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The Business Backer Small Business Loans Review

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The Business Backer is an online business lender that’s provided capital to small companies since 2007.

It is one of several brands under Enova International, a Chicago-based financial services company that has issued more than $22 billion in loans. Other Enova International brands include Headway Capital, NetCredit and CashNetUSA. In the second quarter of 2019, Enova International reported $286 million in revenue.

The Business Backer offers a variety of financing products to help entrepreneurs. Continue reading to find out if The Business Backer business loan is the right option for you.

What The Business Backer offers

Several short-term funding solutions are available to eligible small business owners. Here’s The Business Backer’s financing options at a glance:

Amount Term APR Range/Factor Rate Fees Time to Funding
Term loan $5,000–$200,000 4–18 months 1.1%-3.5%* fixed monthly interest 0.00% - 3.00% origination fee As fast as 1 business day
Merchant cash advance $5,000–$200,000 Up to 15 months Factor rates start at 1.12* 0.00% - 3.00% origination fee As fast as 1 business day
Line of credit $5,000–$100,000 12, 18 or 24 months Minimum 3.30% APR 2% withdrawal fee As fast as 1 business day

Rates and terms current as of October 4, 2019.

Term loan

The Business Backer offers short-term loans from $5,000 to $200,000. Repayment terms range from 4 to 18 months with daily, weekly or semimonthly payments.

Fixed monthly interest rates range from 1.1% to 3.5% on loans, though the average monthly interest rate is 2.2% and the average annualized rate is 25.8%, as of Oct. 4, 2019. Loans could also come with an origination fee from 0.00% - 3.00%.

There is a benefit to paying loans more quickly. For example, a $50,000 loan paid over 12 months at 2% monthly interest translates to an annual rate of 24%. If you can repay that same loan in three months, that annualized rate drops to 19%.

Business owners could receive funds in as quickly as one business day after approval. If you need to borrow more money before paying off your debt, The Business Backer offers a loan renewal program. It would roll your existing balance into a new loan, covering 100% of the unpaid interest on the initial loan.

Merchant cash advance

A merchant cash advance would involve the sale of your business’ future receivables in exchange for a lump sum of capital. The Business Backer would take a fixed percentage of your sales, typically credit card transactions, until the advance is paid back. Merchant cash advances are available between $5,000 and $200,000, and you could choose to make daily, weekly or semimonthly payments. The maximum repayment term is 15 months; you cannot repay your balance early.

The Business Backer uses factor rates to express interest on merchant cash advances. A factor rate is written as a decimal figure and is multiplied by the loan amount to show the total amount that must be paid back. Factor rates for merchant cash advances from The Business Backer start at 1.12, though the average rate is 1.25, as of Oct. 4, 2019. For instance, if you borrowed $50,000 with a factor rate of 1.25, you would owe a total of $62,500.

You could also owe an origination fee of 0.00% - 3.00%. Funding could be available in as little as one business day after approval.

Line of credit

Headway Capital, a financing brand within Enova International, issues business lines of credit through The Business Backer. A business line of credit allows borrowers to withdraw financing from a set amount on an as-needed basis. Lines of credit are available from $5,000 to $100,000 with a minimum repayment term of 12 months and a maximum repayment term of 24 months. Payments are due weekly or monthly, and interest would not compound.

Annual interest rates start at 3.30%, though the average monthly rate is 6%, as of Oct. 4, 2019. Each withdrawal also comes with a 2% draw fee. You could take out as much funding as you need up to your approved limit. When you repay your balance, the full line of credit becomes available again.

Who is eligible for The Business Backer financing

To be eligible for financing, businesses need to be open for at least one year and must generate at least $250,000 in annual gross revenue. The amount of funding you could receive would be based on factors such as your revenue, industry risk, business needs and credit score.

