Small business loans, credit lines and working capital loans…they’re all types of finance that can help your business grow, but how do you know which option is right for you?
Let’s dive in…
At Spotcap we offer both business loans and lines of credit but they’re not the same thing!
A credit line is the amount of money we make available to our small business customers. It’s completely free to apply for and maintain and you’ve got three months to decide if you will use the funds and just how much you need.
A small business loan is the amount of money our customers decide to withdraw from their credit line, subject to the agreed payment terms.
How can you use a credit line or small business loan?
Every small business is different and will approach financial solutions in their own way. Navid used his credit line for peace-of-mind – he needed financial security in case an unexpected expense cropped up or his clients were late with payments.
More commonly though our customers withdraw loans from their credit line to use within their business. Kym used hers to launch an innovative new range of CrossFit accessories, and Spencer used his loan to purchase a shipment of solar panels at a time when global financial markets were fluctuating.
How does a credit line work?
Spotcap provides approved business customers with an unsecured line of credit which is available for up to three months.
During that time businesses have the opportunity to assess their finances against upcoming projects and withdraw funds as needed. This approach offers flexibility and peace-of-mind.
When the three month period comes to an end we invite our customers to have their application re-assessed. We call this process a ‘rescore’, and it often results in positive adjustments to borrowing terms, depending on the performance of the business. It’s a lighter version of an initial application and takes just minutes to complete.
The re-score process itself is quick and easy (all you need to do is reconnect your data and we’ll come back to you within 24 hours), but there are some important things to keep in mind as you approach the three month mark.
What can you do to ensure a positive re-score?
Alternative providers are often looking to lend to growing businesses. In fact the good ones won’t ever lend to businesses on a downward spiral because a business loan won’t function as it should when used as a last resort.
In order to positively re-score your application we’re on the look out for four key things:
- Stable or increasing revenue trends – we want to know your business is on the right track.
- A flurry of activity – we also like to see an increase in business activity reflected in your banking transactions. We understand that this may not always be the case so we may also look at your receivables or contracts.
- No other debts – Taking on other liabilities into your business is something we keep a very close eye on, as this will impact your ability to make repayments.
- Punctual repayments – we take into consideration whether or not your repayments have been paid on time so keep on top of your repayment obligations.
Taking a line of credit from an alternative provider like Spotcap gives your business freedom and security. Get in touch with us today to find out more about our re-score process or to apply for a line of credit.
Originally published July 22 2016 , updated May 9 2017