A Comprehensive Look at Funding Circle’s Small Business Loans
In the competitive landscape of small business financing, Funding Circle has managed to carve out a distinctive niche. In this 2023 review, we’ll explore the key aspects of Funding Circle’s offerings, from business term loans to SBA 7(a) loans. Whether you’re an established business owner or a budding entrepreneur, understanding the ins and outs of Funding Circle Small Business Loans.
Funding Circle: At a Glance
Rating: 4.6 stars out of 5 – Finance Devil Score
- Accessibility: 4.7 stars out of 5
- Affordability: 3.7 stars out of 5
- Customer Experience: 4.8 stars out of 5
- Transparency: 5 stars out of 5
- Flexibility: 4.6 stars out of 5
Overview
Funding Circle is a financial institution that specializes in offering a variety of financing solutions, including business term loans, lines of credit, and SBA 7(a) loans. With a streamlined application process and potentially competitive interest rates, it has become an attractive choice for businesses with a solid credit history.
Lender Details
Loan Amount: $5,000-$500,000
Interest Rate: 7.49% APR
Term Lengths: 6 months-10 years
Min. Annual Revenue: $50,000
Min. Time in Business: 24 months
Who Funding Circle Is Ideal For
Funding Circle caters to established small business owners with good or excellent credit. Here’s why it might be the right choice for you:
1. Competitive Rates
Funding Circle offers lower rates than many online lenders, making it an attractive option for cost-conscious business owners.
2. Streamlined Application
The application process is straightforward and doesn’t affect your credit score.
3. Quick Funding
In just two days, your loan can be funded, which is faster than traditional banks.
4. Minimal Fees
Funding Circle is known for its transparency and minimal additional fees.
5. Extended Loan Terms
Business term loans can extend up to seven years, making monthly payments more manageable.
Who Funding Circle May Not Suit
While Funding Circle has numerous advantages, it’s not suitable for everyone. Here are scenarios in which it may not be your best choice:
1. Startups
Funding Circle’s eligibility requirements can be challenging for startups.
2. Bad Credit
Business owners with bad credit may find it difficult to qualify for loans from Funding Circle.
3. Urgent Funding Needs
If you need funding within 24 hours, Funding Circle may not be your fastest option.
READ ALSO: National Funding Small Business Loans: Your Ultimate Guide in 2023
Funding Circle: In Detail
Business Term Loan
Loan Quick Facts:
- Amounts: $25,000 to $500,000
- Terms: 6 months to 7 years
- APR: From 7.49%
Funding Circle’s business term loan is designed for companies with a credit score of 660 or higher, making it a solid choice for those with good credit. The lender’s interest rates start at 7.49% APR, offering competitive rates compared to other financial institutions.
While Funding Circle doesn’t charge prepayment penalties, it does have an origination fee ranging from 4.49% to 8.49%, which is something to consider. Collateral is required for these loans.
Business Line of Credit
Loan Quick Facts:
- Amounts: $5,000 to $250,000
- Terms: 12 or 18 months
- APR: Not stated
Funding Circle’s business line of credit offers flexibility and accessibility. However, some aspects should be noted, such as the 1.6% fee per draw and a 5% penalty for late payments. Managing your account responsibly can lead to credit line increases over time.
SBA 7(a) Loan
Loan Quick Facts:
- Amounts: $50,000 to $500,000+
- Terms: Up to 10 years
- APR: As low as 11.25% (Prime + 2.75%)
Funding Circle’s SBA 7(a) loans are backed by the Small Business Administration, offering solutions for various business needs. These loans have more extensive documentation requirements and slower approval times. Still, Funding Circle collaborates with SBA lenders to streamline the process, making it more accessible.
Do You Qualify?
Funding Circle’s borrowers typically have good or excellent credit, and their businesses have been operational for an extended period. The minimum personal credit score required is 660. However, there are general guidelines to be aware of:
- FICO score of 660 (or 630 for SBA loans)
- No personal bankruptcies within seven years
- Operate in an industry not related to gambling, speculative real estate, pornography, weapons manufacturing, or speculative real estate
- Not operate a marijuana dispensary or non-profit organization
What We Like and What We Don’t Like
What We Like
Lower Rates: Funding Circle offers competitive rates, often lower than many online lenders.
Streamlined Application: The application process is quick, and it doesn’t impact your credit score.
Quick Funding: Most loans are funded in just two days, a faster option than traditional banks.
Minimal Fees: Funding Circle avoids many additional fees that other lenders may charge.
What We Don’t Like
Strict Eligibility Requirements: A minimum credit score of 660 is required, which may exclude some potential borrowers.
No Unsecured Loans: Collateral is needed for business term loans, which might not suit all business owners.
