To learn more about Clearco Review (Formerly Clearbanc) and decide if it’s right for your needs, please continue reading:
Clearco (formerly Clearbanc) is one of the newest and fastest-growing players in business financing. Founded in 2015, this Toronto-based startup has financed thousands of companies, including mattress manufacturer Leesa Sleep, fashion-rental service Le Tote, and home goods supplier Public Goods. Since its inception, Clearco has funded over 7,000 companies with more than $3 billion in capital.
Clearco’s growth and competitive edge can be attributed to its narrow target clientele. Though they offer just two products, their requirements cater to two of the most promising industries: eCommerce and SaaS, which stands for “software as a service.” Popular SaaS companies include Slack, Mailchimp, Square, and Salesforce. Clearco’s products are exclusively designed for these businesses’ unique financial circumstances.
Clearco is a business financing company that specializes in funding tech startups. The company launched to service companies that don’t want to give up equity in exchange for funding. Clearco utilizes technology to assess funding applications quickly, enabling businesses to receive capital within as little as 48 hours after applying.
It claims to be the world’s largest eCommerce investor. The absence of equity dilution makes revenue-based financing appealing, as founders maintain control over their business. Clearco provides capital in exchange for a percentage of future revenue, with terms that are typically clear and fair.
However, revenue-based financing can lead to higher effective interest rates for high-performing businesses due to the nature of the repayment model. Businesses using revenue-based financing often face lower overall borrowing costs compared to traditional lending options.
Clearco’s revenue-based financing model offers borrowers flexibility in repayment based on sales fluctuations and revenue growth. Clearco supports startups specifically by understanding the unique cash flow challenges they face, positioning itself as a significant player in the alternative lending market for digital businesses.
For years, tech startups only had the option of venture capital. When a company gets funded through a venture capital firm, it sells a portion of its ownership, known as equity financing. Traditional bank loans, on the other hand, have longer approval times that can lead to cash flow delays, making them less appealing for fast-growing startups. Additionally, traditional loans may have strict eligibility requirements based on revenue and business history, which can be a barrier for newer businesses.
Clearco, which launched as Clearbanc, sought to eliminate the need for promising startups to sell ownership shares to get funding. The company’s founders are Andrew D’Souza and Michele Romanow, who appeared on CBC’s Dragon’s Den (a Canadian version of Shark Tank).
Clearbanc rebranded as Clearco because it wanted to be more than just a bank. Today, the company offers advice and resources for young tech entrepreneurs.
Clearco offers two financing products: ClearCapital and ClearRunway. It also provides a platform for business advice, access to investors, and additional tech startup resources. Businesses can use the funds for various funding needs, such as development or marketing expenses.
Clearco’s systems offer smooth and efficient processes that cater to customers’ specific needs.
When you register with the company and submit your business information, it will run a check to see which program is right for your business and determine your funding capacity. Clearco’s application process relies heavily on the business’s digital footprints and revenue streams for verification. Applicants typically need to connect their sales and marketing accounts during the application process.
Here are the main funding options.
ClearCapital is a form of debt financing that works similarly to a merchant cash advance. Companies must have over six months of revenue greater than $10k/month to qualify for ClearCapital. You can borrow up to $20 million, and there is no set due date on when the borrower must pay the loan back in full.
ClearRunway provides invoice financing to SaaS companies in growth mode.
Clearco is only available for several industries. These industries include:
The cost of the loan is also heavily influenced by how you use the funds.
Clearco was created as an alternative to venture capital. Up until fairly recently, venture capital was the most accessible source of funding for tech startups. Many startups reportedly end up using most of their venture capital to cover a few considerable expenses. Most startups use venture capital to fund marketing campaigns.
This leaves the startup with little money to cover other vital expenses, like labor and equipment. And since venture capital is a form of equity financing, the business leader loses a portion of ownership. As a result, the business leader has fewer personal funds to re-invest in the business.
Clearco strives to eliminate this problem by giving young businesses another way to cover these massive startup expenses.
Clearco’s interest rates and fees are both competitive and transparent, making it easier for businesses to plan and budget for their funding costs. The company’s fee structure is based on a flat fee ranging from 6% to 12.5%, which is fixed and does not compound over time. Traditional loans, in contrast, often come with a compounding interest structure, which can increase the overall cost of borrowing.
Clearco utilizes a flat fee structure for repayments instead of interest rates. This straightforward approach helps businesses understand their financial commitments from the outset. Clearco’s products do not include traditional term loans but instead offer flexible financing solutions aligned with business revenue patterns. Jeremy went the extra mile to help clients secure better interest rates, further enhancing the appeal of Clearco’s offerings.
In addition to the flat fee, Clearco’s interest rates range from 8% to 14%, depending on how the funds are used. This flexibility in interest rates ensures that businesses can access the funding they need under terms that are manageable and conducive to growth. By offering competitive rates and a clear fee structure, Clearco provides a funding solution that is both accessible and predictable, allowing businesses to scale with confidence.
To apply for Clearco, you will need to supply the following information:
Clearco has minimal documentation requirements compared to traditional lenders.
