The UK-based lending platform Funding Circle is a world leader in business financing. The fintech company enjoys an excellent online reputation centered around its dedicated customer service and the ease of the application process.
Small business owners can apply for Funding Circle financing in about six minutes or less. The company also connects investors and lending institutions to small businesses needing financing through its lending-as-a-service platform.
Funding Circe aims to take the best parts of Small Business Administration (SBA) loans – low interest rates, monthly payments, and high borrowing amounts – and remove the drawbacks of the lengthy application process and funding times. While the time it takes to fund a loan is not as lightning fast as some online lenders, it is much faster than traditional bank and SBA loans.
Like any lending platform, Funding Circle does have its share of drawbacks. All Funding Circle business loans require collateral. They also have high credit approval requirements and don’t fund businesses younger than two years.
Funding Circle loan products are best for established businesses with good credit that couldn’t get financing from the bank. This review will discuss what makes Funding Circle unique and help you decide if they’re the right lender for your business financing needs.
Specifically, we will answer these questions:
Funding Circle is a peer-to-peer lending platform for business loans. The fintech company provides direct lending to businesses and investment opportunities to financial institutions.
The company launched in 2010 in the United Kingdom and soon expanded to offering loans in the United States. Today, they also provide loans in Germany and the Netherlands.
They aimed to simplify small business credit assessments and processing with an efficient front and back-end process. When they launched, the world was amid a global recession, which impacted business financing. The company’s founders wanted to create a new solution for business financing options.
Funding Circle combines cutting-edge technology with industry-leading risk management models to provide small businesses with fast, affordable, and transparent financing. Their institutional investors gain access to returns through loan purchases and as a lending-as-a-service digital solution to customers.
The company is a global leader in business financing solutions. They had an initial public offering (IPO) in September of 2018, and they’re listed on the London Stock Exchange.
Funding Circle’s US offices are based in Denver and San Francisco.
Funding Circle offers several loan products, including business term loans, SBA loans, and a business line of credit.
The following financing products are available to US customers. UK and EU customers might have additional loan options.
With loan amounts ranging from $25,000 to $500,000, Funding Circle business term loans can help your business grow. Small business owners commonly use Funding Circle business loan funds for hiring employees, expanding locations, marketing & advertising, equipment purchases, or restructuring existing debt. You cannot use the funds to pay off personal debt, however.
You typically receive the fund distribution within three business days when you get approved for a business term loan through Funding Circle. Loan terms are anywhere from six months to seven years.
Longer repayment terms mean lower monthly payments, but you’ll end up paying more interest. You should evaluate if your cash flow allows for a higher monthly payment or if the extra interest is worth a lower payment.
You can also expect competitive interest rates and minimal fees. Funding Circle is upfront about all loan costs. Borrowers repay the loan in fixed monthly payments, so you don’t have to worry about hidden fees or service charges. Your payment amount remains consistent throughout the loan term.
Funding Circle also participates in the Small Business Administration (SBA) loan program. SBA loans are considered the gold standard of business financing.
Since SBA loans are partially backed by the government agency (up to 85%), lenders can offer higher borrowing amounts at much lower rates. The drawbacks to SBA loans are high credit approval requirements and long funding times.
While Funding Circle can’t get around the credit requirements or funding times, they aim to simplify borrowers’ application process. Funding Circle offers an in-house process to apply for an SBA loan.
After completing the initial application, a dedicated loan specialist will discuss your business and loan needs. You will work with the Loan Specialist to collect the required documents and information. The Loan Specialist helps you create and submit your SBA Loan application.
Funding Circle then provides your loan application to its SBA lending partners. Once a lending institution receives the application, they do the final approval and underwriting process.
Funding Circle states SBA 7(a) loan applicants typically receive a response within three weeks. Once approved, their lending partner sends a final proposal letter outlining the applicant’s requirements.
Funding Circle also offers business lines of credit ranging from $5k to $25k. A business line of credit is like a credit card with a set amount of available credit. You can draw whatever funds you need and repay according to the repayment terms.
A business line of credit helps cover everyday expenses when you have a cash flow shortage. Funding Circle’s average draw fee is 1.6%. Business lines of credit tend to have higher interest rates than other loan types.
Funding Circle only offers financing to established businesses with good to excellent credit, but they do not have a revenue requirement.
Small businesses need a minimum of two years in business to qualify. Funding Circle does not provide funding to startups or younger businesses.
At least one business owner must have a personal credit score of 660 or better. In addition, no business owners or shareholders can have a bankruptcy on their credit report in the previous seven years.
Funding Circle doesn’t offer unsecured loans. To secure funding, small business owners must provide a personal guarantee and a business lien. The business lien allows Funding Circle to collect business assets if the borrower defaults on the loan.
You’ll often need to agree to a UCC blanket lien. In this type of collateral, the lender can come after any business asset if the borrower defaults. The only exclusion is that they can’t go after any real estate the business owns.
