Credibly is an online lender that provides a wide range of small business financing options even when your credit is less than perfect. We like Credibly due to its transparency and the fact that entrepreneurs can find short-term or longer-term financing, but you will need to understand how factor rates work. In this Credibly review, we’ll walk you through its offerings to help you decide if they’re right for you.
We’ll focus on Credibly’s three main offerings: working capital loans, business expansion loans and merchant cash advances. Other products — business lines of credit, SBA loans, equipment financing and invoice factoring — are available through unspecified partners.
|Credibly Loans: At a Glance|
|Amount||Terms||Starting Rate||Repayment/Remittance||Minimum Credit Score|
|Working Capital Loan||Up to $400,000||6–18 months||1.15 factor rate||Daily or weekly||500|
|Business Expansion Loan||Up to $250,000||18 or 24 months||9.99% APR||Weekly||600|
|Merchant Cash Advance||Up to $400,000||3 to 18 months||1.15 factor rate||Percentage of daily or weekly sales||500|
If you’re looking for a short-term loan to cover regular business operating expenses like payroll, utilities or supplies, a Credibly working capital loan might be right for you. Keep in mind that it charges a factor rate instead of the more familiar interest rate. Calculate your costs by multiplying the amount borrowed by the factor rate. Here’s an example:
If you borrow $100,000, you’ll owe $115,000 (100,000 x 1.15). The cost of your loan is $15,000, not including a 2.50% origination fee, assuming you qualify for Credibly’s starting rate. Credibly declined to specify its maximum rate.
Credibly’s business expansion loans are designed for projects that take longer to pay off, such as opening a new location or launching a new product line. But they’re not that much longer, 24 months versus 18 months, and actually provide smaller loan amounts than the working capital loan. However, they might be less expensive over time — a 9.99% interest rate on an 18-month $100,000 business expansion loan would add up to a total repayment of about $107,750. Its maximum rate is 36.00%.
Merchant cash advances differ from business loans. Instead of a set payment, Credibly will take a fixed percentage of your daily or weekly sales. Every time a customer pays you, you’ll owe a portion of that sale. Remittances are either made through your credit card processing company or automatic withdrawal from your business checking account.
The upside is that remittances correspond with sales, which is handy if you have a seasonal business with ebbs and flows. The downsides are that MCAs can be expensive and daily or weekly remittances can put stress on your company’s cash flow. Credibly charges an underwriting fee of 2.50% of the advance amount plus a $50 monthly admin fee. These costs can add up, particularly if sales slow down and remittances take longer than you expected. This is why MCAs don’t have set terms though Credibly says a typical timeframe is to months.
Credibly, like other alternative lenders, requires frequent repayment or remittances — daily or weekly.
A merchant cash advance is best for those businesses with a high volume of credit card transactions or seasonal sales cycles. Credibly’s business expansion loan allows a little more breathing room with weekly payments, but traditional bank loans typically allow fixed monthly payments. Unlike small business bank loans, Credibly considers those with poor credit and offers approvals as quickly as 24 hours with same-day funding.
It’s always a good idea to compare business loan offers so you can analyze terms and costs.
The minimum requirements for Credibly loans vary by product:
If you’re interested in another lending product through one of Credibly’s partners, you’ll need to meet a different set of criteria. For example, for an SBA loan you’ll need to have a higher credit score (at least 620) and no serious negative remarks on your credit report like bankruptcies or foreclosures in the past three years, or any outstanding tax liens. For a business line of credit through a Credibly partner, you can get by with a smaller revenue requirement — $50,000 per year (or $4,167 per month, on average).
You can apply for Credibly online without any impact to your credit. You’ll need to enter the amount of funding that you’re seeking, plus your monthly revenue, business name and contact details. From there, a Credibly customer service representative will get in touch to finish your application — once you are approved and ready to move forward with funding, Credibly may conduct a hard credit pull.
Although it’s not a part of the initial form, you may also be required to provide the following details through the rest of the application process:
Credibly small business loans and merchant cash advances aren’t your only option. Here are some similar lenders to consider:
Like Credibly, Fora Financial offers a merchant cash advance as well as a term loan. But its single loan is more limited: 15-month terms versus Credibly’s maximum of 24 months. However, if you cannot meet Credibly’s revenue requirements, business owners can qualify with $12,000 in monthly revenue compared with Credibly’s $15,000 minimum.
Reliant Funding offers factor rates of 1.15 to 1.49 as of Nov. 24, 2020, for its merchant cash advance, matching Credibly’s starting rate of 1.15. But you’ll know your ceiling — Credibly does not specify its maximum factor rate — which might be important if your credit is particularly low. Reliant also considers businesses with lower revenue. You’ll only need a minimum of $100,000 per year in gross sales. Credibly, on the other hand, requires an equivalent of about $180,000 minimum.
OnDeck offers small business loans (no merchant cash advance) as well as a business line of credit in case you need a more flexible way to borrow money. Lines of credit only require that you pay interest on what you borrow rather than a lump sum with a term loan. Like Credibly, OnDeck offers the possibility of same-day funding after approval with daily or weekly automatic payments. OnDeck offers rates as low as 35.00% for its business loan.