Clearco is exclusively designed for just six types of companies. All other industries need not apply. Clearco is perhaps the only business financing company with such a strict limitation on clientele. But this shows how confident Clearco is in the rise of these few industries.
Another considerably restrictive requirement is average monthly revenue: at least $10,000. Once again, this requirement merely reflects Clearco’s projections for eCommerce and SaaS companies. You can’t blame them. $10,000 could be the standard for monthly revenue in both industries in the near future.
However, there is a lack of fixed repayment terms and a lack of transparency regarding loan amounts and funding limits, which could be a concern for businesses evaluating different financing options. Traditional lenders typically provide fixed repayment schedules, offering more predictability for businesses.
Considering the high growth rate of eCommerce and SaaS companies, it’s no surprise that Clearco only works with limited liability companies (LLCs) and corporations.
Clearco clients can be in business for as little as six months. However, eligible companies must also have at least six months of consistent revenue. Though the criteria for “consistent” isn’t clear, it’s probably safe to assume that businesses with occasional dips in revenue or startups that ran into a bit of trouble early on won’t qualify.
Lastly, Clearco has no minimum requirement for a personal credit score. Thus, there is no credit check in the application process. Clearco’s eligibility criteria are generally less stringent, aiding newer businesses. Customers liked that no credit score checks were required, making it accessible for many businesses.
Clearco’s repayment structure is the same as a merchant cash advance. Every time you make a sale, Clearco takes a percentage of it until the total amount is paid back in full. Clearco provides a simple method for obtaining cash advances without complex terms or equity sacrifices.
Unlike traditional loans, the loan has two percentages. First is the fixed percentage of future debit and credit card sales from the previous section. The second percentage is also fixed but works more like a flat fee. This percentage can range from 6% to 12.5%.
The percentage of each sale that Clearco takes is based on cash flow. Businesses with highly consistent cash flow can pay as little as 1% of each sale, while companies with rockier cash flow can pay up to 20%.
The second percentage, on the other hand, is based on entirely different criteria.
If you visit Clearco’s website, you will see a list of popular marketing channels like Facebook, Google, Amazon, and Twitter. Companies that use Clearco funds to buy ads from this vendor list will automatically be given a flat fee of 6%. Clearco also offers inventory financing for eCommerce businesses that must make large upfront purchases. However, it’s unclear if this purpose also guarantees a flat fee of 6%.
If you use the funds for purposes aside from digital marketing or inventory, your flat fee could be as high as 12.5%.
The minimum borrowing amount is $10,000. Payments are not reported to the personal or business credit bureaus. Thus, timely repayments won’t affect your personal or business credit score. While the company largely caters to ecommerce brands, most commerce businesses can benefit.
Also, Clearco does not require collateral or a personal guarantee. This means that if the business defaults on the loan, Clearco cannot seize the business owner’s personal assets to make up for the lost funds.
The full application process from start to finish usually takes 1-2 business days. The entire process from initial application to receiving funds often takes as little as 48 hours. Clearco’s application process is designed to be efficient and user-friendly, leveraging technology to provide quick decisions and funding.
Applying for a Clearco loan requires creating an account on their website. This requires basic information about your business and yourself (the business leader). After entering this information, click “Calculate Now.”
Once you’ve created an account, a representative from Clearco’s investment team should contact you within 1-2 business days. However, this doesn’t mean you’ve been fully approved.
It just means you’ve been cleared to complete the rest of the application. This step ensures Clearco doesn’t waste time fielding applications from businesses that don’t meet their general requirements.
When you log back into your account, you can review loan offers. You will also see instructions about uploading documents and completing the rest of the application.
Then, connect Clearco to the online accounts you use to make sales and payments (PayPal, Square, Stripe, etc.). Remember, Clearco is used entirely by online-based companies. Since these companies provide products and services online, all sales and payments are conducted via online accounts.
Next, connect Clearco with the online accounts you use for digital marketing (Facebook, Google, Amazon, etc.) and your sales accounts. It usually takes about 20 minutes to enter the data from all accounts.
After entering your data, you will receive a loan contract containing your borrowing amount, fixed fee, and repayment percentage. Funds should then appear in your bank account within 24 hours.
Like traditional merchant cash advance loans, repayments begin as soon as you make sales. Clearco will deduct the percentage of your daily sales disclosed in your contract to ensure timely payments. After you sign the contract, you cannot adjust your fee or repayment percentage.
Since there’s no due date, you keep making payments until the total amount is paid off, regardless of how long that takes.
Even if you haven’t paid off your loan in full, Clearco may allow you to apply for more funds if you meet specific criteria, including:
As you can see, Clearco’s products are geared toward a particular type of customer. Eligible businesses must belong to the abovementioned industries and earn an average of $10,000 in monthly revenue. For this reason, we will consider the advantages of Clearco under the assumption that your business fits this criterion.
Let’s say you’re a young, growing business looking for a large borrowing amount. Qualifying for a bank loan might be difficult, considering you probably can’t meet the time in business and credit score requirements. Traditional lending often requires personal credit checks to qualify for loans. You could seek venture capital, but this would involve sacrificing a portion of ownership and profits.
