Small businesses often need funding help to scale and grow. But traditional lenders like commercial banks have strict qualifications and take a long time to fund.
Fintech lenders like Backd offer an alternative to traditional financing. Business owners can access working capital at much lower qualifications within a few business days.
However, Backd might not be the right fit for every small business. While its borrowing amounts are high, it only offers two funding products.
We can help you decide if Backd suits your business needs by covering the benefits, drawbacks, and application process. Specifically, we’ll answer these questions and more:
Backd (formerly GetBackd) is an alternative online lender for small business funding. Like many alternative lenders, the company offers a quick and convenient online application with lower qualifications, quicker approvals, and faster funding than traditional business lenders.
Brothers Xan and Michail Myburgh founded the fintech company in 2018 to help meet the needs of small business owners who couldn’t obtain financing from traditional sources. Since then, it’s provided over $1 billion in funding to over 10,000 businesses.
The company is based in Houston, Texas.
The lender offers unsecured working capital advances and business lines of credit. You’ll select which option you prefer when you start the application.
Let’s look at how each product works.
Backd working capital advances operate like a merchant cash advance. You receive a large lump sum payout, which you repay plus interest and fees with a percentage of your revenue.
You can use the funds for most working capital needs. Examples include paying rent, making payroll, purchasing inventory, and covering cash flow gaps.
A line of credit differs from other business loans because your funds are activated as an available credit limit instead of a one-time disbursement. You can draw funds from your credit limit as needed.
You only pay interest on the funds you draw. You’ll pay off the draw in weekly installments for six or twelve months.
The lender’s lines of credit are revolving, meaning the credit limit replenishes as you pay it back, like a credit card. Lines of credit are excellent for short-term needs, ongoing projects, seasonal businesses, and covering unexpected costs.
The lender recently rolled out a new program called BackdPay, which allows companies to buy now, pay later for business-to-business transactions. Vendors can sign up to offer terms to their customers for deferred payments for 3, 6, or 9 months.
The qualifications for Backd business loans are much more lenient than traditional lenders but more stringent than some alternative lender competitors. Both products require your company to be based in the U.S. and have a business bank account. You also must have a brick-and-mortar location, except for eCommerce or similar businesses.
Here are the eligibility criteria for each product.
The lender doesn’t fund businesses in the following industries:
The lender doesn’t publish cost information such as interest rates, factor rates, or fees. Some online reviews suggest that its working capital loans have factor rates starting at 1.10, but that can’t be confirmed.
In general, alternative funders like Backd have high rates and fees. That’s often the tradeoff for easy applications, accessible eligibility, and fast funding.
Several online reviews seem to confirm the rates can be high. Like all funding options, the better your credit score, the lower rate you’ll receive.
The company does offer transparency regarding costs before you sign. In response to some online reviews, the lender states all rates and fees are outlined on page 2 of the contract or funding agreement. Ensure you carefully review any contract and understand the costs and repayment structure before signing.
You can access cost information when you apply and get pre-approved. The free application only uses a soft credit pull, which won’t affect your credit score. It only takes a few minutes to apply and see your rates.
The lender offers a business loan affiliate program. ISOs and business loan brokers can sign up to offer the company’s business funding products to their small business clients.
The application is quick and easy. The website indicates it only takes three minutes to complete. Follow these steps to apply.
First, you’ll select if you’re applying for the line of credit or working capital product. The form will then ask how much you need and how you plan to use the funds. Next, you’ll enter your business’s financial information.
On the next page, you’ll enter your personal information, such as full name, address and contact info, and social security number. After that, you’ll enter your business’s information and submit.
You’ll receive a pre-approval decision within minutes. If you accept, the loan process moves to underwriting. Some online reviews suggest you’ll have to speak with a Backd representative over the phone to move forward. The website states it tries to complete its proprietary underwriting process the same day you apply, typically taking a few hours.
After approval, your funds get sent to your business bank account within 24 hours.
Repayment begins immediately after receiving your funds. The lender will set up automatic payments, so you don’t have to worry about scheduling or missing payments.
