Founded in 2006 and headquartered in NYC, Kapitus is one of the most reliable and respected names in small business financing. As both a direct lender and a marketplace built with a trusted network of lending partners, Kapitus is able to provide small businesses the financing they need, when and how it is needed. With one application business owners can save time and money, while eliminating the stress that comes with applying to different lenders. At Kapitus, we believe that business owners should be able to focus on running their business, while we take care of the financing.
New York-based Kapitus has provided more than $2 billion to more than 25,000 small business owners across the country. The company says it more than 50 percent of its customers are repeat customers.
The online lender offers five lending products that cater to businesses across a range of industries. It provides revenue-based financing — also known as merchant cash advances — small business loans, equipment financing, factoring receivables and medical financing.
Revenue-based financing. Also known as a merchant cash advance, this option allows you to borrow against money that’s owed to you from services you’ve already provided — or against future earnings or credit card sales. Payments are based on a fixed percentage of sales and are made directly from your bank account or credit card terminal.
Small business loans. These loans don’t require personal collateral or equity. They also feature fixed payments and structured terms. Options vary, depending on the business’ geographical location and type of industry.
Equipment financing. This financing option requires no down payment, and you can buy equipment from the vendor of your choice.
Factoring. This option allows you to sell the full amount of your invoices to Kapitus, minus a fee, to access cash. Factoring does not require a down payment, but there are borrowing maximums.
Helix medical financing. Launched in 2017 in partnership with Bankers Healthcare Group, this Kapitus financing option is tailored to the needs of independent healthcare and medical practices. The underwriting is health care-specific and the approval process is expedited.
Kapita borrowers must in business for at least one year, have a minimum credit score of 500 and earn at least $6,000 in monthly revenues. This lender noted that approvals for revenue-based financing is dependent on cash flow, not traditional metrics. For example, if your business earns $15,000 in monthly revenues, Kapitus would offer to lend you from $20,000 to $25,000.
You can prequalify for up to $1 million in working capital by applying by phone or online. You’ll need to provide information regarding the year you started your business, your annual revenue and how soon you need funding. A funding specialist will call you to review your application and options. You also need to submit three months of bank statements as part of the process.
|Easy qualification process with no personal collateral required||No information about rates, terms and fees|
|Approvals based on cash flow, not traditional metrics||Unclear if there are eligibility requirements|
|Expedited financing||Revenue-based not a traditional loan|
Kapitus lists a number of small business types that would benefit from its funding products. But without clearly defined eligibility requirements, it’s difficult to recommend which businesses should seek out the company. Independent health care and medical practitioners might want to consider its Helix medical loan, however, because Kapitus advertises that its underwriting is tailored for the health care industry.
It’s important to understand how revenue-based financing, also known as merchant cash advances, or MCAs, work.
Factor rates. Cash advances don’t have interest rates. Instead, MCA pricing is based on its factor rate. To determine how much you would pay in total for an advance, you need to multiply the amount you’re getting from the advance by the factor rate. For instance, if the factor rate is 1.3 and the advance is $10,000, then the total amount you would be responsible for paying back is $13,000.
Cash advances can be risky. Generally, MCAs are costlier than loans and have quick repayment terms. To pay an advance back, you must give the MCA provider a percentage of your sales or credit card transactions. If sales are slow, that could eat into your profits and compromise your ability to cover bills. In some cases, you might be forced to take out another cash advance to cover the original one, so you’d owe even more. Consider all other options before signing up for an MCA.
Kapitus offers lending products for a variety of small business-lending needs. The major issue is that there is limited information about these offerings available on the company website — the company lists only loan amounts for three of its five products and loan terms for its Helix medical financing option.
Some of the products offer no down payment or no personal collateral, but it’s unclear who would benefit because the eligibility requirements aren’t listed on the site. All of these things makes it difficult for potential borrowers to comparison shop — and requires them to submit an online application to find out more details about their options.