Clearco’s creators envisioned this exact scenario when designing their product. Even though you’ve been in business for six months and don’t have excellent credit, you could still access up to $10 million. Unlike traditional lenders, Clearco does not demand collateral for securing a loan, making it a more accessible option for startups.
Compared to other forms of financing, a merchant cash advance is one of the more expensive options. If you use the funds for digital marketing, you’d have a fixed fee of just 6%. This is substantially lower than the fee for a traditional merchant cash advance.
Many businesses cannot afford to put that kind of pressure on their cash flow. But if you can meet Clearco’s monthly revenue threshold, you should have no problem affording the cost of a Clearco loan.
Applying simply does not make sense if you do not belong to Clearco’s target clientele. Let’s say you meet only one aspect of this criterion, like your industry.
If you own an eCommerce business that’s a few years old, you could probably access products more conducive to cash flow than a merchant cash advance. Older companies may have higher credit scores or want to use the funds for purposes other than digital marketing or inventory.
Thus, like the previous section, we will consider the disadvantages, assuming that you belong to Clearco’s target clientele.
In the past, young businesses with subpar credit could not access high amounts, low rates, and long terms. However, the business financing industry has changed dramatically recently. Many business financing companies now prioritize cash flow over credit score or time in business.
If you can meet Clearco’s monthly revenue threshold, your credit score or time in business might not stop you from accessing higher amounts and low rates. Compared to Clearco, these options might contain more convenient repayment structures. You probably wouldn’t have to use the funds for a specific purpose to access lower rates.
A merchant cash advance might not be the only option for a young business with fantastic revenue.
Pros:
Cons:
Clearco is available for six types of businesses: eCommerce, SaaS, online retailers, subscription companies, mobile apps with in-app purchases, and marketplace (beta). However, eCommerce and SaaS companies are more likely to meet the other requirements for the approval of these industries. This is because eCommerce and SaaS companies tend to grow very quickly and rely heavily on digital marketing.
Completing the application and receiving funding usually takes about 1-2 business days. The typical timeline from initial application to receiving funds can be completed in as little as 2-3 business days.
Clearco’s main product is similar to a merchant cash advance but offers a form of invoice financing for certain companies. In both cases, the borrowing amount is repaid with a percentage of future sales.
Yes, Clearco’s repayment structure is the same as that of a merchant cash advance. Clearco takes a percentage of each sale until the loan is paid back in full. The main difference between Clearco loans and a traditional merchant cash advance is that, in addition to cash flow, the loan’s cost depends on how you use the funds.
Clearco is renowned for its excellent customer support and positive reviews. The company maintains a strong online presence and has a physical headquarters, making it easy for customers to contact their team. Clearco’s customer support is responsive and helpful, ensuring that businesses receive the assistance they need throughout the funding process. The onboarding process was quick and efficient, with an attentive sales team.
Customers expressed appreciation for the genuine interest Clearco’s team showed in their success. Here are a few examples:
These testimonials highlight Clearco’s strong reputation in the eCommerce industry, making it a trusted and reliable partner for businesses seeking funding solutions. By consistently delivering high-quality service and support, Clearco has established itself as a leader in the field of growth capital for digital businesses.
Most customers praised Clearco’s fast approval processes and helpful customer service personnel. Customer reviews for Clearco are overwhelmingly positive, with many praising the company’s flexible funding solutions, competitive interest rates and fees, and outstanding customer support.
If Clearco rejects your application, it’s probably because you don’t meet their standards for “consistent revenue.” Even if you generate $10,000 per month, Clearco might still reject your application if they see occasional dips in revenue or cash flow shortages.
This situation is common with business financing companies that rely primarily on computer algorithms to assess financial health. Remember, a merchant cash advance requires daily payments. Clearco might determine that your daily cash flow cannot withstand this repayment structure.
But tumultuous revenue doesn’t have to stop you from accessing the borrowing amounts, terms, and rates you’re looking for. Several other business financing companies offer similar products as Clearco and cater to younger businesses. To clarify, you can still get a substantial merchant cash advance with subpar credit.
These other companies will also make sure that a merchant cash advance is even the right product for your cash flow in the first place. For example, your cash flow may be better suited for another product that takes weekly, bi-weekly, or monthly payments. Younger businesses now have many highly affordable options to choose from, including:
Any business that doesn’t meet the specifics of Clearco’s target clientele should look elsewhere for business financing options. This is especially true for companies over six months old or with strong personal credit. Do you have the cash flow and monthly revenue to qualify for Clearco, but your business is at least a year old? If so, you can almost definitely find a business loan that is significantly more advantageous than Clearco’s merchant cash advance.
Also, eCommerce and SaaS business owners should not assume they have fewer options because they belong to non-traditional industries. These businesses are the future of the economy, and if anything, the ball is in their court. When you’re exploring different options, business financing companies are developing better products exclusively for your needs.
Odds are, it won’t be long before another company can offer the same borrowing amounts and requirements as Clearco but for a much lower price. Because the options are so limited, we at UCS give Clearco a 4 out of 5 rating.
Disclaimer: The Clearco trademark is owned by Clearco and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from Clearco.
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