Online business line of credit: Everything you need to know to get started

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If you’ve been researching online business line of credit facilities, you might relate to one of the following situations:

  • You need immediate access to cash for a one-off purchase or a business milestone, but you know a traditional funding option will take too long to secure.
  • You might have tried to get a regular overdraft with your bank, but perhaps you couldn’t get one, or if you did, you didn’t get the loan amount you needed.
  • You’re located in Ireland and want a funding provider that can cater to you. You might also be looking to expand internationally.

In this article we’re going to look at funding your business using a line of credit, including how it works, when it makes sense as a funding option, and how to get started with Financefair. 

We’ll cover:

Note: If you want to dive straight in and find out what funding we can offer you, get started by filling out our online funding application form

What is a business line of credit and how does it work?

In short, a business line of credit works like a digital overdraft. Many businesses need access to funding of between €10,000 to €250,000 per 12 months, and this is where a line of credit can help. 

With a line of credit, you don’t have to worry about running into the red as the capital is available to you if you need it.

Usually, you can apply for a business line of credit online with your bank or with an alternative online lender. Once you’re ready for the funds, you can submit a request directly to your provider and receive the funds via a bank transfer straight into your business bank account.

The main advantages of a line of credit is that you: 

  • Can easily manage larger than usual payments for stock or staffing that you might not otherwise have the money for. 
  • Aren’t limited to only working with your business bank account provider, giving you more choice. It’s also useful if you’ve had your business bank account for a short period of time, as many banks won’t lend to businesses within a certain time of the account opening. 
  • Can usually draw down and pay back on your own repayment terms, either monthly or as a lump sum. After the initial 12 months have passed, you can either decide to keep the facility running for peace of mind or bring it to a close. 
  • Can put it towards seasonal business expenses that may come once or twice a year. 
  • Won’t have to divert customer payments to a separate bank account. You can directly request to draw down from your LoC and get the funds in your account.

When does it make sense to get a business line of credit?

When you might choose to get a line of credit depends on your needs and future business plans. It might be something you’re searching for as you aren’t happy with your business checking account overdraft – or maybe your bank didn’t grant as big an overdraft as you needed.

A line of credit is ideal for handling a larger than usual transaction, or seasonal transactions that only occur a couple of times a year. With this type of facility, you won’t face the restrictions you may get with term loans and other types of small business loans, like having to pay a fixed amount per month for a certain number of months.

Other examples of situations where a line of credit may be useful include if you:

  • Are looking for hassle-free cash flow for capital expenditure – most commonly to buy stock.
  • Want to fund milestone needs in the business – say you need to upgrade some equipment to keep up with demand.
  • Can see a big opportunity but need funding for a larger than usual expense to fulfil.
  • Went to the bank for an overdraft but were turned down or didn’t get as much as you’d hoped.
  • Think you can’t get the funding elsewhere, maybe because you already have a loan.

You might also choose to keep a line of credit open after you’ve dealt with your immediate funding need and paid off what you’ve used. You have the option to keep it available to you, ready for the next big expense. 

We think of line of credit use as being driven more by the key events and milestones in your business, compared to other types of funding such as revenue based finance (RBF) which is driven more by business strategy and scale. However, a line of credit also works nicely alongside other solutions like RBF if it suits your business needs. 

Read more: Revenue based financing: What it is and how to get started

How to get an online business line of credit with Financefair

Business line of credit facilities are not very common in Ireland. At the moment, only AIB offers a credit line for their customers and we’re the only alternative provider in the country.

Our online business line of credit is both quick and easy to set up. It’s our fastest solution to get up and running, and we can advance the funding within 24 hours of your being onboarded on our platform. 

It’s easy to do since the set up is all digital – you can apply online, connect your accounting and banking with our platform and complete the fulfilment all digitally.

Here are some of the other benefits of our line of credit facility: 

  • We’re the only provider in Ireland that can offer a business line of credit as a standalone product. 
  • We use data analytics for visibility over ongoing performance, meaning you don’t need to continually send us bank statements or any other financial documents. 
  • We collect fees via direct debit, so there’s no need for us to contact your customers, or for you to redirect payments to another bank account.
  • We don’t require a personal guarantee.

Who’s a line of credit for? To qualify to use a Financefair line of credit, you must: 

  • Have a debtor book.
  • Be primarily B2B.
  • Be able to integrate your accounting and banking software with the Financefair platform for ongoing management.
  • Be a fit in our rating system: We look at a number of attributes including your business credit score, creditworthiness, credit history, experience score and business performance.

How much funding could you get?

Here are some examples from our funding calculator showing the revolving line of credit you could get depending on your annual revenue:

Annual turnover including VAT Line of credit you could be approved for
€250,000 €50,000
€750,000 €150,000
€1,250,000 €250,000

 

You can try our calculator for yourself by visiting our line of credit page. 

Our pricing for this type of facility comprises:

  1. A monthly fee of 0.6-0.75% 
  2. The platform joining fee 
  3. Depending on a few other inputs there may be a discount

Costs typically range from 0.75% to 1.50% per 30 days, depending on the factors mentioned above. 

