A line of credit is a flexible form of short-term financing. You have a set amount of available credit which you can access as you need. With a business line of credit, you do not make any payments or pay any interest until you actually use the funds. A line of credit is ideal for unexpected expenses so that you don’t have to rely on cash flow when emergencies arise. For instance, having to replace a major piece of equipment or offsetting a seasonal decline in revenue. A line of credit could be in the range of $5,000 to $500,000 or more. When you apply through Funding Circle’s network of lending partners, this range is $6,000 to $250,000. With a line of credit, you’ll only pay interest on the funds you draw. However, there may be other fees attached to lines of credit like monthly maintenance fees, draw fees, and late payment fees. Learn more about applying for a line of credit through Funding Circle.
Invoice Factoring
Invoice factoring is more similar to an MCA than it is to a business loan. Invoice Factoring works by selling your accounts receivables to an invoice factoring company (also called a factor’) at a discounted rate in exchange for two lump-sum payments. The first payment is the advance (which represents the discounted invoices) – an upfront payment of 70-90% of the factored invoices, and the second payment is for the remaining balance (minus any fees) once your customers pay the invoices in full. The first lump-sum through Funding Circle’s network of lending partners is between 85-90%. Invoice factoring is best for businesses that need to cover inventory costs or upfront expenses but have delayed payment terms with their customers. The benefit of invoice factoring is that your account receivables are quickly turned into cash rather than having to wait months for customers to pay. Learn more about applying for invoice factoring through Funding Circle.
Can I qualify for financing?
Small business owners often don’t believe they have good enough credit to receive small business financing, but you shouldn’t give up just because traditional banking https://worldpaydayloans.com/payday-loans-mt/great-falls/ institutions rejected you. Every lender weighs qualifying factors differently, so you have a good chance of being approved even if you’ve been rejected in the past.
There are certain financing options, like invoice factoring, that don’t consider your credit score but your clients’ ability to pay their invoices.
If you apply for a small business loan and are able to offer collateral for the loan, you can often get better interest rates as lenders will see you as less of a risk. Borrowers with all kinds of credit and entrepreneurial histories can qualify for small business loans with competitive interest rates.
Business owners can look for small business loans with shorter or longer terms based on their financial needs. The best one for you depends on a few factors. You should consider how you’ll use the money, how much you need, and how much you’ll pay in interest with each option.
If you’re not sure what kind of financing option (loan, line of credit, or anything else) you want, consider talking to a financial expert (like your accountant) about your situation. They’ll be able to talk you through your choices, helping you find the best small business loans for you and your business.
By applying for a small business loan through Funding Circle, you’ll get a dedicated loan specialist – while they are not a financial advisor, they’ll be here to walk you through the entire funding process. Your dedicated loan specialist will be able to walk you through your options and work with you to find the best option(s) for your business.