There was a time when small business owners who needed financing were either forced to accept the terms given to them by big banks or scrape together loans from family and friends. Today, alternative online lending options are a mainstream source of funding. Small businesses can now decide what type of financing is best for them—and Headway Capital has emerged as a leading lender for companies in almost all industries.
Headway Capital is part of a group of companies, headed by Enova International, that provides consumers and businesses around the world with loans. Headway provides a true line of credit, which offers revolving capital to small business owners. They also champion a “holistic” view of your business when determining your eligibility, which means they consider the overall health of your business rather than being stringent about a minimum credit score or annual revenue.
In order get your hands on a line of credit from Headway Capital, you’ll have to fill out the company’s 3-step online application. After that comes the underwriting and funding processes, but the original application process is the stage that takes the most effort, so we’ll walk you through it below.
Lots of online lenders offer a variety of funding options to entice business owners who need to perform emergency repairs, hire new employees, purchase inventory that’s currently on sale, or expand locations, among other reasons. Headway Capital’s offering is special in the online space for a few reasons.
“The biggest differentiating factor with a line of credit is that it’s revolving,” says Alyssa Ingle, Strategy & Operations Associate at Headway Capital. “With every payment a customer makes, a portion of that goes towards their principal and towards their interest. So, as they rebuild their principal, they can continue to make future draws without having to reapply.”
And for those who are worried about paying off new amounts taken from a line of credit, the past outstanding balance (plus their new draw) is completely re-amortized over their newly-selected loan term and payment schedule—so customers aren’t paying off new and old balances at once.
There are other reasons that small business owners might be drawn to Headway Capital over other online lenders or even a bank, since Headway Capital offers a service that banks have extended for years. There’s the flexibility of the line of credit—the ability to draw whatever amount you need under your credit limit, or to pick a desired repayment term and frequency—as well as the greater likelihood of success than if applying for a line of credit from a bank.
“We evaluate your application more holistically than a bank would,” says Ingle. “We incorporate a variety of factors into our decision model to determine your eligibility and credit limit.”
“It can be difficult for people to get funding from banks, because if someone doesn’t meet the minimum FICO score requirement, they won’t even look at you. We look at the overall health of their business and do not have a minimum score requirement.”
There are some requirements that small businesses must meet in order to receive a line of credit from Headway Capital, though. The factors vary from the company’s annual revenue to what state it’s located in.
Here are the minimum requirements to receive consideration from Headway Capital:
Note that businesses in some industries will not be considered for loans, even from alternative lenders.
Certain terms vary from state to state, though not too significantly. Most states are the same. For example, business owners in New York and many other states have these terms:
To get an idea of how each state varies in their terms: Alabama has the same terms as New York, except that the minimum first draw is $2,000. Check how your state stacks up here.
Begin the 3-step application process by visiting Headway Capital and clicking the big red “Do I Qualify?” button. From there, you’ll go through the following pages:
This page covers the basics, including:
Assuming page one checks out—for example, if you find that your business is in a state not currently served by Headway Capital, you’ll be flagged—you’ll move on to page two. This section goes a little more in-depth, both into your business and your personal information, including:
You’ll also indicate whether you’re interested in paying back your credit line on a monthly or weekly basis, and whether you accept communicating all of this information and money electronically.
The third page provides a quote, not a hard offer, of what your business is eligible to receive. Then you can choose the initial draw amount and your preferred repayment schedule over the course of a year to two years. This will finalize your application and send you to the contract page, which you can review and sign, along with providing your bank account information.
But the application process isn’t over here. Headway Capital still needs to confirm the statements you made in your application by way of financial documents that you provide.
“We ask for their 3 most recent months of bank statements, which can be uploaded or submitted electronically and securely by simply entering their Online Bank ID and password, and in some cases their 2 most recent years of tax returns or a profit/loss if it’s a sole proprietorship,” says Ingle. The use of electronic bank statements (EBS) will speed up your application’s processing even more.
If you have those documents ready from the beginning—and we recommend having them on hand regardless of where you look for financing—you’ll be ready to move on to the underwriting stage, which is covered in part two of our series on working with Headway Capital to secure a business line of credit.