Funding Circle Business Loan Review
Janet Schaaf is a freelance writer, editor and proofreader who considers reader advocacy to be her calling. After taking a few roads less traveled, Janet completed a bachelor’s degree in English Literature from the University of Missouri-Kansas City, with English Department Honors. She has been correcting grammar and checking facts since she could string a sentence together. For the past three years, Janet has focused on making personal finance topics understandable and relatable. Loan terms and credit card agreements can look overwhelming, but understanding what you’re agreeing to is paramount in grasping the impact debt can have on your life.
 | Estimated APR range: 11.29% to 30.12% for term loans Best for: Established small business owners looking for simple and quick financing options. |
Pros and cons of Funding Circle
| Pros | Cons |
|---|---|
Quick funding Transparent requirements No hard credit check for most applicants | Hard credit check for partnerships Exact interest rate not disclosed up-front Doesn’t report payments to all credit bureaus Collateral and personal guarantee required for loans |
Funding Circle small business loans review
Funding Circle is one of the largest online small business lenders in Europe and North America. It’s also unique in that it’s technically a peer-to-peer lender: Funding Circle works by issuing a lending decision and provides the loan funds but then anonymizes your small business profile and allows institutional investors to back your loan after it’s already been issued. That lets Funding Circle provide additional loans to other small businesses and allows the investors to receive a cut of the profits from your repayment.
Who is Funding Circle for?
- You’re looking for a loan or line of credit. No fancy products like merchant cash advances or invoice factoring: you can choose from loans or a line of credit, and that’s it.
- You’re an established business owner. You’ll need to have been in business for at least two years in order to be eligible for financing. Startup businesses need not apply.
- You have collateral you can use. Funding Circle will place a lien on your business collateral as a condition of receiving the loan. It accepts a wide range of things as collateral, even accounts receivable and inventory.
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 | 11.29% to 30.12% | Origination fee: 4.49% to 10.49% Late payment fee: 5% of missed payment amount |
| Business lines of credit | $5,000 to $250,000 | 12 to 18 months, but may vary | Varies | Draw fee: 1.6%, but may vary Late payment fee: 5% of missed payment amount |
| SBA 7(a) loans | $50,000 to $500,000 | Up to 120 months | Rates vary, subject to SBA maximums* | SBA guaranty fee: 1.7% for loans up to $150,000, $2.25% for loans over $150,000 Broker fee: Varies, paid to lender Closing costs: Varies, pays for background checks, lien placements, credit pulls, etc. |
*Terms and rates based on SBA guidelines
Term loans
Funding Circle offers a wide range of business term loans ranging from $25,000 all the way up to $500,000. Terms to repay range from over just 6 months all the way up to 84 months. Funding Circle is relatively open about its business loan requirements. Its business loan interest rates vary, though, so you won’t know your exact rate until you apply for a term loan. The good news is Funding Circle doesn’t do a hard credit check at any stage in the application process unless your business is operating as a partnership.
Line of credit
If you need to borrow money on occasion and don’t want to apply for a new loan each time, Funding Circle’s business line of credit might be a good option. Many lenders charge a maintenance fee to keep your line of credit open, but Funding Circle only charges you a draw fee for each time you borrow money, making it a more affordable option to keep in your back pocket. Each time you draw money out, you’ll get a set repayment period that typically ranges from 12 to 18 months, with payments due at monthly or weekly intervals.
SBA 7(a) loans
Funding Circle acts more like a business loan broker for its SBA loans than for its other financing options. Rather than underwriting your SBA loan directly, Funding Circle will take your application and ferry it out to its network of SBA partner lenders. If one agrees to finance your loan, Funding Circle will pass along the offer letter and facilitate communication between you two, charging a broker fee in the process.
Funding Circle borrower requirements
| Minimum annual revenue | $400,000 for SBA 7(a) loans, amount not disclosed for other financing types |
| Minimum time in business | 2 years |
| Minimum credit score | 660 (650 for SBA 7(a) loans) |
Funding Circle’s products are secured business loans. This means you’ll be required to use some sort of collateral to secure your loan, such as business equipment, accounts receivable, inventory or delivery vehicles. (Note that Funding Circle does not accept real estate as collateral, however.)
Any owners with at least a 20% stake in the business will also need to sign a personal guarantee, agreeing to repay the loan from their personal funds if the business isn’t able to repay the debt.
In some cases, you may need to jump through a few extra hoops to get a business loan or line of credit, such as joining a credit union that Funding Circle is partnering with in order to fund your loan.
Required documents
Funding Circle will ask for a few documents to verify that you meet the business loan requirements before approving your application:
- Bank statements: Six most recent months
- Personal tax returns: Most recent year from all owners with 20% equity or more in the company
- Business tax returns: Two most recent years
If you’re applying for an SBA 7(a) loan, there are a few more requirements:
- Business tax returns: Three most recent years
- Business financial statements: Business debt schedule, current profit and loss statement, current balance sheet
- Personal tax returns: Three most recent years from all owners with 20% equity or more in the company
- Personal financial statements: Personal financial sheet and signed credit check authorization
Alternatives to Funding Circle
| Funding Circle | Bluevine | Fundbox | |
|---|---|---|---|
| Minimum credit score | 660 (650 for SBA 7(a) loans) | 625 | 600 |
| Loan products offered |
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| Time to funding | 3 weeks for SBA 7(a) loans, 2 – 5 days for other financing types | 1 day | 2 days |
| Starting APR | 11.29% to 30.12% for term loans | Not disclosed | 4.66% fee for each 24-week repayment plan |
| Maximum loan size | $500,000 | $250,000 | $150,000 |
| Minimum annual revenue | $400,000 for SBA 7(a) loans, not disclosed for other loan types | $480,000 | $100,000 |
Funding Circle vs. Bluevine
Bluevine is another popular online small business lender that’s more accepting of lower credit scores as long as you’re able to maintain a higher volume of revenue. You can receive funds faster as well, with credit decisions in about five minutes and funding by the next business day if you opt for ACH transfer (or within a few hours if you pay a $15 wire transfer fee). In addition, Bluevine also offers business checking accounts if you’re looking for a relatively simple all-in-one business financial platform.
Funding Circle vs. Fundbox
Compared to the similar-sounding Funding Circle, Fundbox offers business lines of credit that are geared more towards smaller business owners with bad credit or who have recently opened up shop. To qualify, you’ll have to have at least three months’ worth of account history in a business checking account, a 600+ credit score and the equivalent of at least $100,000 in annual income. Each draw you make is designed to be repaid quicker as well, with automated weekly payments over the course of 12 or 24 weeks.