Funding Circle Merchant Cash Advance Review 2023
Loan Amount
Factor Rate
Terms
Min Credit
Time to Fund
Company Profile
Funding Circle is a leading lending platform for small businesses, offering fast, affordable, and transparent financing. Established in 2010, the company has facilitated over $19.4 billion in loans to 135,000 businesses globally. Funding Circle's unique approach combines cutting-edge technology with industry-leading risk management models, simplifying the complexity of SMB credit assessment and processing. The company's services include customer acquisition, online application, sales support, document gathering, credit underwriting, compliance and fraud detection, origination and disbursement, servicing, and loan sales. Funding Circle is listed on the London Stock Exchange and has a global leadership team with extensive experience from some of the world’s leading financial services companies.
Funding Circle was founded in response to the 2008 financial crisis, with the aim of supporting small businesses that were struggling to secure financing from large lenders. The company's model allows investors to diversify their fixed-income portfolios and access attractive returns by investing in successful and growing businesses. This approach provides businesses with fast, easy access to financing, which in turn supports local communities and drives economic growth. Since its inception, Funding Circle has expanded its operations to the US, Germany, and the Netherlands.
In addition to business loans, Funding Circle also provides resources and guides to help businesses grow and succeed. This includes articles on business finance, growth and operations, and success stories from businesses that have benefited from Funding Circle loans. The company also offers a partner program, where businesses can earn commission by referring customers to Funding Circle.
Products & Services
Funding Circle offers small business term loans ranging from $25,000 to $5,000,000, with a repayment period of six months to ten years. The loans have a fixed interest rate that remains constant throughout the loan term, and there are no prepayment fees. The company charges a one-time origination fee, which is added to the approved loan amount and financed through the term.
The company's process is quick and efficient, with an application time of just six minutes and decisions made in as little as one business day after document submission. Funding can be received as soon as 48 hours after approval. Funding Circle uses advanced technology to review a business's overall financial health, basing its decisions on more than just a personal credit score. This allows the company's underwriters to better understand a business and work with it to find suitable terms.
Their loan products include:
1. Business Term Loan: This offers long-term, low monthly payments with no capital upfront. It is designed to provide the benefits of a bank loan without the need to go through a bank. The loan amounts can go up to $500,000 with fixed rates, and term lengths range from 6 months to 7 years. There are no prepayment penalties. This option can be considered a similar product to a Merchant Cash Advance if it is a very short term business loan.
2. SBA 7(a) Loan: This is a government-backed loan designed to finance long-term business growth. It offers lower rates on a longer timeline and may require collateral. Borrowers can take anywhere from $75,000 to $5 million, with term lengths up to 10 years. The funds are delivered three times faster than the industry average.
3. Business Line of Credit: This is a fast, flexible financing option on a revolving basis, ready to go whenever the business needs it. Credit lines can go up to $250,000, with same-day funding. The available credit replenishes with each payment, and interest is only paid on the funds used.
Funding Circle Pros and Cons
Pros:
1. Fast and efficient application process.
2. Fixed interest rates and no prepayment fees.
3. Loans are available to businesses in all 50 states.
4. The company works with a variety of established businesses.
5. Funding Circle reports loan payments to two major business credit bureaus, helping businesses build their credit.
Cons:
1. The minimum loan amount is $25,000, which may be too high for some small businesses.
2. The company does not work with certain industries, including speculative real estate, nonprofit organizations, weapons manufacturers, gambling businesses, marijuana dispensaries, and pornography.
3. All loans are secured, requiring a lien on certain business assets.
4. The company requires a personal FICO credit score of at least 660 for business owners.
5. The company charges a one-time origination fee, which is added to the approved loan amount.
Ideal Customer
The ideal customer for Funding Circle is a small to medium-sized business that has been in operation for at least two years. The business owner should have a personal FICO credit score of at least 660 and should not have any personal bankruptcies within the last seven years. The business should operate in an industry other than those that Funding Circle does not support, and it should be looking for a loan of between $25,000 and $500,000. The business should also be comfortable with the loan being secured and with Funding Circle taking a lien on certain business assets.
Required Documentation
To apply for a loan with Funding Circle, businesses typically need to provide basic information about the business and its owners, including the business tax ID and the names of shareholders or owners with 20%+ ownership. Additionally, the company may ask for the Social Security number of business owners, driver's license number and state of issue, two most recent years of business tax returns, one most recent year of personal tax returns for every business owner (20%+ ownership), and six most recent months of bank statements.
Industries and Restrictions
Funding Circle works with a variety of established businesses, including veterinary clinics, pharmacies, cosmetics brands, and many more. However, the company does not work with certain industries, including speculative real estate, nonprofit organizations, weapons manufacturers, gambling businesses, marijuana dispensaries, and pornography.
State of Operations
Funding Circle offers loans to businesses in all 50 states in the United States. The company has two US offices located in San Francisco and Denver, and it also has an office in London, UK.
Basic Qualifications
To qualify for a loan with Funding Circle, businesses need to meet several criteria. They must have been in operation for at least two years, have a minimum annual revenue of $500,000, and the business owner must have a personal credit score of at least 660. In addition, the business must not have any bankruptcies or tax liens in the past three years.
Collateral or Guarantees
All loans from Funding Circle are secured. In addition to a personal guaranty from the primary business owner(s), defined as anyone with 20% or more ownership of the business, Funding Circle requires a lien on certain business assets. This collateral includes equipment, vehicles, accounts receivable, and inventory. The company does not take a lien on real estate.
Alternatives
For businesses looking for alternative options to Funding Circle, they might consider traditional banks, credit unions, or other online lenders. Microloans from nonprofits, community development financial institutions, and financial institutions that participate in the SBA Microloan program might be a good option for businesses looking to borrow less than $25,000. For businesses looking to borrow more than $500,000, they might consider larger commercial loans or seeking funding from venture capitalists or private investors.