About lender
Funding Circle is an online peer-to-peer lending platform connecting investors with small businesses. The company offers a simple online process for obtaining financing for small businesses. It allows businesses to receive financial support and investors to diversify their portfolios by funding businesses from different areas. The platform actively helps enterprises in the UK, US, Germany, and the Netherlands. Over 90,000 investors helped 122,000 businesses with financing. The total amount of money issued with small business loans is 18.4 billion.
Funding Circle Limited provides loan programs for small businesses in various fields. The list of these programs includes business term loans, SBA 7(a) loans, business lines of credit, merchant cash advances, working capital, and invoice factoring.
The launch of the Funding Circle project is directly related to the financial crisis of 2008. Since small businesses could not find financing, the crisis affected them the most. The crisis also created problems for investors who did not receive dividends. The Funding Circle company came up with the idea of offering investors and businesses to help each other. At the start of the project, in 2010, the organization financed small businesses in the UK. After three years, the company expanded into the US and later to Germany and the Netherlands.
Pros and cons
Pros
There is no prepayment fee. You can opt to pay back early.
The online process of reviewing applications is quick. The company gives a response within 24 hours.
Funding Circle provides a wide range of loan programs so that you can choose a suitable one.
You can request high loan amounts, up to $500,000.
Cons
Funding Circle issues a high origination fee.
The services are not available in Nevada.
There are many requirements for obtaining a loan.
Conclusion
Conveniently, the possible loan amount reaches up to $500,000 and sometimes higher, but you may face high demands that grow proportionally with the loan amount. Contacting the company is completely free, as is reviewing the application, but the origination fee is higher than with some similar organizations. Thus, it is possible to say that Funding Circle can be a good solution for funding your small business, but you should be prepared for possible rejection and a high one-time origination fee.
Terms and conditions
Funding Circle takes the one-time origination fee from each loan provided. The rate ranges from 3.49% to 6.99% of the confirmed loan amount. The range of rates depends on term length and credit history. Before sending money to the client, the company debits the amount of this fee.
The company adds a 5% late fee to the monthly payment if the payment is over ten days late. It is possible to pay this fee immediately with a monthly payment.
All small business loans have their rates and conditions.
Business term loan
It is possible to borrow the amount from $25,000 to $500,000. The repayment period ranges from 6 months to 7 years. This type of loan can offer fixed rates or variable rates. Rates range from 3.9% to 12.1% per year, depending on several factors.
SBA 7(a) loan
SBA 7(a) loan allows you to borrow an amount from $50k to more than $500,000 for up to 10 years. The interest rate is the sum of the Prime and additional rates, which is 2.75%. So at the moment, the rate is about 6%.
A business line of credit
A business line of credit allows you to have a balance on a credit account from which you can borrow money. In this case, you do not receive the entire amount at once and do not have to pay the interest rate. However, it is necessary to pay a fee of 1.6% when withdrawing money from the account.
Merchant cash advance
A merchant cash advance is not a type of loan. This form of business financing lets merchants borrow funds that are secured by their future sales. In this case, there is no interest rate. You will pay fixed rates, which are called factor rates, and start from 1.15. For example, if you borrow $1000, you will have to return $1150.
Working Capital
Working capital is an option for cases when you need to increase cash flow but do not want to take long-term loans. Like Merchant Cash Advance factor rate is a minimum of 1.15 depending on credit history.
Invoice Factoring
Invoice factoring allows you to borrow quickly and for a short-term length. This loan consists of 2 disbursements. The first advance payment comes immediately and amounts to 85-90% of the total amount. The remaining amount comes later. The interest rate is 0.25% per week.
Funding a loan
Borrowed money is issued using electronic transmission to business bank accounts. It is possible to set up automatic payments (ACH) to avoid missing payment deadlines. The minimum period for receiving money after confirming the loan is three working days. On average, the money arrives to the clients within five days.
