Hypothetical scenario
Scenario: From Reactive to Ready Before Peak Season
Short answer
In this invented example, a $120,000 fixed-fee offer with a 1.12 payback repaid over five monthly payments costs $14,400 with an estimated APR of about 47%. The same money from a bank line at 11%, repaid over the same five months, costs about $3,320. The fixed-fee offer is faster; the line is far cheaper if the business qualifies.
Key points
- A 12% fee repaid in five months is not 12% a year.
- Time the financing so repayment starts when the season pays.
- Set up a line before peak season, when the books look their best.
The situation
A four-year-old online store selling home goods does about 40% of its annual sales in November and December. Its supplier needs payment for $120,000 of holiday stock by early September. In past years the owner scrambled in August and took whatever was fastest. This year she starts in June: the store has an offer through its sales platform and she is asking her bank for a line of credit before the need is urgent.
The two options
Terms are assumptions for the example:
| Fixed-fee offer | Bank line of credit | |
|---|---|---|
| Amount | $120,000 | $120,000 drawn |
| Price | Repay 1.12 x = $134,400 | 11% interest on the drawn balance |
| Repayment | Five equal monthly payments of $26,880 | Repaid over the same five months (amortizing) |
| Cost | $14,400 | about $3,320 |
| Estimated APR | about 47% | 11% |
| Speed | Days | A few weeks, needs financial statements |
Things the numbers don't show
- Timing. The fixed-fee offer starts collecting in October, before the peak. If it's collected as a share of sales, payments will rise in November and December, which is better than equal payments for cash flow but shortens the term and raises the APR.
- Qualification. The bank will want two years of returns and current statements. The store's books are current and profitable, so it has a reasonable case.
- Inventory risk. If holiday sales disappoint, the line can be repaid more slowly at the same rate; the fixed fee stays the same whatever happens.
A middle path
The owner asks the bank for a seasonal line now, and keeps the platform offer as a fallback. She also negotiates with the supplier to pay 50% in September and 50% in November, which cuts the amount needed up front to $60,000 and halves the cost of either option.
The reasoning to take away
The fixed fee looked small as a percentage; converted to an APR, it wasn't. And the cheapest dollar of financing turned out to be the one she didn't need, by negotiating supplier terms.
Sources
- Federal Reserve Banks: 2026 Report on Employer Firms
- SBA: Types of 7(a) loans (CAPLines seasonal lines)
Checked November 9, 2026. Program rules and scoring models change; the source is the authority.