A ledgered line of credit, also known as a receivables line of credit, offers many of the advantages of a traditional bank line, except for the restrictions that can hinder a company's growth if a financial covenant is not met during a review of their latest financials or an audit. A ledgered line of credit has no such restrictions.
Here are some of the advantages:
- No long application
- No complicated forms
- No audit requirements
- No restrictive financial requirements
- No restrictive covenants
- No financial ratio requirements
- No concentration restrictions
- Plus other benefits
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Ideal for companies that are considering a traditional line or are present with an asset-based lending or bank line and would like to get away from the strict requirements but maintain the features of a line of credit and competitive pricing.
The line is flexible and secured with the company's accounts receivables. And unlike a traditional line of credit, there are no audits required or restrictive covenants concerning ratios, concentration, etc.
Competitive pricing is similar to an ABL line structure, typically prime + %, plus a service fee. The service fee is charged monthly on the gross amount of invoices, interest is charged on the amount of funds drawn, thus controlling the cost of funding.
The process is simple, the company submits invoices, creates a pool or borrowing base, and then draws up to 90% depending on the advance rate. The client can draw funds, daily, weekly, bi-weekly, or monthly. Funding is based on the value of your receivables, providing constant capital based on sales. The ledgered line is structured to fit the funding needs of the client.
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