There are Better Alternatives to a Kabbage or OnDeck Line of Credit
Every small business owner wants a financing source that is easy to put in place, fast to get, and inexpensive when used. A small business line of credit is a great solution for small business owners when they need money for working capital, operating expenses, payroll, and more.
Luckily, there are many options for entrepreneurs looking for a small business line of credit, including banks, credit unions, and online alternative
What Is a Small Business Line of Credit?
A small business line of credit is a type of short-term funding solution for companies needing money for operational business expenses. For larger amounts and bigger projects, business owners typically apply for traditional term loans such as Small Business Administration (SBA) loans or equipment loans. But a small business line of credit usually functions as emergency working capital ready to draw from when needed.
Like a credit card, the small business line of credit is a small business revolving line of credit. With a revolving line of credit for small businesses, entrepreneurs have a preset lump sum available to them for various expenses, such as:
- Payroll. It is illegal to miss paying payroll, so having a small business line of credit to cover payroll costs can be a lifesaver for a small company.
- Emergencies. All business owners occasionally encounter setbacks that lead to unexpected costs—from office repairs to last-minute travel.
- Opportunities. Business owners never know when a great opportunity will emerge. Having a small business line of credit to draw from can help turn the opportunity into a reality for the company.
Secured or Unsecured Small Business Line of Credit
You have two choices when applying for a small business line of credit—secured and unsecured. A secured line of credit is a loan tied to collateral, such as accounts receivables, equipment, and property. With a secured line of credit, lenders have less risk because the collateral can be seized if the company defaults on the payments. Secured business lines of credit also typically have lower interest rates. On the downside, if your business cannot make the payments, you could lose valuable assets.
Unlike a secured business line of credit, an unsecured line of credit for small businesses requires no collateral or personal guarantees. Therefore, business owners are not at risk of losing significant real estate or equipment. Unsecured lines of credit have quicker approval times because there is no collateral to get appraised; however, unsecured loans also come with higher interest rates.
Kabbage and OnDeck Lines of Credit
Several online lenders offer small business lines of credit—Kabbage, OnDeck and Financing Solutions are the most well-known. All offer relatively quick turnaround times. Always pay attention to the fees and interest rates connected to any small business lines of credit, as well as what qualifications are needed for approval and how the lender sets the repayment terms. Some lenders only offer variable rates, which could become quite costly.
For instance, Kabbage requires a personal guarantee and uses a relatively complex fee structure instead of charging interest. This can cost you more money and makes it challenging to compare Kabbage with other online lenders. In addition, Kabbage does not report to the credit bureaus, so borrowing money won’t help you build your business credit score. Some customers have reported that Kabbage’s customer service is not helpful and unfriendly.
OnDeck’s loans are unavailable in all states, so your state may not be covered. OnDeck also requires a business lien and personal guarantee. Its interest rates tend to be higher than other online lenders, and OnDeck charges a monthly maintenance fee for its lines of credit.
Before signing an agreement with any lender, find out:
- Are there any setup and/or maintenance fees?
- Are there monthly payments throughout the loan, or only when money has been drawn?
- Are the interest rates variable or fixed?
- How long does the loan last, and can it be renewed?
Although Kabbage and OnDeck are large lenders with many borrowers, you may not get the personal service you can get with a small online lender. It’s better to shop around.
Why Financing Solutions for Your Small Business Line of Credit?
Financing Solutions offers an unsecured line of credit for businesses. There is no charge to set up the line and nothing to repay until you use it, so it is a perfect small business backup plan. Plus, unlike Ondeck and Kabbage, there is no monthly maintenance fee.
The application line of credit process with Financing Solutions is quick and easy, and the line will remain open for 12 months with yearly renewals after that. There is no obligation to use the business line of credit, making the credit line a great backup plan. Financing Solutions works with businesses, nonprofits, and churches with annual revenue from $100,000 to $7,000,000.
Financing Solutions is an alternative lender offering an easy application process (it takes less than two minutes to fill out) and requires no collateral or documentation for a written offer letter. Other alternative lenders have a much longer application process and can be expensive.
The founders of Financing Solutions have started and grown several companies together, so they understand how important it is to keep costs low. That’s why we don’t charge you to set up the credit line, and there are no maintenance fees. We don’t ask for personal guarantees, and applicants can receive a no-obligation offer letter the same day. Financing Solutions makes approval decisions based on over a decade of experience working with small businesses and nonprofits.
Find out today why Financing Solutions is the only alternative lender that has five-star ratings from the Better Business Bureau and Google.
Summary of Financing Solutions unsecured small business line of credit
- There are no costs to set it up or keep it in place
- The easy 2-minute application online application
- If approved, you’ll receive a same-day, no-obligation offer letter
- The fastest setup, 48-72 hours
- Once you have the line of credit, requests for funds are wired to your bank in minutes
- You can use your line of credit whenever needed
- Inexpensive when used (low fees)
- There are no restrictions in place or collateral required
- No personal guarantee is required, either
- Financing Solutions is a leading provider of lines of credit
- We are a reputable company with an A+ & 5-star rating
- You can pay off the line whenever you are ready
- The credit line is easy to renew and renews yearly
- You have a secured account portal access 24 x 7
A small business line of credit is a good funding resource available whenever your company needs it, without the heavy burden of term loan requirements. If you want to see if your small business would be approved and for how much, please fill out the no-obligation, 2-minute line of credit application here.