Here’s how to get started with our application process:

  1. Apply: Complete a funding application form or contact us to arrange an appointment to speak to one of the team. 
  2. Connect: You’ll need to share a few documents including your latest statutory financial statement (e.g. tax returns), business forecasts and tax clearance certificate, as well as connect your banking and accounting software.
  3. Offer: Within 24 hours, you’ll receive an indicative offer.
  4. Onboard: If you accept the offer, our team will onboard you onto our platform.
  5. Formal offer: Once you’re credit approved, you’ll get your formal offer along with:
    1. A DocuSign link with the debenture
    2. A link to sign up to GoCardless so we can collect fees
    3. Security documentation for AML and KYC
  6. Funding: Once your facility is in place, your funding will be available within 24 hours.

What we do and why you should work with Financefair

Financefair (formerly InvoiceFair) was founded by a team of finance and accounting experts in Ireland, with the objective of offering working capital solutions to help businesses grow faster. 

In the years since then, we’ve continued to innovate and our funding solutions now include invoice discounting, revenue based financing and line of credit. 

When you choose a Financefair funding solution, here’s what you’ll get:

Get an indicative offer within 24 hours

We want you to know how much funding you can get as soon as possible, and that’s why we’ll give you an indicative offer within a business day. Plus, once you’re onboarded and all documentation is complete, you’ll be able to access your line of credit within 24 hours.

We can do this because of the way we combine technology and data analytics with our experienced team, offering you a frictionless and flexible experience. Having access to real time accounts data and combining this with a conversation about your business means we know exactly how things are going, and we have the information we need to evaluate, approve and monitor the risk. We can make decisions for future funding faster and often offer more funding than other providers.

The team’s diverse knowledge and experience of financial services means we know very well that working capital ebbs and flows like a river. Some months it flows faster than others. We understand this and can work with you to adapt what we’re offering. 

Access a line of credit, plus other innovative financing solutions to help your business scale

Not only is a line of credit a useful source of hassle-free funding that you can manage on your own terms, but it also serves as an entry point to other business financing options we offer at  Financefair. As your business grows and becomes more successful, other opportunities will become available that can help you scale even further. 

Because we speak to you to get an understanding of your business, and back this up with real-time data about your accounts, we’re able to offer innovative funding solutions that are tailored to you and your unique situation. Whatever your goals for your business, we act as a funding solution for your company.

Here are some of the other advantages of working with us:

  • You’ll be able to access multiple options to help grow your company: These include invoice financing, revenue based financing and line of credit.
  • You can work with a local company: We’re the only provider of line of credit facilities in Ireland.
  • You won’t come up against any restrictive funding concentration limits: We work with multiple funders. We explain more below, but in short, our unique business model allows us to offer more funding.
  • You don’t need a personal guarantee.
  • You won’t be charged any hidden annual fees or costs: Our pricing and monthly payments are clear from the outset. 

Get more funding thanks to our unique business model

One of our unique selling points is that because of our unique business model, we’re able to advance a larger amount of funds. 

Usually, traditional bank loans have strict concentration and risk rules. Banks don’t want to give more financing to a company that already has a credit line with them, which often makes it harder for you to access a higher amount of funding.

But when it comes to our funding, we don’t fund directly from our balance sheet. Instead, we partner with investors who advance the funding. That means you might get 20% from one investor, 40% from another, and so on. This diversification means it’s easier to get more funding in place, as well as top up your line of credit when needed.

How a solar panel company doubled their contracts using a Financefair line of credit

One company that took advantage of a Financefair unsecured business line of credit supplies and installs solar panels for businesses on their commercial property. 

They needed funding for a bulk purchase of solar panels to make the most of a supplier discount. Their initial plan was to use receivable financing to get €120,000 to fund this purchase. When they reached out to us, however, we realised a line of credit would be a better fit for their needs. 

We were able to offer and advance them a €250,000 line of credit upfront, instead of the original €120,000. This allowed them to fund the initial purchase they had in mind, plus use the remaining €130,000 to tender for another contract and get new business. 

This allowed them to fulfil two contracts at the same time, instead of just one.

Using the business line of credit to fund one purchase and tender another contract helped boost their credibility and their brand. Once the money came on from the completed job, they were able to pay off their outstanding balance. 

Thanks to the line of credit, they were able to:

  • Get a bulk discount on their solar panel order 
  • Fulfil their existing contract
  • Secure another large contract
  • Fund two projects instead of just one as they had done in the past

For those needing to bulk buy stock to fulfil contracts, a line of credit can work very well – and in this case, it made more sense than invoice discounting. 

Fund your business milestones with a Financefair business line of credit 

In this article we took an in-depth look at funding your business using a line of credit. We shared some examples where it works well as a funding option, then we went on to cover how you can get started with Financefair. 

If you know you have a big expense coming up that you can’t quite cover, like upgrading your equipment to cope with demand, or buying extra stock to deliver on another contract, a line of credit could be what you need. 

Reach out to us if you’re ready to get started, and let’s talk about how we can help you get your business where you want it to be.

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