It provides some flexibility in that you can choose daily, weekly, or semi-monthly payments. It doesn’t indicate if there are any early repayment penalties or discounts.
Customer reviews indicate that some users have renewed financing with the company. However, it doesn’t provide renewal information, so you’ll have to ask how it works.
The online lender offers many benefits for small business owners seeking funding. Here are the most significant advantages.
As mentioned, it only takes a few minutes to apply. There are also minimal documentation requirements.
After applying, you can get instant pre-approval. Underwriting and final approval can happen on the same day. Once approved, you’ll receive your funds in 24-48 hours.
Many financing businesses dictate the repayment frequency for short-term loans. However, Backd lets you choose your repayment schedule.
Small business owners can get up to $2 million in working capital.
Unsecured funding means it doesn’t require collateral. Loans with collateral are called secured because the collateral provides security for the lender.
With unsecured financing, you can protect your business assets. It also helps businesses without high-value business assets to pledge as collateral, which most banks require.
The lender also has its share of drawbacks, like all funding options. Here are the most significant disadvantages.
As mentioned, the lender does not publish interest rates or fees for its funding products. We can’t confirm if the company uses APR, simple interest, or factor rates. Similar funders also have some fees, such as origination or draw fees. The lack of transparency makes determining if your business can afford its products difficult.
The working capital advance requires annual revenue of $100,000, and lines of credit require $300,000. Those revenue thresholds will exclude some small businesses.
Backd also excludes businesses in certain industries. See the list of restricted industries in the qualifications section above.
Here’s a quick summary of the online lender’s benefits and drawbacks.
Yes, Backd is a legitimate online business lender. It’s Better Business Bureau (BBB) accredited and has an A+ rating on the watchdog site. The lender is also a verified company on Trustpilot.
The lender has primarily positive reviews, but like most financial services companies, the reviews are polarized. It has a 4.8 out of 5 rating on over 130 Trustpilot reviews, a 4.3 out of 5 rating on over 20 Google reviews, and an impressive 5 out of 5 on 5 BBB reviews.
Customers who rated the company highly mentioned the ease of the process, fast funding times, and excellent customer service. Most reviews with positive feedback mentioned the customer service representative by name, praising their knowledge and helpfulness. Many felt the Backd team provided a boutique feeling with personalized service.
The negative comments broadly discussed the high costs. Several customers accused the company of tacking on hidden fees. One customer accused them of engaging in illegal practices. However, we should note that Backd responded to these complaints to explain the costs and fees were outlined on page 2 of the funding contract. The lender has not engaged in illegal practices, and the customer who accused them of such complained about an additional charge for late payment.
Aside from costs, some customers complained about customer service being unresponsive or rude. One customer said it took five days for the lender to respond and then wanted paystubs to verify income.
While the lender has less stringent approval criteria than banks, you still need at least a 600 FICO score, high annual revenue, and be in an approved industry to qualify. If Backd can’t approve your loan request, it might try to place you with other lenders.
If you were declined, the denial letter should explain why. You can contact the lender for more information if needed.
Fortunately, there are many alternative lending platforms to consider if Backd doesn’t work out for you. Most online funders and business financing facilitators can provide working capital loans and business lines of credit.
You might also be interested in the following small business loans:
Backd is best suited for established businesses with decent credit with urgent working capital needs. While it doesn’t publish rates or fee schedules, you can get an estimate of your costs with its free application that only requires a soft credit pull.
More established businesses with excellent credit can access more advantageous funding options. Business owners with less than one year in business, a credit score under 600, or annual revenue below $100k must also find a different lender.
Based on the available products and user reviews, we rate Backd at a 4 out of 5. It has an excellent reputation and is suitable if you qualify and need working capital fast. However, there are significant concerns with the lack of transparency on costs and high annual revenue requirements.
Disclaimer: The Backd trademark is owned by Backd Inc., and its use herein is for reference purposes only, and it does not indicate sponsorship or endorsement from Backd Inc.
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