Established businesses in industries where cash flow varies by season or is dependent on the timing of invoice payments can benefit from the revolving credit line Idea Financial offers. As an alternative to bank loans, this type of financing gives merchants a reliable and flexible source of working capital without hefty monthly payment obligations.
Idea Financial brands itself as “a digital lending company committed to providing customer-centric and efficient lending solutions” in a market where many alternative lenders are charging high fees and engaging in unsustainable or unscrupulous lending practices. Founded in 2017, Idea Financial offers revolving lines of credit with the goal of helping business owners turn their ideas into “a reality” and achieve the growth they desire.
The company is currently headquartered in Miami, Florida and employs “a team of experienced business advisors and financial services professionals” seeking to creating meaningful relationships with the merchants whose loans they oversee. By using positive marketing language and expressing a desire to support entrepreneurs in community settings, Idea Financial differentiates itself from online lenders that seek only to make deals by any means possible.
Business owners wishing to secure credit lines from Idea Financial must have a FICO score of 650 or more. This is higher than the minimum requirement of many online lenders and is indicative of the standards Idea imposes on the merchants with which it works. However, the number is low enough to make this lender’s credit lines accessible to merchants unable to obtain loans and other financial products from banks, making Idea Financial a potential alternative for those with fair credit.
When it comes to credit and other application requirements, Idea Financial has a “no exceptions” policy. The lender focuses on offering its credit lines to a specific target market, namely businesses with established histories, consistent annual gross incomes and at least fair credit. The tone of the website supports this, as it lacks the language used by many fast-cash lenders to suggest workable solutions will be found for just about any business.
Idea Financial does consider all the paperwork submitted as part of the application process, so credit score isn’t the single determining factor. However, companies with poor or bad credit will be turned down to prevent a situation in which both Idea and the merchant wind up in a high-risk financial deal.
The range of industries served by Idea Financial is less extensive than some other online lenders, but the company is still willing to extend funding to a fairly broad array of businesses. Qualified merchants in retail, foodservice, manufacturing, trucking and certain types of construction should have no trouble obtaining an LOC from Idea.
In general, Idea Financial can help any business meeting its lending requirements find a solution to gaps in cash flow. However, unlike the majority of fast-cash options, this lender seeks to minimize the risk involved when providing funding.
In light of this, Idea Financial won’t approve credit lines for:
Sole proprietorships are also excluded from applying for Idea Financial’s credit lines.
This level of selectivity makes Idea different from online lenders casting broad nets and seeking to close deals with as many applicants as possible.
When a draw is made on an LOC from Idea Financial, the merchant has 12 to 18 months to pay back the borrowed amount with any applicable interest and fees. Merchants may also choose to pay the draw in full before the end of the term. Doing so saves money on interest by reducing the amount of time a balance is carried, and this structure offers flexibility not available from lenders that charge prepayment penalties.
Payments on existing draws are automatically taken out of a merchant’s business bank account to ensure no obligation is ever missed or overlooked. This allows business owners to focus on day to day operations without being bogged down by yet another bill or risking damage to their credit from unintentionally missing a payment or paying late.
In addition to a FICO score of at least 650, Idea Financial requires applicants to:
The individual applying for the loan must have at least 50 percent ownership in the business. These requirements place further restrictions on the range of companies to which Idea Financial will lend but are in line with its desire to provide high-quality service with a low level of risk.
Merchants begin the paperless online application process by clicking the “Apply Now” button on any page of the Idea Financial website. Some pages have additional application links near the footer. These all bring up a three-page application asking for information like:
Submitting this application doesn’t affect credit score, so merchants can check the amount, percentage rate and terms for which they qualify without any negative consequences. One completed, the application is sent to Idea Financial for review. The lender looks at “unique business attributes” and extends an offer, which can result in access to funds in as little as one day.
Each applicant is assigned a “dedicated business advisor” to provide support and answer questions for the duration of the merchant’s relationship with Idea Financial. Customer reviews suggest this aspect of the lender’s approach is particularly useful and contributes to the reliability of the service.
Charges on lines of credit are similar to credit cards and are calculated as an annual interest rate (AIR) instead of the rates used for cash advances and other fast-cash loans. Rates are typically higher than those on bank loans, but Idea Financial’s rates are comparable with most major credit cards.
