When it comes to applying for a line of credit from Headway Capital, the most important question of all is perhaps the most obvious:
How soon can I get my money?
Lots of small business owners who look for alternative financing—i.e., not from a traditional big bank—need money for emergency repairs, to take advantage of a great deal on supplies for their inventory, or to pay bills. They often need the money sooner rather than later, which is why the funding stage of the three-step process to receiving a line of credit from Headway Capital can happen rather quickly. (Part one is applying and part two is underwriting—make sure to check those articles out, too.)
“It’s possible that if you apply for a line of credit on Monday morning, you can get your funding by Wednesday,” says Alyssa Ingle, Strategy & Operations Associate at Headway Capital.
That means business owners can go from no additional funding to a line of credit worth up to $35,000, with flexible repayment terms and repayable over 12, 18, or 24 months. The exact terms vary by the business owner, but that’s still an impressive upgrade in spending power.
Headway Capital’s offering is a little different from other online lenders because they provide you with a true line of credit, rather than a short-term loan or credit card. Learn how to make sense of, and make the most of, your new line of credit.
As we talked about in part one and two, small business owners can go to headwaycapital.com and begin an application right away. The online three-step application asks a number of questions about your business as well as your personal information, including last year’s total revenue and your primary source of income. You’ll then get preapproved for a quote on a potential line of credit, including payback terms and initial draw amounts that you’ll agree to.
The next stage is underwriting, where you’ll receive a call from a Headway Capital associate who will look to flesh out the concept and goals of the business a bit more. This usually takes, according to Ingle, about 5-10 minutes. They’ll also review financial documents that you’ll provide over DecisionLogic (faster) or email (slower). Assuming everything goes well and the underwriter approves your loan, funding for the business can become available by the next day through an ACH payment into your bank account.
Use the line of credit for any legitimate business purpose, like creating a dynamic new marketing campaign or expanding your location.
The interest rate you’re paying depends on the information that was provided during the application, and credit maximums and minimums can vary by which state the business resides. in (Headway Capital is available in 24 states, including many of our nation’s most populated. If you don’t live in a Headway Capital-served state, hold tight—the company plans to expand in the near future.) There are no service fees, though late fees for late payments are possible.
The most important thing to note is that a line of credit, unlike a term loan or merchant cash advance, is revolving credit. With every payment you make to repay their line, a portion goes towards both your principal and your interest—so as you continue to build your principal back up, you can make more draws, and you’re not paying interest on money you haven’t drawn.
As mentioned above, you’ll set your repayment terms, with either weekly or monthly payments that automatically get deducted from your business’s bank account via ACH. Some of every payment pays off your principal until you’re back to zero.
What if business booms and you can repay all the remaining money on your line of credit earlier than expected?
No problem: Headway Capital charges no additional fee for giving them their money back ahead of schedule, and you’ll stop accruing interest.
If you want to draw again from your line of credit—perhaps the deal on equipment and inventory you wanted to take advantage of has been extended, or a new expansion idea is floating around—you don’t have to wait to repay the first draw. Just draw again, up to your remaining principal balance. The past outstanding balance plus the new draw is completely re-amortized on their selected term and payment schedule.
This way, you won’t be paying off different draws on different schedules at different rates. Just note that there is a 2% fee from Headway Capital for new draws on the line.
None! Headway Capital offers a true line of credit with no hidden fees, which banks have been offering for years but less so with alternative lenders.
“Our agenda is to support these businesses,” says Ingle. Increasing visibility helps small business owners understand their options and pick the right loans based on what they need.
From here on out, it’s up to you how to make the most of your new line of credit. Be sure to always have enough in your business bank account to cover payments—you may be hit with a non-sufficient funds (NSF) fee from your bank—and not to overextend yourself or your business.
It can be a tough world out there for small businesses, which often live or die based on forces outside of your control. If you’ve got the ability to change your business for the better and just need a little outside help, consider Headway Capital’s line of credit as a tool to help you keep your edge in this competitive market.