied for an auto or equipment loan, 12% for an MCA, and 20% for an SBA loan or line. Fully approved shares were 71% for auto or equipment loans (N=294), 48% for MCAs (N=298), and 32% for SBA loans or lines (N=359). Among firms that borrowed from online lenders, 60% said actual costs were higher than expected. These are survey outcomes, not a prediction. Source: https://www.fedsmallbusiness.org/reports/survey/2026/2026-report-on-employer-firms and https://doi.org/10.55350/sbcs-20260303
- The Federal Reserve's G.20 Finance Companies release dated October 30, 2026 reports equipment loans and equipment leases as separate outstanding amounts. It does not publish an equipment interest rate in the current release. Source: https://www.federalreserve.gov/releases/g20/current/default.htm
- ELFA's 2026 Survey of Equipment Finance Activity, covering 2025 and released October 14, 2026, reported a pre-tax yield of 7.39% at surveyed equipment finance companies, with a 4.40% cost of funds and a 2.99% spread. Construction equipment was among the five most-financed types, and construction was among the top end-user industries. That yield is an industry average across loans and leases, not a quote on any truck or lease. Source: https://www.elfaonline.org/newsroom/survey-of-equipment-finance-activity-reports-6-8-growth-in-new-business-volume-in-2025
- New York requires an estimated APR on covered commercial financing offers (23 NYCRR Part 600). We did not find a published state-regulator table of typical MCA factor rates or median APRs, so we did not invent one.
- The skill's existing $50,000 / 1.35 factor / 126-business-day illustration was kept and clearly labeled as an illustration. Annualized on a calendar basis (365 x 5/7 = about 260.7 business-day payments a year), the estimated APR is about 130%, or about 144% if a 3% fee comes off the top. The same cash flows annualized at 252 payments a year, the method still in the live calculator guide, produce the familiar 126% and 140% figures. The 252-day method understates that illustration by about 4 percentage points. Two other live illustrations, found in a full sweep of the skill references tree, were recomputed the same way: an 84-business-day collection of the same $67,500 is about 188% on 252 payments a year and about 195% on the calendar basis; a $20,000 advance at a 1.40 factor over 105 business days is roughly 170% on 252 and roughly 176% on the calendar basis.
Result (small sample)
On the eight contractor questions -- mobilization before a first draw, payroll while a draw is late, buying an excavator, lease vs loan on a dump truck, retainage and materials, winter seasonality, a 1.35 factor quote vs 7(a), and whether a 504 can cover payroll -- the new paragraph scored 80 of 80 rubric points and the old illustration scored 37 of 80. The new paragraph won all eight cases. Both arms stayed inside the compliance rules in the written answers (no lender links, no application-page links, no "free" or "no fee" claims, no approvals).
This is a small sample. A perfect score on eight author-scored questions is not proof the line will hold up in live use. It does show that the old comparison cannot answer a lease-versus-loan question, cannot block a 504 loan for payroll, and still quotes an understated APR on the standard advance illustration.
Limits
Small sample, same-author scoring, written stand-in answers rather than live skill runs. No official 504 coupon was fetched, so none is quoted. No regulator-published MCA factor distribution was found. The live calculator guide and several other bundled guides still use 252 payments a year; the replacements are in the patch, not in the repo. A first QA pass caught a labeling error (365.25 x 5/7 is not 260.7) and two guides that still taught the 252-day method; the patch now uses only 365 x 5/7 = about 260.7, and 365/7 = 52.14 for weekly, and covers every 252-basis illustration found in the references tree.
Sources
Listed in full, with fetch dates, in the accompanying sources note. The main official URLs are the SBA lenders page, the SBA 504 page, the Wall Street Journal Money Rates page, Federal Reserve H.15, Federal Reserve G.20, the Federal Reserve Banks' 2026 SBCS report, and ELFA's 2026 Survey of Equipment Finance Activity news release.
