Business Lines of Credit: What Startups Should Know.
A startup can obtain funds through various means ranging from term loans to revenue-based financing to venture capital. Each kind of funding is stereotyped differently with its own rules and remuneration. It is very important for startups to obtain funds that suit them because what’s good for one business can be detrimental to another business.
Business line of credit is an excellent option for startups when raising funds for their business venture. Most business owners point of convergence is on angel investors and venture funding which has jettisoned other traditional funding options. It is a known fact that, a business line of credit is a great option for businesses in pursuit of stable growth and need non-dilutive capital at cheap rates.
These are the essentials about this type of funding — which Efunding experts is offering, called the Line of Credit — see if it might be a match for your business.
What is a business line of credit?
A line of credit is a financing solution aimed at meeting the needs of every business venture.It is an alternative to equity or venture debt, which makes funds readily accessible to Startups on a monthly basis, so as to enable them to pay for their business operations. Startups can save money at low interest rate on expenses and advance, as well as withdraw on the line anytime a need arises.
How a business line of credit works
A business line of credit is more like a credit card. You get approved to borrow funds in which a limit will be set which you cannot exceed, after which you pay an interest only on the amount you borrowed. Lines of credit are in two forms: Secured lines of credit, and Unsecured lines of credit. Secured lines of credit are more preferable as it offers higher limits and reasonable rates.
A line of credit is better than credit cards in some ways, therefore, making it more useful for business ventures. Lines of credits always come with higher limits and lower rates compared to credit cards. They also allow you to access funding in cash, so you can make payments that require cash, which includes lease payments, payroll, and payments to particular vendors.
With a line of credit, you are able to repeat the cycle of borrowing and repaying, as long as you do not exceed your limit in total borrowing. A business line of credit is best for companies who have a lot of financial needs from time to time.
The benefits of Efunding Experts Lines of Credit
To come to terms with the benefits of the Efunding Experts Line of Credit, we must be aware of the challenges many startups will encounter. Startups face a myriad of problems which eventually wreaks havoc on their businesses.
A number of Startups keep funds in their bank account, so as to keep up with their cash flow cycle. This can be costly due to the fact that those funds emanates from an equity raise or long-term venture debt. The issue is that many Startups are in a dilemma where their working capital needs a corresponding increase to the growth of their business which cannot be sustained in the long-run.
In contrast, the Efunding Experts Line of Credit can scale with business growth and assist businesses to draw capital without interference in customer relationships and payments.
How do I qualify for a business line of credit?
Generally, the prerequisite most lenders give to a business is that it must have existed for at least six months and also within that duration such business must have at least an annual income of $25,000. A good credit score is also required to qualify for a business line of credit. In order to get approved for a high credit limit, a collateral will be required to secure lending.
The process of securing funds through traditional banks is lengthy and consumes a lot of time. Either way you will you’ll need to provide basic information about your business such as tax returns, bank account info, and financial documentation like a profit-and-loss statement and a balance sheet.
Efunding Experts is providing lines of credit based on accounts receivable levels. The minimum qualifications includes:
- Tech companies with Accounts Receivables
- Monthly recurring revenue (MRR) is an average minimum of $15,000
- Business must be based in the U.S. or a subsidiary in the U.S.
Where can I get a line of credit?
Efunding Experts offers lines of credit along with term loans and cash advances to businesses who meets up with her criteria. Startups can receive a line of credit, so as to meet up with any financial need that arises in their businesses.