All Funding Circle applicants complete the same online application form regardless of the loan product. After applying, you can discuss your financing needs and determine the appropriate loan product.
Click on the “Apply” button on the Funding Circle website. The application takes an average of six minutes to complete. On the application, you will indicate the loan amount and terms you’re requesting.
The application also asks for information about your small business. You need to provide the business name, the primary business owner’s full name, and business contact information such as email address and phone number.
The Funding Circle website indicates a personal account manager reaches out within one hour of completing the online application. The account manager will discuss your business, collect the required documentation, and help you find loan terms that meet your needs.
You’ll need to provide information like your business tax ID, business owners’ names and social security numbers, and driver’s license information.
You’ll also need to provide business tax returns for the previous two years and personal tax returns from the prior year for business owners with a 20% stake or greater. Finally, you’ll need to provide business bank statements from the previous year.
Additional documentation may be required during the loan process as well. Your dedicated account manager will let you know if you need to provide anything else.
Funding Circle’s underwriters review your application to determine approval. They will review your business’s finances to assess your ability to repay the loan. Most potential borrowers receive a determination on their loan within 24 hours.
Funding Circle might reach out if there is missing information or need more documentation. You will likely need to provide a personal guarantee and business lien on some assets.
Once Funding Circle’s underwriters approve the loan, you receive a loan offer. After accepting the loan offer, the loan funds are electronically distributed to your business bank account, and you can receive the money in as little as one business day.
In some cases, you can get the funds in your business bank account in as little as three days from when you applied. The exact funding time depends on several factors and how quickly you can provide the required documentation. Remember that the process still takes several weeks to complete for SBA loans.
Funding Circle sets up automatic payments charged to the business bank account where you received the loan funds. Borrowers can also pay by check.
Make sure to stick to the repayment schedule. Funding Circle charges a 5% late fee on missed payments exceeding ten days. They also report to the credit bureaus, so late payments can lower your credit score.
Interest rates vary depending on your credit history, loan type, loan amount, and other factors. Their interest rates are competitive for an online marketplace. Annual percentage rates (APRs) start at 10.64% and go as high as 31.85%. The average APR is 15.42%.
Funding Circle takes a holistic approach to your finances. They don’t have a minimum revenue requirement but do consider your cash flow, working capital, and other factors.
You must meet the requirements of two years in business and a personal credit score of 660. All loans through Funding Circle require a personal guarantee and business lien.
Funding Circle states they have no hidden fees. Depending on your creditworthiness and loan term, they charge an origination fee between 3.49% and 6.99%.
Late payments exceeding ten days accrue a 5% late payment penalty. Be advised to maintain automatic payments to avoid any late payment fees.
Funding Circle does not charge a prepayment penalty. Paying off your loan early reduces the interest you pay.
Funding Circle is a UK-based company that trades on the London Stock Exchange. The fintech company offers additional products to UK and European Union customers, but this review focuses on their US-based offerings.
Specific industries are excluded from Funding Circle’s loan products. Those industries include:
Funding Circle provides many advantages businesses expect from an online lending platform. They provide outstanding customer service, fast funding, and competitive interest rates.
The company’s tech-driven underwriting process assesses the complete financial picture of your company, which can sometimes lead to credit approval even when other lenders deny the application.
Some small business loans require weekly payments, which are sometimes challenging to manage. Funding Circle term loans have a monthly payment, making them more manageable.
Another signification advantage of Funding Circle is that there are no hidden fees or surprises. They’re upfront about APRs, origination fees, and late payment fees. With Funding Circle, you can count on the following:
Finally, Funding Circle doesn’t charge a prepayment fee or penalty. You can pay your loan off early and save significant interest.
Funding Circle does come with some limitations and drawbacks you should know. One of the main drawbacks is the $500,000 loan max. You will need a different lending platform if you need more than $500k.
They also have high approval requirements for an online lender. At least one business owner needs a credit score of 660 or higher.
Funding time also takes longer than other online lenders, but they still provide faster funding than traditional banks and financial institutions. In some cases, you can access the funds within three business days. This is a roadblock for any small business needing immediate funding.
Funding Circle doesn’t provide startup business loans or funding for younger businesses. You need a minimum of two consecutive years of profitability to be considered.
Specific industries are restricted from Funding Circle’s financing products. Speculative real estate businesses, the adult entertainment industry, non-profits, weapon manufacturers, gambling businesses, and legal marijuana dispensaries are not eligible for Funding Circle.
The company also requires a personal guarantee and business lien to secure financing. You might be required to agree to a UCC blanket lien. A blanket lien allows the lender to come after any business asset, excluding real estate, if the borrower defaults.
Funding Circle business loans also face limitations from state to state. Check for any loan limitations in your state.
Pros:
Cons:
Funding Circle is a legitimate lending marketplace and is considered a world leader in business financing. They are accredited by the Better Business Bureau (BBB) with an A+ rating.