Applicants need a personal credit score of 550 or higher. When checking if you’re pre-qualified, The Business Backer conducts a soft credit pull to view your credit history, but it doesn’t impact your credit score. However, the lender would make a hard credit inquiry when you pursue a specific loan after qualifying, and that would impact your credit score.

To receive a short-term loan, your business must be in one of these states:

  • Delaware
  • Idaho
  • Iowa
  • Indiana
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Nebraska
  • New Hampshire
  • Pennsylvania
  • South Carolina
  • Utah
  • Virginia
  • Washington
  • Wyoming

The Business Backer serves a wide range of businesses, including the following industries:

  • Accommodation and food services
  • Construction
  • Health care and social assistance
  • Professional services
  • Repair and maintenance
  • Retail
  • Transportation
  • Wholesale trade

Conversely, several types of businesses are not eligible for financing from The Business Backer:

  • Nonprofits
  • Adult industries
  • Marijuana-related businesses
  • Businesses with open bankruptcies
  • Startups

How to apply

Business owners must submit information such as annual revenue, desired funding amount, name, phone number and email address. Searching for The Business Backer offers would not impact your credit score, and you wouldn’t be obliged to accept any offer you receive. As we’ve noted, there would be a hard credit pull when you move forward with an individual offer.

You would also need to supply three months of recent business bank statements. The Business Backer would review all aspects of your business based on the information you provide to determine if you qualify for funding. Even if you don’t have good credit, you may still be eligible based on other factors.

If you receive and then accept an offer, you could see funds in your bank account as soon as the next business day. Funds are delivered between 8 a.m. and 3 p.m. Eastern time Monday through Friday.

The pros and cons of The Business Backer

Before applying for a loan from The Business Backer, consider these pros and cons of the lender.

Pros Cons
  • Information regarding amounts, interest rates and fees available online
  • Small funding amounts available
  • Multiple types of financing offered
  • Loans restricted to certain states
  • Fast time to funding
  • Strict revenue, time in business and credit requirements

The fine print

Use caution when taking out a merchant cash advance. Merchant cash advances can be risky financing products to take on, though they provide near-immediate access to funding. Merchant cash advances typically have high interest rates and fast repayment terms that can be challenging for businesses to keep up with. And because payments are typically taken out of your daily sales, it could be difficult to predict how much of your daily revenue you’ll have to forfeit. But on days when sales are low, your payments would also be reduced, which could provide some reprieve.

Headway Capital’s line of credit could be secured or unsecured. Whether a business line of credit is secured or unsecured depends on if you offer assets as collateral. An unsecured line of credit doesn’t require borrowers to provide any collateral, while a secured line of credit does. If you provide collateral (your business property or equipment, as an example), the lender could seize those assets if you fail to repay your debt — but your interest rate may be lower. Headway Capital offers unsecured lines of credit up to $50,000 and secured lines of credit between $50,000 and $100,000.

The bottom line

The Business Backer provides several short-term financing options for small business owners who need outside financing to support their operation. Depending on your needs, you could apply for a merchant cash advance, term loan or business line of credit and see money in your bank account as soon as one day after getting approved.

A line of credit would be best for ongoing expenses, while a loan or merchant cash advance would provide one lump sum of funding. You’d be able to pay back a loan over time with fixed daily, weekly or semimonthly payments, while payments toward a merchant cash advance would come directly out of your daily sales.

Maximum funding amounts from The Business Backer are relatively low at $200,000. Some small business lenders offer loans up to $500,000. The Business Backer may be a better fit for businesses looking for a minimal amount of funding that they could quickly pay back.

The Business Backer is more forthcoming with rates and terms than other small business lenders. Ranges for interest rates and repayment terms are available online, making it easier to compare The Business Backer to other lenders when searching for a loan. That being said, it does focus on the minimum APR when discussing lines of credit, so beware that your rate could be much higher.

Make sure you’re comfortable with the rates, terms and loan amount that’s offered to you before accepting financing. Shop around to get the amount of money you need and a repayment schedule that works for your business.


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