The financial lending company aims at fulfilling the cash flow needs of small businesses Fund.do announced another financial feather in their cap as they have now started providing a business line of credit to their clients. This is an addition to the different factoring services the company has already been providing to small businesses.
A business line of credit is a financial borrowing method where the borrower is not provided with an outright lump sum. Instead, the lender provides a credit limit to the borrower, out of which they can make withdrawals according to their convenience.
Unlike other small business loans, line of credit requires you to pay interest only on the amount you withdraw and not on the entire credit limit granted to you. Fund.do’s business line of credit is revolving in nature. This implies that the maximum credit limit of the borrower goes back to the original value once all the repayments are done.
For example, if you borrowed $100,000 from the lender and have used $40,000 in a month for covering your business expenses, the credit limit will immediately go back to $100,000 once you have repaid $40,000 + interest to the lender. There is no need for reapplication.
By providing business credit lines, Fund.do aims at helping small businesses to take care of financial requirements such as:
• Purchasing inventory
• Paying wages and salaries
• Funding marketing/sales campaigns
• Funding short-term working capital needs
• Covering other operational expenses
The line of credit services also include business credit cards, especially suitable for businesses with a limited capital. These are financial products very similar to personal credit cards, where businesses can withdraw money within a pre-determined credit limit. Just like personal credit cards, the borrower is charges with card fees, annual fees and late payment fees.
It is advisable for business owners to check their eligibility before approaching the lenders to save their time and efforts. The credit limit sanctioned by Fund.do lenders to businesses depends largely on:
• Personal credit score
• Business credit score
• Years of business activity
• History of bankruptcy
• Value of the collateral pledged (if any)
• Specific services asked by the borrower
Depending on the nature of the financial product, Fund.do provides three different types of credit lines apart from business credit cards:
1. Secured Line of Credit – These credit lines can be obtained by pledging collateral.
2. Unsecured Line of Credit – These credit lines can be obtained purely on the basis of credit score and other eligibility criteria, without pledging collateral.
3. Home Equity Line of Credit (HELOC) – Here, you obtain a business line of credit by pledging your house as collateral. The business of credit and other small business finances can be availed by visiting the official website of Fund.do.