As you look at the landscape of small business lenders today you will see everything from big banks like Capital One and Wells Fargo, to human loan brokers, online loan brokers, cash advance companies, factoring companies and other lenders.
An informed business owner should first answer the following:
What is my personal and business credit profile?
Why am I borrowing?
How much time can I commit to a loan application process?
What type of documentation can I provide?
Do my sales come largely from credit card volume?
Does my business carry high balances of accounts receivable?
The answers to those questions will dictate what type of lender you should approach:
Banks: Banks only lend to customers with excellent credit. Generally they have a product for any purpose if you qualify and will offer you the lowest cost of borrowing, but the application process can take one to two months and substantial documentation is required. Payments will be monthly
Merchant Cash Advance: This is not a loan. These companies take daily percentages of your credit card volume. They tend to offer very high annual percentage rates of 40% or higher and the documentation requirements tend to be less than banks but still extensive. These products are best used as a cash flow management product given the length of the facility.
Factoring / Accounts Receivable Financing: This is also not a loan. These companies purchase your accounts receivable at a discount. They tend to offer very high annual percentage rates of 30% or higher and documentation is also less than banks but still quite extensive. These products are also best used as a cash flow management product.
Fundation and Other Intermediate-term Lenders: These products cater to borrowers with reasonable historical credit or better. We offer loans with terms of one to four years rather than months and a streamlined application process that can deliver funds in as little as three days and requires no paperwork. Payments for Fundation are made twice a month.
Fundation combines the benefits of a bank loan with the ease and efficiency of an online lender. We offer conventional loans with competitive rates to businesses with varying credit profiles. Our technology allows us to deliver capital in as few as 3 business days through streamlining the collection and evaluation of customer information and conducting the majority of the lending process electronically. As a direct lender, we use our own capital to originate and hold the loans we make, so that we can focus on building relationships with our customers. Our dedicated customer relationship model enables us to understand each unique borrower’s business. This level of service, coupled with our best-in-class products, is why many of our customers come back to us repeatedly for more capital.