The company claims it has connected over 120,000 businesses to over $19 billion in financing since its launch. Funding Circle also has a 4.6 rating on Trust Pilot.
One of the most significant benefits of working with Funding Circle is outstanding customer service. Online comments praise the Funding Circle team’s courtesy, professionalism, and accessibility.
Most feedback indicates customers felt at ease when dealing with dedicated account managers or asking questions about their loan products. With over 12,000 customer reviews on Trust Pilot, Funding Circle has an excellent rating.
We should note that some customers complained of overly aggressive sales tactics. In addition, some reviews stated it was more challenging to get ahold of the customer service team during the Covid-19 pandemic.
Most reviews praise the simplicity of the application process and outstanding customer service. Customers talk about the knowledge and responsiveness of the account executives. Some customers state the company fulfills a missing need in business financing.
Negative reviews tend to focus on funding time and sharing customer information with their financing partners. While Funding Circle provides fast funding compared to SBA and bank loans, many online and alternative lending marketplaces are faster.
Funding Circle does share customers’ information with their lending partners, including other financial institutions, credit unions, and investors. They state that information sharing is necessary for the lending process.
Customers agree to disclose information to lending partners when they apply for a loan, but some customers state that part of the information is not as upfront as it could be. In addition, a few customers complained about talk about aggressive sales tactics.
Overall, customer reviews are highly positive, and the Funding Circle has an excellent online reputation.
Funding Circle reports your loan payments to two major credit bureaus, Experian and Dun and Bradstreet (DNB). DNB is the only major credit bureau that deals exclusively with business credit.
Reporting on-time payments to the credit bureaus helps build your business credit, which you can use for additional financing options. They also report late payments to the credit bureaus, which can negatively affect your business credit.
Funding Circle does a soft credit pull when you apply. In most cases, they only require the soft credit inquiry to approve and underwrite the loan.
Soft credit pulls do not affect your credit, and Funding Circle only performs them after you consent during the application process. Keep in mind that Funding Circle does report on time and late payments to the credit bureaus.
While applying does not impact your credit, in most cases, payments on your loan do affect your credit. On-time payments will help build credit, while late payments will lower your credit score.
It is possible to have more than one Funding Circle business loan under certain conditions. You can apply for additional financing once you’ve made six on-time payments for your first loan.
Also, the total credit limit is still $500,000, and the minimum loan amount is still $25,000. That means your new loan must be at least $25k, and adding the loan cannot exceed $500k in total debt.
There is no limit to the number of loans you can have if you meet those thresholds. You could potentially refinance your loan for a better interest rate or use a loan for debt consolidation. Debt consolidation is when you take out a new loan to pay off multiple loans, so you only have a single payment.
Funding Circle does not provide any unsecured financing currently. Unsecured loans don’t include collateral, personal guarantees, or business liens.
Secured loans include security for the lender, such as collateral. All Funding Circle loans require a personal guarantee.
In addition to the personal guarantee, Funding Circle also requires a business lien on certain assets. Examples of business assets used as collateral include equipment, vehicles, accounts receivable, and inventory.
There are several reasons Funding Circle might deny your loan application. The first is if you have insufficient credit or business history. Funding Circle requires at least two years in business, and no business owner can have a bankruptcy in the previous seven years.
Funding Circle also has high credit score requirements. At least one owner needs a credit score of 660.
Other reasons could include cash flow issues, being in an unreliable industry, or state-specific regulations. The lender is required to tell you why your loan application was denied.
Review the denial letter to see why they made the denial determination. If you are still unclear or need a more detailed explanation, you can reach out for more details.
Thankfully, many online business lenders offer more flexibility with credit requirements and loan approval. There are even options for businesses struggling to get financing due to bad credit.
If you’re interested in bank term loans or a business line of credit, you shouldn’t have trouble finding another lending platform with lower approval requirements and faster funding.
Small business owners have a lot of financing options when it comes to getting a business loan. Finding the right platform depends on several factors, such as how much you need to borrow, when you need the funds, and how you intend to use the money.
Working with lenders that have experience in your specific industry is also advisable. In addition, you should know the lender’s approval requirements to see if you qualify for their loan products.
If you run an established business and have a solid personal credit score, Funding Circle could be an option for you. Their loan products go up to $500k, which is adequate for most small business needs. But if you need more than $500k, you should look for a different lending option.
Some unique features of Funding Circle include the ease and quickness of the application process, backed by their industry-leading risk management software, and the outstanding customer service provided. Some drawbacks include high credit approval requirements and limited loan products.
Based on customer reviews, loan features, funding times, and the ease of applying, we rate Funding Circle as 4.0 out of 5. Funding Circle offers many advantages, but borrower requirements and limitations by state and industry mean they are not a viable option for all small businesses.
Disclaimer: The Funding Circle trademark is owned by Funding Circle and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from Funding Circle.
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