APRs Not Disclosed Online: Funding Circle does not provide APR information on its website, making it challenging to compare rates.
How Funding Circle Compares to Other Lenders
Comparing Funding Circle to other lenders is crucial to finding the best fit for your business needs.
Funding Circle vs. Fundible
Fundible, an online lending marketplace, offers a more accessible option for small business owners. The eligibility requirements are less stringent, with a minimum FICO score of 450, just six months in business, and $100,000 in annual revenue. Fundible also provides a broader range of funding options, including business term loans, lines of credit, SBA loans, equipment financing, bridge loans, and invoice factoring. The approval process is swift, with funding available in as little as 24 hours, making it a compelling alternative to Funding Circle.
Funding Circle vs. Wells Fargo
Wells Fargo caters to established business owners with solid credit ratings and offers a more traditional lending approach. While Wells Fargo offers business lines of credit and SBA loans, it’s limited compared to Funding Circle. Wells Fargo does provide unsecured options and cashback rewards, but its processing timeline can be as long as two weeks, unlike Funding Circle, which typically takes two to four days.
Both lenders feature SBA 7(a) loans, but Wells Fargo also offers 504 loans for long-term financing solutions.
How does Finance Devil rate Funding Circle?
- Overall Score: 4.6
- Accessibility: 4.7 (Loans are open to some people with fair credit, and funding times could be relatively quick.)
- Affordability: 3.7 (There’s a potential for high APRs and origination fees.)
- Transparency: 5.0 (Funding Circle provides a wealth of details on its website, including fees it charges and a profile of its typical borrower.)
- Customer Experience: 4.8 (Funding Circle offers a streamlined application process and a healthy amount of support options for clients.)
- Flexibility: 4.6 (This lender has multiple loan options and the chance to take out an additional loan after six consecutive on-time payments.)
In conclusion, Funding Circle is a compelling choice for established business owners with good credit. It offers competitive rates, a streamlined application process, and quick funding times. However, it may not be the best fit for startups or those with bad credit. Understanding the specific loan offerings and eligibility requirements is essential when considering Funding Circle as your financing partner.
How to Apply for a Loan with Funding Circle
Applying for a loan with Funding Circle is a straightforward process. Here’s what you need to do:
- Visit the Funding Circle website and submit an online application. This won’t affect your credit score.
- If you meet the lender’s eligibility requirements, an account manager will reach out to answer your questions and guide you through the process.
- Submit the required documentation to the account manager to proceed with the lending process.
- The underwriter will review your application, and upon approval, the loan will be closed, and the funds will be disbursed to your business bank account.
Most borrowers receive a lending decision within 24 hours, though SBA 7(a) loans may take up to three weeks for approval.
Before applying, ensure you have the following documents on hand:
- Business tax ID
- Names of owners or shareholders with a stake of 20 percent or more
- The most recent six months of bank statements
- Three years of business tax returns (SBA 7(a) loans only)
- Current profit and loss statements and balance sheet (SBA 7(a) loans only)
- Schedule of business debts (SBA 7(a) loans only)
To Recap
Funding Circle is a noteworthy option for established business owners with good or excellent credit, offering competitive rates, a straightforward application process, and relatively quick funding times. However, it may not be suitable for startups or individuals with lower credit scores. It’s essential to familiarize yourself with Funding Circle’s various loan offerings and eligibility criteria when contemplating it as a financing solution for your business.
Funding Circle Frequently Asked Questions
Is there a minimum credit score for Funding Circle?
Funding Circle requires a 660 credit score for business term loans and lines of credit. For SBA 7(a) loans, the minimum allowable credit score is 630.
Is it hard to get approved for Funding Circle loans?
Funding Circle’s loans are best suited for established business owners with good or excellent credit. If your company is newer and hasn’t yet generated consistent revenue, approval may be challenging.
Does Funding Circle require collateral?
Funding Circle does not offer unsecured loans and requires a lien on business assets. However, SBA 7(a) loans under $25,000 typically do not have collateral requirements.
What is the typical funding time for loans from Funding Circle?
Funding Circle typically funds most loans in just two days, providing a faster alternative to traditional banks.
Are there any prepayment penalties associated with Funding Circle loans?
No, Funding Circle does not impose prepayment penalties, offering flexibility to borrowers who wish to repay their loans early.
How does Funding Circle’s interest rate compare to traditional banks?
While Funding Circle doesn’t disclose interest rates on its website, the starting rate of 7.49% APR is competitive and may rival the rates offered by conventional financial institutions, making it an attractive choice for business owners seeking favorable terms.
In other article, Unleashing the Power of Credibly Small Business Loans in 2023
