When small-business owners talk to lenders about financing for equipment or other assets, they usually try to bargain over things like interest rates and collateral. But one aspect few try to negotiate is how long they'll have use of the funds, and the schedule for paying them back. Usually, a borrower starts paying off principal right away. "But the longer you can use the full amount," explains Jeff Hurwitz, a partner in KPMG Peat Marwick's Cincinnati office, "the more flexibility you'll have."

Most working-capital loans, he notes, are written for periods of about a year, so the potential for extending the so-called average life of capital is limited. But for longer-term money, slowing down the principal payments can reduce pressure to think about the next round of financing. Lenders want to get their money back sooner rather than later, so don't expect them to offer suggestions. But if you initiate talks with them, Hurwitz recommends bringing up four points:

Longer maturity. If you need money to buy equipment or assets you'll be using over a long time, shoot for the longest loan term possible.

Less frequent principal payments. Once the maturity has been set, negotiate for as few regular principal payments as possible (quarterly or semiannually, say, instead of monthly).

Moratorium on principal payments. An attractive alternative is to press for interest-only payments for the first, say, two years of a seven-year loan, followed by normal payments.

Balloon payments. Perhaps the most effective ploy: ask to make a single principal payment (or at least as much of the principal as possible) when the loan matures.

-- Bruce G. Posner