Funding Circle Business Loans: 2023 Review
Marianne Hayes is a freelance writer whos been covering personal finance for nearly a decade. She writes about everything from budgeting and debt repayment to mortgages and student loans (and pretty much everything in between). Marianne has written for CNBC, Forbes, Cosmopolitan, Redbook and more.
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Pros and cons of Funding Circle
| Pros | Cons |
|---|---|
Loans ranging from $25,000 to $5.5 million, depending on loan type Funding options include long term loans, SBA 7(a) loans and business lines of credit Term lengths up to 84 months | Longer average funding time when compared to other platforms for SBA loans Requires a personal credit score of at least 660 for business term loans (recommended score of 680 for SBA loans) |
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Funding Circle small business loans review
Funding Circle is an online lending platform for small businesses. It offers several different financing options for small businesses, including term loans, SBA 7(a) loans and business lines of credit. Lending decisions may be made in as little as 24 hours, and you may be able to receive funds in as little as 48 hours after approval. Funding Circle U.S. has helped over 40,000 small businesses access over $4.1 billion in financing.
Who is Funding Circle for?
- Small business owners with good credit.
- Those looking for a quick alternative to a bank loan and long repayment terms.
- Business owners who don’t mind providing collateral and a personal guarantee.
Funding Circle small business financing at a glance
| Product | Loan amounts | Repayment term | Estimated APR range | Fees |
|---|---|---|---|---|
| Business term loans | $25,000 to $500,000 | 6 to 84 months | 12.45% to 40.51% | Origination fee: 4.49% to 8.49% Late payment fee: 5% of missed payment |
| SBA 7(a) loans | $75,000 to $5,000,000 | Up to 120 months | Rates vary, subject to SBA maximums | SBA loan guarantee fee: 1.7% for loans up to $150,000; 2.25% for loans greater than $150,000 Broker/agent fee Closing costs |
| Business lines of credit | $5,000 to $250,000 | Not disclosed | 10.99% or higher | 1.6% average draw fee 5% average fee for past due amount |
Term loans
Term loans provide a lump sum upfront and you’ll repay it in installments over time. Depending on the amount, term loans can be used for large purchases or even filling a cash flow gap. At Funding Circle, amounts range from $25,000 to $500,000 with terms anywhere from 6 to 84 months. You should anticipate being required to put up some form of collateral, though specifics may vary.
Line of credit
A business line of credit is ideal for those who need ongoing access to funds. Instead of providing a lump sum of cash, it offers a revolving credit line that you can draw on as needed. You’ll only pay interest on the amount borrowed, similar to a credit card. At Funding Circle, credit lines range from $5,000 to $250,000 with no prepayment penalties or monthly maintenance fees. However,Funding Circle states that draws incur a 1.6% fee on average, and late payments come with a 5% fee. Collateral requirements are unclear.
SBA 7(a) loans
Because of the guarantee by the U.S. Small Business Administration, SBA loans are known for their favorable terms and interest rates. You can expect stricter eligibility requirements when compared to term loans, as well as a longer application process. SBA loans are available through approved lenders. SBA 7(a) loans allow financing up to $5,000,000 with terms up to 25 years. Interest rates are subject to SBA maximums, and Funding Circle charges an additional broker fee, though the amount is not stated.
Funding Circle borrower requirements
| Minimum annual revenue | SBA loans: $500,000 or more Term loans: no minimum |
| Minimum time in business | SBA loans: Over three years Term loans: Two years |
| Minimum credit score | SBA loans: 680 (recommended) Term loans: 660 |
Funding Circle’s eligibility requirements vary based on the type of financing you’re seeking. To qualify for an SBA loan, you must be in operation for at least three years with an annual revenue of $500,000 and shouldn’t have any federal tax liens against you.
Term loan requirements are a little more lax. Your business must be in operation for at least two years, your minimum credit score must be 660 or higher and you cannot have personal bankruptcies among the business owners within the last seven years. Your business must also operate within an approved industry. Industries restricted from receiving funds are:
- Speculative real estate
- Nonprofit organizations
- Weapons manufacturers
- Gambling businesses
- Marijuana dispensaries
- Pornography
Required documents
For loan applications with Funding Circle be prepared to provide: the following required documents:
- Last two years of business tax returns
- Most recent personal tax return
- At least six months of business bank statements
For an SBA loan through Funding Circle, you’ll need to complete several SBA specific forms, as well as provide profit and loss statements, business licenses and any business leases.
Alternatives to Funding Circle
| Funding Circle | OnDeck | SmartBiz | |
|---|---|---|---|
| Minimum credit score | 660 for term loans 680 for SBA loans (recommended) | 625 | 650 for SBA loans Not disclosed for term loans |
| Loan products offered |
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|
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| Time to funding | Term loans: As little as 2 days SBA loans: As little as 13 days in some cases | Up to 3 business days for term loan | As short as 7 days |
| Starting APR | Term loans: 12.45% SBA loans: subject to SBA maximums | 35.40% for term loan | Starting at 11.25% for SBA loans Starting at 9.99% for term loans |
| Maximum loan size | Term loans: $500,000 SBA loans: $5,000,000 | $250,000 for term loans | $500,000 for SBA loans $350,000 for term loans |
| Minimum annual revenue | Term loans: no minimum SBA loans: $500,000 | $100,000 for term loan | $50,000 for SBA loans Not disclosed for term loans |
Funding Circle vs. OnDeck
Funding Circle offers high loan amounts and long repayment terms, but if you’re looking for smaller amounts for shorter lengths of time, consider a term loan or line of credit from OnDeck. This may make it a better option for working capital needs. OnDeck offers repayment terms up to 24 months for lines of credit and 24 months for term loans, but its starting APR is 35.40% — in other words, its starting APR approaches Funding Circle’s maximum. Plus, with a minimum credit score of 625 and only requiring 12 months in business, OnDeck may be a good alternative for business owners with lower credit or for startups looking for funds.
Funding Circle vs. SmartBiz
Borrowers looking for an SBA loan will find pros and cons between Funding Circle and SmartBiz. Both platforms connect applicants to SBA-approved lenders. Loan caps are higher with Funding Circle, which could make it attractive to businesses that need more capital. However, SmartBiz’s minimum credit score is lower, and they boast shorter turnaround times — funding in as little as just one week.