Depending on the creditworthiness of the applicant, the APR for an LOC from this lender can range from 11.99 to 29.99 percent. This percentage is applied to the amount of each draw rather than the full amount available to the merchant, which is the typical structure for a credit line. Interest is only charged when money is borrowed.
Some draws are subject to additional fees of up to 2 percent of the amount being borrowed. Idea Financial’s pricing information is unclear as to when or why most draw fees may be applied and how the required amount is determined.
Idea Financial stands with most lenders in its position against stacking. If an existing customer attempts to obtain additional funding from another source while still using a credit line from Idea, the lender reserves the right to terminate the loan agreement.
There is one exception to this rule that Ideal Financial is willing to make: If an applicant has a single existing merchant cash advance or other type of working capital loan when applying for an LOC, it shouldn’t affect their ability to qualify.
Idea Financial highlights its application process as being free from fees and doesn’t impose an additional charge on top of interest.
Since a revolving credit line differs in structure from a traditional loan or merchant cash advance, merchants pay no origination fee.
In contrast to credit lines with fixed ending periods, Idea Financial’s revolving lines of funding are always open and cash is always available, so renewals aren’t necessary. Idea Financial allows multiple draws per day, and existing draws can be overlapped if merchants are willing to pay a 1.99 percent fee per draw.
Revolving lines of credit like those offered by Idea Financial don’t require merchants to pay back a predetermined fee or amount of interest based on the total amount of credit available. Instead, interest is paid only on existing draws, and Idea Financial doesn’t penalize for early repayment. If no money is borrowed, no interest is owed. However, this also means the full interest percentage is applied to each new draw along with any applicable draw fees. Depending on how often you draw, the amount you borrow and how long you take to pay it back, you could wind up owing more in interest on an LOC than you would on a traditional loan.
Businesses typically rely on credit lines as a source of working capital, and Idea Financial requires all funding to be used only for business purposes. Unlike with some types of loans, there are no restrictions on the nature of the business expenses for which Idea Financial’s funding may be used.
The revolving structure of an LOC makes it an ideal choice for seasonal or cyclical companies routinely encountering periods of low cash flow or slow sales. Common uses for this type of funding include:
Credit lines aren’t meant to be used for big expenses or extensive projects, such as purchasing real estate, opening a second location or performing significant renovations. Because terms are limited to 18 months and stacking is prohibited, merchants in need of long-term funding for these types of plans should look for lenders offering traditional term loans.
As of this writing, customer reviews for Idea Financial appear only on Google and TrustPilot. Nearly all reviews are positive, placing the company at 4 out of 5 stars on TrustPilot. One 3-star review cites interest charges as a negative aspect of the LOC structure, to which the company replied with a detailed explanation of interest charges.
Positive feedback praises Idea Financial for:
Because Idea Financial is a fairly new player in the online lending industry, it doesn’t yet have a BBB rating or accreditation. No press or media information is available on the website, and sites like Merchant Maverick and Fundera haven’t posted any reviews.
Businesses considering Idea Financial as a source for a working capital loan should keep in mind that customer reviews are an important factor when researching lenders. Although it’s possible to use the chart provided on Idea’s website to compare its offerings to those of banks, credit cards and the average online lender, this doesn’t provide any information about the loan process or the customer experience. Merchants with questions about customer service and the reliability of the credit line should call Idea Financial for clarification.
About Theresa HoughtonTheresa "Sam" Houghton is a wellness consultant and freelance writer from Upstate NY. With more than half a decade of experience in the business world, Theresa understands the unique challenges small business owners face in highly competitive markets. Her experience with researching and writing positions her to provide solid advice and high-quality content on a variety of topics. When she's not writing or helping people get on track to better health, Theresa likes to read the Bible, play humorous card games and knit socks. You can learn more about Theresa's wellness consulting services at GreenGutWellness.com and connect with her on LinkedIn.
Sep 28, 2018 12:12 AM
We used Idea Bank after it was suggested to us by our broker. He said we could get $500K LOC to fill our warehouse with inventory. Rate was on the cheap side. We took 250K.
Sep 29, 2018 2:18 PM
Had a LOC with Ondeck Capital. It was expensive although the process was fast. Idea was similar in process. I'm own a small trucking company that runs that extra mile. Applied from my phone and received funding in 48 hours. I used a middle man but didn't pay any points like I had to with my Rocket Mortgage home loan. Unlike factoring, here I'm only paying interest in the amount I move into my account. Much cheaper, IMO.