Funding Circle small business loans review

Our take on Funding Circle

Funding Circle has funded over $15 billion through its marketplace since it was founded in 2010. With over a decade of experience, it is one of the most trusted peer-to-peer lending platforms for established small businesses. Businesses were able to use it to get a PPP loan when the program was open, and it’s still one of a select group of online lenders able to offer SBA loans.

According to its statistics, Funding Circle’s average borrower has good to excellent personal credit, at least 11 years in business, over $1 million in annual sales and 12 employees. But this is the average — as long as you meet its minimum requirements, your business may still qualify for a loan.

In my experience, Funding Circle is a legitimate and trustworthy online lender. Its wide variety of loan options makes it perfect for finding the right type of funding. And because most of its loans don’t have a revenue requirement, you don’t need to make that $1 million in annual sales to be considered for funding.

But Funding Circle does charge a relatively high origination fee compared to other online lenders. You’ll also be funded by investors, not Funding Circle, which could the application process slower than with its competitors.

Funding Circle business loans

Because Funding Circle is a peer-to-peer lender, investors will technically be the ones to fund your loan. This means that your business may qualify for multiple types of loans depending on your personal credit score and small business revenue.

However, it doesn't mean there won't be a cost to using Funding Circle. Unlike connection services, you will pay an origination fee between 3.49% to 6.99%. And if you're late repaying your loan, Funding Circle charges a late payment fee of 5% of the missed payment.

There are no prepayment penalties — so if you pay back your loan early, you could save on interest and other fees.

Funding Circle SBA loans

Funding Circle is an SBA-approved lender, although it only offers 7(a) loans — which are term loans — now that the Paycheck Protection Program (PPP) has closed.

These government-backed small business loans are standard options for businesses. But expect a longer turnaround time and more strenuous application criteria if you want some of the most competitive interest rates and terms out there. This includes meeting a minimum revenue requirement and having a good to excellent personal credit score.

SBA 7(a) loan rates, fees and terms

SBA 7(a) loans have standard terms of up to 10 years. Your small business may qualify for funding between $25,000 to $500,000, and your interest rate could be as low as the prime rate + 2.75% — currently 6%.

But there are also some fees and other costs you should be aware of:

• SBA loan guarantee fee
• Broker or agent fee
• Loan closing costs

These can quickly add up, so be sure to discuss them with your loan agent as you prepare your application.

Funding Circle term loan

Term loans allow your small business to borrow a set amount and repay it in weekly, biweekly or monthly installments. These are one of the most flexible options, and Funding Circle offers relatively competitive rates for an online lender. But like with SBA loans, you will need to have a decent credit score and solid revenue to qualify.

Term loan rates, fees and terms

Funding Circle offers small business loans between $5,000 to $500,000. Unlike many other lenders, it has extremely flexible terms: three months to 10 years.

However, it is more expensive than a bank. Interest rates start at 4.99% when you borrow a business loan through Funding Circle, but it may be higher depending on your credit score.

Funding Circle lines of credit

Unsecured lines of credit are similar to credit cards: You can borrow money as your business needs it. Funding Circle's partners typically offer revolving lines, which allow you to continually borrow from your funds as you repay your line. This lets you skip multiple applications and spare both your time and hits to your credit score.

Keep in mind that some lines of credit may require daily or weekly payments instead of standard monthly payments. You may also have unique repayment terms each time you make a draw.

Line of credit rates, fees and terms

In addition to interest, you may be charged these fees:

• Monthly maintenance fee: $20
• Draw fee: 1.6% to 2.5%
• Late fee: Varies by lender

Your line of credit will be between $6,000 to $250,000. There are no set terms when you borrow, and you'll only pay interest — and draw fees — when you borrow money against your line.

Funding Circle working capital loans

Working capital loans are meant to cover payroll, regular expenses and expansion for your business. Since working capital loans are meant for newer businesses, you may not need as strong of a personal credit score when you apply.

They can be either secured or unsecured depending on your lender, so work with Funding Circle to determine the best course for your small business. And because they have shorter terms than traditional business loans, they are more expensive.

Working capital loan rates, fees and terms

Funding Circle's working capital loans range from $25,000 to $400,000. Unlike standard term loans, you won't pay interest. Instead, you'll have a factor rate starting at 1.15. This means your small business will pay $115 for every $100 your business borrows.

Terms last from six to 18 months. Your business should expect to make either daily or weekly payments.

Funding Circle merchant cash advances

Merchant cash advances use your credit and debit card sales as proof of your business's finances. Because of this, you may not have to meet the same personal and business requirements as with other types of loans.

However, Funding Circle still has its base requirements to qualify — and more importantly, this is an expensive form of credit. It's good if you want a quick process without going through a bank, but be sure you can handle cost before you borrow.

