National Funding Business Loans: 2023 Review
Pros and cons of National Funding
Early payoff discount
No down payment needed
Lowest payment guarantee
Only two loan options
Misleading website marketing make it appear like the lender offers more than two loan options
Steep business income requirement
National Funding small business loans review
National Funding is a San Diego, Calif.-based online small business financing company. It’s been around since 1999, and since then the company claims it’s offered over $4.5 billion in funding to over 75,000 businesses. Currently, the company only offers two loan options: a business term loan that you can use for a wide range of purposes, and equipment financing that you can use to purchase machinery for your shop.
National Funding small business financing at a glance
|Product||Loan amounts||Repayment term||Starting rate||Fees|
|Term loans||$5,000 to $500,000||4 to 24 months||Factor rate: 1.11||Origination fee: 1.00% to 2.00%|
|Equipment financing||$3,000 to $150,000||24 to 60 months||Not disclosed||Origination fee: 1.00% to 2.00%|
National Funding advertises that its business term loans can be used for a wide range of purposes, such as working capital, short-term, long-term or first-time businesses, and across a wide range of industries — including IT consultants, farmers, landscapers, retailers and more — but these generally appear to be the same loan product.
Unfortunately, these loans do come with an origination fee, but it’s a relatively small one at 1.00% to 2.00% of your loan amount. National Funding charges a factor rate for these loans in lieu of an interest rate. We aren’t a fan of this calculation method for loans because it obscures the true cost of lending if you’re trying to compare it with other APR-based loans, which is more typical.
National Funding will finance loans and leases for new or used small business equipment, such as skid-steer loaders, manufacturing machines, lab analysis tools and more. Given that National Funding‘s upper limit is $150,000, you won’t be able to finance any large and specialized equipment such as combine harvesters or excavators, but it should cover most business owner’s needs just fine.
National Funding borrower requirements
|Minimum annual revenue||$250,000|
|Minimum time in business||6 months|
|Minimum credit score||600|
National Funding‘s business loan requirements aren’t as strict as many other lenders, especially banks. Its loans are available to relatively new businesses, as long as you’ve been up and running for at least half a year. The income requirements are relatively high, however, at a quarter of a million dollars. (You’d be hard-pressed to find many brand-new businesses earning quite that much.) The credit requirements are a bit easier to meet, however, and borrowers with a fair credit score or better are eligible for loans.
National Funding doesn’t disclose what documents you’ll need in order to apply, but most lenders will want to see documents related to your business finances, such as recent business bank account statements and current profit and loss statements. You may also need to provide copies of your driver’s license or documents related to your business structure, such as operating agreements or articles of incorporation.
Alternatives to National Funding
|National Funding||Funding Circle||Navy Federal Credit Union|
|Minimum credit score||600||660 for most financing options, or 650 (recommended) for SBA loans||Not disclosed|
|Loan products offered||Term loans and equipment loans||Term loans (including SBA loans) and lines of credit||Commercial real estate, lines of credit, term loans, vehicle loans|
|Time to funding||As soon as 24 hours||As soon as 24 hours||7-10 business days|
|Starting interest rates||Varies based on borrower credit profile||17.90% APR for lines of credit|
|Maximum loan size||$500,000 for term loans, $150,000 for equipment financing||$250,000 for lines of credit, $500,000 for loans, or $5,000,000 for SBA loans||Varies|
|Minimum annual revenue||$250,000||$50,000 for term loans, or $500,000 for SBA loans||Not disclosed|
National Funding vs. Funding Circle
Funding Circle is an international lender licensed to offer business loans in all 50 U.S. states. It offers other options for financing that National Funding doesn’t: chiefly, low-cost SBA loans and business lines of credit. It doesn’t offer any specific equipment loans, but you may be able to use an SBA loan or a term loan to buy equipment. You’ll need slightly higher credit in order to apply, but if you’re eligible, you’ll likely find that Funding Circle is a more upfront lender.
National Funding vs. Navy Federal Credit Union
If you prefer working with nonprofit credit unions and you have a tie to the military, you might prefer working with Navy Federal Credit Union for equipment financing options. Compared with National Funding, Navy Federal doesn’t offer as many details about what requirements you’ll need to meet for its business financing options. However, credit unions in general have a reputation as being easier to work with and cheaper than other lenders, if you’re willing to wait for the slower funding times.