5.0 out of 5.0 (21 reviews)
Headway Capital is a good option for startups that need access to flexible credit lines. The majority of small businesses that operate for less than 12 months have difficulty qualifying for a business line of credit. These loan products are typically reserved for businesses with long operating histories and excellent credit profiles. Headway Capital makes obtaining a line of credit possible for business that have been open for as little as six months.
- Headway Capital Review: Should You Apply?
- Eligibility Criteria
- Headway Capital Rates and Terms
- Headway Capital Application Process
Headway Capital Review: Should You Apply?
If you operate a startup that needs access to flexible credit, Headway Capital might be a good option for you. Headway Capital offers a business line of credit with low barrier to entry. The lender does not have minimum credit requirements, so business owners with lower credit scores may still qualify, provided that other aspects of their businesses make up for credit deficiencies. Headway Capital's flexibility when it comes to repayment terms is also handy for businesses with cash flow concerns. While it may not be the cheapest lender on the market, its lack of fees and straightforward lending practices mean you won't receive surprise charges later on.
The Pros of Headway Capital
Headway Capital offers a business line of credit product that has low eligibility hurdles. The lender requires no minimum credit score, instead choosing to evaluate borrowers holistically, based on profitability, time in operation and purpose of funds. Eligible businesses only need an operating history of six months, which makes Headway Capital's line of credit a viable option for many newly formed businesses.
In our experience, online business lenders are often unwilling to quote their fees and interest ranges without a formal application, making shopping between lenders difficult. By contrast, Headway Capital can provide an estimated line amount and prequalify you without the need for a hard credit check. This makes it easy for many borrowers to see where they stand without commitment.
The lender is also surprisingly upfront about its rates and fees. Over the phone, the customer service representative quoted us a monthly interest rate range of between 3.3% and 6% — or 40% to 80% annualized. They also confirmed that they charge no additional fees, aside from a 2% draw fee that varies by state. Finally, business owners can choose whether they repay their draws on a weekly or monthly basis, and they also have a choice of 12-, 18- and 24-month repayment periods. Many other lenders are not as flexible.
The Cons of Headway Capital
After comparing Headway Capital's APRs to other lenders, we found that Headway Capital's interest rates are higher than average. The lender's interest rates are quoted on a monthly basis—starting at 3.3%—which translates into 40% when annualized. Depending on the credit profile of your business, these rates can go as high as 80% on an annual basis. When comparing offers, remember to convert quoted rates to APRs so that they're comparable across different types of loans.
Headway Capital's maximum loan limit is $50,000, which is lower than the limits offered by many other line of credit providers. Some lenders offer lines of credit for two or three times this limit to creditworthy applicants. This makes Headway Capital less attractive for businesses with large capital needs.
Headway Capital isn't available in every state, and some states will have unique requirements for minimum draw amounts or credit limits you can obtain. According to our review of the lender's FAQ page, Headway Capital's lines of credit are only available to borrowers in 34 states. Borrowers in the remaining 16 states will have to look elsewhere for funding.
Headway Capital is a good choice for newly established businesses and borrowers with below-average credit. The lender has low eligibility requirements and is flexible with repayment schedules and loan terms, which can be useful for businesses with tight cash flows. Its rates and terms are transparent, which is unfortunately uncommon among online business lenders. However, Headway Capital is only offered across 34 states, making it a nonoption for about one-third of the country. Businesses with solid credit profiles and long histories of profitability will likely find better rates elsewhere.
To qualify for a line of credit with Headway Capital, your business will need to meet the requirements below. Meeting these requirements does not necessarily approve you for funding.
- No minimum personal credit score
- Minimum annual revenue: $50,000
- Minimum time in business: one year
Headway Capital requires no minimum credit score. The lender will take your credit profile into account but will also weigh your application holistically, evaluating business financials, loan purpose and amount of time in business.
Headway Capital Rates and Terms
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Headway Capital offers a revolving business line of credit, which means that your credit line will be replenished as principal is repaid over time. Depending on the industry and state in which you operate, your terms may differ from what's indicated below. Interested applicants can view terms specific to their states by checking the rates and terms page on the lender's website.
|Line Amount Range||$5,000 - $100,000|
|APR Range||40.00% - 80.00%|
|Line of Credit Terms||12, 18 or 24 months|
|Repayment Options||Weekly or monthly|
|Personal Guarantee Required||Yes|
Headway Capital Application Process
Headway Capital's application process is entirely online and takes about 10 minutes to complete. Eligible applicants can receive funding in as quickly as one business day if approved. You will need to provide your business's three most recent monthly bank statements. In certain instances, you may need to provide your corporate and personal tax returns as well as your business's profit/loss statements, although this is uncommon and depends on the nature of your business.
Begin the application by clicking “apply now” on the lender's homepage. You will first need to create an account and provide your desired credit limit, use purpose and some basic details about your business.
Once you've created an account, you will be asked to provide the following information:
- Industry type
- Legal entity type (sole proprietorship, LLC, etc)
- Years in business
- Business tax ID
- Gross revenue
- Number of employees
You will also be asked for your personal address, contact information, date of birth and Social Security number. After you've provided both your business and personal information, you will need to indicate whether you would like weekly or monthly repayments on your loan balance. You will also need to consent to electronic communications by checking the box and clicking the “continue” button. By continuing to the next segment, Headway Capital will conduct a soft pull of your credit profile. This will not impact your credit score.
In the next section, you will be asked to sign into your business's online bank account; this is so Headway Capital can evaluate your business's finances. Alternatively, you can choose to upload your last three months' worth of business bank statements to complete this process. Note that uploads of your documents will take longer to process and may result in a less accurate preliminary offer.
At this point, if you prequalify, you will receive a preliminary offer amount and choice of payment terms: either 12, 18 or 24 months. If you choose to accept these terms, you will need to review and e-sign the Headway Capital loan agreement.
Note that once you sign and submit your agreement, Headway Capital will conduct a hard pull of your credit report. This may impact your credit score. Once submitted for processing, a decision will be sent via email within two business days. During this period, you may receive a call from a Headway Capital loan officer for verification purposes.