As a newer player in the world of online business financing, Idea Financial has built a solid reputation for fast funding at reasonable rates and providing personalized business advice. The lender is more selective than most, but for those who qualify, Idea is an excellent option for a line of credit and short-term loans.
Deciding if Idea Financial is the right lending partner for your company depends on whether you meet the strict eligibility and if the loan products will meet your needs. This review will cover how Idea Financial’s lending products work, its costs, and the benefits and drawbacks of the digital lending company.
Specifically, we’ll answer these questions and more:
Idea Financial is an online lender that provides funding across the United States. The company is based in Miami, FL, with offices in Richmond, VA. Like other lenders, the company uses cutting-edge technology to provide quick approval and develop financial products.
The company launched in March 2017 and initially only offered lines of credit (LOC). It now provides term loans as well.
Like many online lenders, Idea Financial provides a quick and easy application with a fast turnaround on approvals and funding. The lender separates itself from the competition with fewer fees and is more selective in who it approves for financing.
Despite being a newer player in online financing, the lender has quickly gained an excellent online reputation. The company states its mission as its trademarked slogan, “Charge Your Business Forward.”
In addition to financing, Idea Financial provides a dedicated business advisor. Specializing in superior customer service, the digital lending company committed resources to help entrepreneurs bring their business ideas to life.
Idea employs “a team of experienced business advisors and financial services professionals” along with its lending products to help business owners achieve their desired growth. Idea Financial is a proud partner of Idea Bank, a leading publicly traded European banking institution based in Poland.
Idea Financial offers two financing products: terms loans and lines of credit. You can complete the same application for either product, which only takes a few minutes.
If everything is in order, Idea Financial can make a determination on your funding request the same day you apply. You can receive your funds in as little as 24 hours if approved.
Term loan borrowing amounts go up to $250,000, and terms range from 6 to 18 months. Once approved, you receive a large sum upfront.
You then repay the loan and interest in fixed weekly or monthly payments. You can use term loan funds for various purposes, including but not limited to the following:
Idea Financial states that it wants to impose a few restrictions on how you can use the funds as possible. The amount you receive for your term loan depends on your credit history and finances.
With a business line of credit, you get an available credit limit. You can then draw funds from that line as you need them. You only must repay what you draw from your LOC.
Idea Financial’s lines of credit are revolving, which means your credit limit replenishes as you pay off what you owe. Depending on your terms, you’ll have anywhere from 6 to 18 months to repay what you draw.
In some ways, a line of credit works like a credit card, except you usually get a higher limit and lower interest rate. The actual limit and rate you receive depend on your credit history and financials.
LOCs are typically used for working capital needs, not more significant capital expenditures. Examples of how you can use LOC funds include but are not limited to:
Idea Financial tries to keep the cost of financing low for its clients. For lines of credit, you may get charged a draw fee (2.5%), but otherwise, the lender does not charge fees such as application, origination, or documentation fees.
The company uses a factor rate for term loans. It doesn’t publish its factor rate ranges, but it uses a factor rate of 1.10 as an example.
Suppose you borrowed $100,000 at a factor rate of 1.10. You’d multiply the factor rate by the loan amount for a total repayment of $110,000.
That means you’d pay $10,000 in interest for borrowing $100,000. Converting factor rates to an equivalent APR gets complicated because it depends on the loan terms.
Idea Financial charges a daily interest rate for lines of credit, which starts at 0.685%. Depending on your LOC terms and daily rate, the equivalent APR is anywhere between 11.99% to 29.99%.
The lender is more selective of the business owners they work with than other online lenders. While many online lenders offer bad credit business loans and are more willing to work with risky businesses, Idea Financial’s qualifications are only for established companies with fair to good credit.
In addition to the requirements listed below, your company cannot be a sole proprietorship or nonprofit.
You must have a minimum personal credit score of 650. For comparison, banks usually require a credit score of 700+, while alternative lenders often accept credit scores of 600 or below.
So, as you can see, Idea Financial aims for that middle spot where business owners might not qualify for a bank loan but can still demonstrate reliability in paying off debt.
Your company must have been in operation for at least two years. The lender wants to ensure that your company is sustainable.
In addition, Idea Financial uses financial data from your business when deciding on a loan application. It needs at least two years of data to analyze your ability to repay any loan.
Your business must earn $15,000 in monthly revenue, which works out to $180,000 in annual revenue. It wants to ensure you have the cash flow to support repayment.
The loan structures are unsecured, meaning you won’t have to pledge any business assets as collateral. However, business owners are required to sign a personal guarantee.
A personal guarantee is essentially a personal promise to repay the loan. If a borrower defaults, Idea Financial can pursue personal assets to recoup the cost.
The lender has a “no exceptions” policy regarding their minimum requirements. Any business that doesn’t meet its credit score, revenue, or time in business requirements will be denied.
In addition to the strict minimum qualifications, Idea Financial does not accept applications from as many industries as other online lenders might. The lender targets specific industries, such as retail, food service, manufacturing, trucking, and construction.
Idea Financial does not accept businesses in the following industries:
The lender does not permit stacking, which is taking out another small business loan while you have a loan or line of credit with Idea Financial. If you take out a loan, Idea reserves the right to terminate your line of credit.