Merchant cash advance rates, fees and terms

You can borrow between $5,000 to $400,000 through Funding Circle. The exact amount you qualify for depends on your business's sales, not your credit score or other financial documents.

Expect daily payments over three to 18 months and a factor rate that starts at 1.15.

Funding Circle invoice factoring

Similar to merchant cash advances, invoice factoring is when your business sells its invoices to a third party. This can come with a few fees, including monthly maintenance fees and invoice processing fees, and is more expensive than traditional loans.

But it does mean you won't need to wait on turnaround from your clients. You can access most of your invoiced amount upfront, then the rest — minus fees — after your client pays the invoice factoring company through Funding Circle.

Invoice factoring rates, fees and terms

The lenders Funding Circle works with offer invoice factoring up to $5 million. Interest rates start at 0.25% per week, and you may have access to 85% to 90% of your invoice when you sell it.

But other fees aren't highlighted. Since the full cost of invoice factoring varies, you won't have a clear idea of the amount you'll pay until after you apply.

How Funding Circle compares to other lenders

Funding Circle offers a wide variety of products — something you won't find with BlueVine and Fundbox. But its strict requirements make it difficult for newer businesses with less revenue to qualify. If you're looking for fast funding, BlueVine and Fundbox are solid alternatives to Funding Circle.

BlueVine accepts businesses with as little as six months in business. While you won't be able to borrow more than $250,000, its APR starts competitively low at 4.8%.

Fundbox also accepts businesses that have only been operating for six months. It offers lines of credit up to $150,000. Its terms are short for each draw, but the fixed fee makes it easy to plan for the cost, unlike most variable-rate lines of credit.

★★★★★

Finder Rating: 4.4 / 5

Find out more
Loan amount $5,000 to $500,000
APR 4.99% to 38.43%
Loan term 3 to 120 months
Requirements 660+ personal credit score, 2+ years in business, for-profit business in an approved industry, not located in Nevada

★★★★★

Finder Rating: 4.5 / 5

Find out more
Loan amount $5,000 to $250,000
APR Starting at 4.8%
Loan term 6 to 12 months
Requirements 6+ months in business, $10,000+ in monthly revenue, 600+ credit score

★★★★★

Finder Rating: 4.2 / 5

Check eligibility
Loan amount $1,000 to $150,000
APR Not stated
Loan term 12 or 24 weeks
Requirements 6 + months in business, $100,000+ in annual revenue, 600+ credit score

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Funding Circle reviews and complaints

Funding Circle generally gets positive customer reviews. Many borrowers state they're happy with the fast and simple application process and helpful customer service representatives. Most negative reviews are from investors who report having difficulty withdrawing their money from Funding Circle or lost profits due to loan defaults.

However, you may notice some of the reviews on its Trustpilot page are from British borrowers — which likely won't indicate the quality of its American team.

How to qualify

The exact requirements you and your business need to meet depend on the type of loan. However, there are a few basics you'll need to cover before you apply for a business loan through Funding Circle.

• At least two years in business
• Personal credit score of 660 or higher
• No personal bankruptcies among business owners in the past seven years
• For-profit business in an approved industry
• Not located in Nevada

During the application process, you may be asked to provide business and personal tax returns as well as six months of bank statements.

Ineligible industries

Funding Circle does not accept applications from businesses in these industries:

• Speculative real estate
• Nonprofits
• Weapons manufacturing
• Gambling
• Cannabis dispensaries
• Adult entertainment

How the application works

You can apply for a Funding Circle loan by filling out a short online application. After you submit the form, a Funding Circle loan specialist will contact you within the hour to collect any required documents and finalize the application process.

Once you submit your documents, an account manager reviews your application and gets back to you with a final decision in 24 hours. If you’re accepted, your funds are disbursed in as little as five business days. The exact terms will depend on your business finances and credit score.

A Funding Circle loan will have daily, weekly or monthly payments, which it automatically withdraws from your bank account or a debit or credit card.

What sets it apart

Funding Circle's forgiving requirements and low rates make it a competitive alternative to a bank loan. It's also one of a handful of platforms to offer investor-funded business loans — and one of the only to provide government-backed financing. But because Funding Circle is a peer-to-peer lending platform, it might not be as fast as other online lenders that fund business loans directly.

Is Funding Circle legitimate?

Yes, Funding Circle is a legitimate lender. It’s been vetted and approved by the SBA to offer 7(a) loans — and was one of the first online lenders to get that approval. And while it isn't a bank, it is a trusted source that helps small businesses get the funding they need.

It protects the information you enter on its website with SSL security to keep it safe from hackers. But it doesn’t seem to offer any additional protection. Its privacy policy also states it’s not liable for any stolen personal information — a potential red flag.