The need for small business funding and the reluctance of banks to provide it has led to a massive increase in alternative funding options. Libertas Funding is an online financial services enterprise that funds revenue-based financing.
However, the company is not a good fit for every small business. Its high credit score, time in operation, and revenue requirements are geared more toward medium-sized companies.
We can help you decide if the online funder is right for your needs by covering the benefits, drawbacks, and application process. Specifically, we’ll answer these questions and more:
Libertas Funding, LLC is a direct funder for revenue-based funding (RBF) transactions. Please note that this review focuses solely on its RBF product. This funding solution is designed to help fuel growth for small and medium-sized businesses (SMBs).
The company recently underwent a brand refresh with a new logo and website redesign. The previous logo was:
Since its founding, the company has funded over $2.6 billion in RBFs for SMBs. It is based in Greenwich, CT, and its RBF products are available in all 50 states and Washington, D.C.
The company prides itself on relationship management and repeat business. It uses a fintech platform to analyze a business’s financials and approve funding quickly. Its team of financing experts provides hands-on service to help business owners through each step of the process.
The funder’s revenue-based financing product is a modified merchant cash advance. It’s technically not a loan but a purchase of your future receivables at a discounted rate.
After receiving the RBF, you pay the amount, plus a factor rate (and modest origination fees), with a percentage of your sales revenue, called a remittance rate. The funding solution allows you to quickly gain working capital without adding debt to your balance sheet.
The funder’s revenue-based financing product is technically not a loan but a purchase of your future receipts at a discounted rate.
After receiving the RBF, you pay the amount, plus a factor rate (and modest origination fees), with a percentage of your sales revenue, called a remittance rate. The funding solution allows you to quickly gain working capital without adding debt to your balance sheet.
The funder has specified qualifications for its products.
Minimum Requirements for Revenue-Based Financing:
** The company states that it may be possible (on an exception basis) to get approved with a credit score under 630 if other qualifications are strong.
The company is primarily an RBF funder. Unfortunately, the funder does not publish its rates publicly for its products, so it isn’t easy to estimate costs.
Most revenue-based financing products use factor rates. This form of payment is easy to calculate but can be more expensive than a traditional APR.
RBF companies such as Libertas typically charge factor rates ranging from 1.05 (pre-payment sales if an RBF deal is repaid very quickly) – 1.30. Multiply the advance amount by the factor rate to determine your cost. For example, if you received an advance for $250,000 at a factor rate of 1.25, the formula would be:
$250,000 x 1.25 = $312,500. You’d pay $62,500 for the advance of $250k.
The funder also doesn’t publish any information on fees. However, one review suggests the company charges origination fees ranging from 1% to 3% of the total amount. On the website, Libertas Funding states that your credit score, revenue, and time in business will determine your rates.
The funder provides an affiliate program. ISOs and business funding brokers can complete and submit an online form on the company’s website to register as a partner.
The application process for Libertas Funding services is quick and easy. Follow these steps to apply.
You can choose to apply for revenue-based financing.
After choosing a product, you’ll register an account with the company.
Once you create an account and submit the initial application, you’ll be prompted to upload the required documents. Be prepared to provide the following:
At this point, a Libertas representative will contact you to finalize your application and review your funding options, rates, and payment terms.
Once approved, you will receive your funds via ACH or wire transfer.
The remittance transactions for revenue-based funding are automatically processed with an ACH transfer from your business bank account. You can choose daily or weekly payments, but bi-weekly or monthly payments are sometimes available.
The strength of your credit profile and business revenue and the payment structure of any existing debt determines your payment frequency. The remittance will continue until the amount due is paid in full.
There are no prepayment penalties for paying off the RBFearly. In some cases, you might get a significant prepayment discount for paying off early.
Many customers renew revenue-based funding (RBF) with the company. It estimates that over 70% of its funding goes to returning customers.
Like many alternative funding options, the company provides a quick and easy application process with a fast turnaround on decisions. RBF provides quick funding, and the RBF product can sometimes provide same-day financing.
SMBs may also get large RBF amounts. There are no prepayment penalties, and you might be able to save money with early payment discounts. It also has a good renewal program.
The funder doesn’t provide any public information on rates for fees. You cannot estimate costs without applying and seeing your available rates. Ensure your cash flow can handle the repayment frequency and amounts before signing any agreement.
It also has very high eligibility requirements. The credit score cutoff is one of the highest for revenue-based financing. The typical revenue requirement of $75k monthly will disqualify many small businesses.
Pros:
Cons:
Yes, Libertas Funding is a legitimate revenue-based funder and fintech platform. While the company is not Better Business Bureau (BBB) accredited, it does have an A+ rating on the watchdog site.
The funder has primarily positive reviews. It has a 4 out of 5 rating on eight Google reviews and a 4.9 out of 5 rating on 79 Trustpilot reviews.
Customers who rated the company highly praised the ease of the process, customer service, and fast funding. Many reviews discussed the funding amounts and recommended the company.
The company has a high revenue requirement and comparatively high credit score requirements. It’s also possible to get denied due to your industry.
If you were declined, the denial letter should explain why. If you need more information, such as when to reapply, contact the funder directly by phone or in writing.
Fortunately, there are many online funders to consider if Libertas Funding doesn’t work out. You should be able to find a revenue-based funding provider with a much lower credit score and revenue requirements.
You might also be interested in a funder or a funding marketplace that can offer the following small business financing:
Libertas Funding is best suited for SMBs earning over $900,000 annually who need fast funding. It’s also a good option if you’re seeking an ongoing relationship with a funder for multiple financing rounds.
High-revenue companies with excellent personal and business credit can likely qualify for lower-cost and longer-term financing options. You may need to find a different funder if your business generates less than $75k in sales monthly.
Based on the available products, user reviews, and eligibility requirements, we rate the company at 4 out of 5. It does have excellent reviews, but the high revenue requirement excludes many small businesses. In addition, the lack of complete transparency on costs is a concern.
Disclaimer: The Libertas Funding trademark is owned by Libertas Funding, LLC and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from Libertas Funding, LLC.
Fraud Disclosure:
Please be aware that individuals have been fraudulently misrepresenting to business owners (and others) that United Capital Source, Inc. (“UCS”) can assist small businesses in receiving government grants and other forgivable business loans, when in fact those grants or loans do not exist or are not available. These individuals have ulterior motives and are engaging in the unauthorized use of the names, trademarks, domain names, and logos of UCS in an attempt to commit fraud upon unsuspecting small business owners.
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