One exception to the stacking policy seems to be SBA loans. Idea actively encourages its clients to pursue SBA loans when they can.
The application process is quick and easy. Follow these steps to apply.
Idea Financial has a 3-page online form. You’ll provide basic information about yourself and your business on the first page.
On the second page, you’ll provide business ownership information, such as the ownership structure and your SSN. On the third page, you’ll connect your business bank account and supply bank statements for the previous six months.
Idea will review your application and, in most cases, give you a decision on the same day. The lender performs a soft credit pull, which won’t affect your credit score. If approved, you’ll receive loan offers that include loan amounts, rates, and terms.
Once you review your offers, you can sign and return the loan agreement. If everything is good and your business account is connected, Idea Financial could potentially wire the funds the same day.
Or, if you prefer an ACH transfer, funds could take up to 24 hours.
You must make your first draw from your line of credit within 30 days. If not, Idea will close your LOC.
Interest for lines of credit accrues daily. When you make payments, Idea applies the payment to the accrued interest first, then to the principal.
The sooner you pay off the draw amount, the less interest you pay. So, while you’ll have between 6 and 18 months to pay it off, depending on your terms, you can save significantly with early repayment.
The factor rate on term loans is applied to the total amount at once. However, Idea Financial provides an early payment discount. If you pay off the balance early, Idea forgives 50% of any remaining interest.
Lines of credit are revolving and open-ended, so you don’t need to renew them. You can renew a term loan once you’ve paid 50% of the loan back.
There are no fees for maintaining or closing your Idea Financial account.
Idea Financial stands out from other online financing companies because it offers fast approval and funding while not charging extra fees or very high-interest rates. Some less reputable and unscrupulous online lenders charge extraneous fees and price gouge on interest.
One way the lender helps keep the cost of financing low is by not charging a documentation or origination fee. The early payment discounts also help business owners save money.
The lender’s goal is to act as a business partner, not just a financing company. To that end, it connects every approved applicant with a dedicated business advisor.
It also provides various business resources on its website. You access advice blogs, business strategies, and financing expertise from the lender’s team of financial professionals.
Idea can offer more reasonable fees because its strict qualification requirements help ensure borrowers are more reliable. The lender takes less risk, but many small business owners are excluded from the financing programs because they don’t meet the requirements.
In addition to the strict qualification requirements, Idea also restricts various industries. Even if you qualify, the available amounts only go up to $250,000. While that amount can meet some business needs, many business lenders offer higher totals.
While its rates are more reasonable than similar lenders, all fast funding and short-term financing options carry higher interest rates than traditional long-term business loans. Business owners on the lower end of acceptable credit scores might get a high interest rate.
Pros:
Cons:
Yes, Idea Financial is a legitimate lender. The Better Business Bureau has accredited the business since 2018, where it has an A+ rating. The lender also has a 4.6 out of 5 customer rating on TrustPilot with over 430 reviews.
Online reviews for Idea Financial are overwhelmingly positive. Most customers praise the ease of the application process and fast funding time.
Some users also commented on the professionalism and expertise of Idea Financial’s staff. Several users called out their representatives by name to thank them.
Of the few negative reviews, users complained about being denied a LOC or getting charged draw fees. Some users complained of having to re-qualify when renewing credit.
One customer was upset that Idea Financial canceled his LOC when he took out a business loan with another company. Many complaints stem from users not thoroughly reading or understanding the credit policy attached to their loans. Idea actively responds to customer complaints.
Idea Financial is an online lender focused on helping its clients succeed. In addition to small business lending services, the company provides various business growth resources.
It offers a Business Center with videos, strategies, and blogs on maximizing business performance. In addition, the lender connects its customers to a business advisor to help ensure their success.
The lender’s strict approval requirements mean you won’t be approved if you don’t have at least a 650 credit score, two years in business, and $15k in monthly revenue. In addition, you must be in an approved industry and demonstrate you have the cash flow to support repayment.
Other factors that could trigger a denial include having an existing business loan elsewhere or high-risk items on your credit report. If you applied and were rejected, the denial letter should explain why. You can call Idea Financial for more information if needed.
Fortunately, many online lenders offer similar products to Idea Financial. You can most likely find lenders that offer short-term business loans or business lines of credit with much more flexible qualification criteria.
You might also be interested in small business loans like the following:
Idea Financial is a great fit for established businesses with fair to excellent credit that need quick funding up to $250k. The strict approval requirements will prohibit many small businesses. But if you meet the requirements, the costs are reasonable, and the service is outstanding.
Areas where the lender stands out are the lack of fees, potential same-day funding, early payment discounts, and dedicated business advisors. Aside from its financial products, Idea tries to serve small business owners by helping its customers transform their dreams into reality.
Business owners with excellent credit who can afford to wait for funding and aren’t daunted by the tedious application process of traditional banks can likely find lower-cost financing. However, few lenders offer to be a partner the way that Idea Financial does.
Based on the ease of applying, quick approvals, fast funding, and outstanding customer reviews, we rank Idea Financial as 4.5 out of 5. If you can qualify with them, Idea Financial is one of the top online business lending options available.
Disclaimer: The Idea Financial trademark is owned by Idea Financial and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from Idea Financial.
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