Business Funding Designed for Small Business Owners
Small Business Administration (SBA) loans
Business Funding Designed for Small Business Owners
Updated: Aug 23, 2019
At Funding Circle, we make business funding as simple and transparent as possible, so you can focus on what’s most important: growing your business. Our business funding offers you:
Rates starting at 4.99%
Loans from $25,000-$500,000
A decision in as little as 24 hours after document submission, and funding in as few as 10 days
Outstanding service with dedicated loan specialists
Business funding where you’re in control
We believe small businesses deserve a better borrowing experience. You should be able to obtain the business funding you need without losing equity to investors. Fuel your business growth goals with access to fair capital. Check your eligibility now.
How to get funding for a small business
Applying for financing is a big step for any small business owner. But before you take the leap, here are five things you should consider so you can go into the process with confidence:
Have a business plan: While most lenders do not require a formal plan, it’s still important to demonstrate knowledge of your industry, be able to articulate the opportunity you’re going after, and highlight your competitive advantage. You should also have a firm grasp of what you plan to use the money for, and how this investment will impact your bottom line.
Compile the right paperwork: While each lender has its own specific requirements, most will ask for your financial statements, tax returns, and current bank statements for both you and your business. Having these documents handy will save you time when you’re eager to get those much-needed funds in your bank account.
Check your credit: This is an important indicator of your creditworthiness. Request a copy of your personal credit report and score. Contact the credit bureau to resolve any issues, and if your score is in the 600s or lower, take steps to improve it before you approach lenders. While improving your personal (and business) credit may take time, it could be the difference in whether or not you receive a loan, as well as the terms you’re given.
Research different lenders: Alternative lenders, traditional banks, and credit unions all offer small business loans. Rates and fees can vary considerably between these lenders and depend on a number of factors, from the type of financing to the underwriting criteria. Take the time to learn about the lender you’re considering to ensure you’re working with the best partner and product to help grow your business.
Compare rates and fees: Before you begin comparing different loan offers, it’s important to make sure you understand APR and how much you’ll actually wind up paying to take out a loan. And before you sign, you should understand all the terms and conditions associated with your loan. Remember: No question is a dumb question.
How to fund a business
Finding the right source of capital for your business can be a bit overwhelming if you don’t know where to start. With more options for small businesses than ever before, how do you choose the best type of financing for your business growth goals?
To help make a more informed decision about financing, we’ve outlined the most common small business funding options below.
What is it? With a term loan, you borrow a set amount of money and pay it back over a set period of time. Term loans not only provide the financial support you need to move forward on big purchases, but also offer peace of mind with the consistency of regularly scheduled payments, which allows you to budget and plan more effectively.
Who is it best for? Businesses looking for large amounts of capital to cover a specific purchase and fuel growth.
What to consider: Term loans tend to be the most straightforward borrowing option. However, one thing can substantially increase the cost of your loan: fees. Some online lenders (not us!) sneak in additional hidden fees — application fees, servicing fees, prepayment penalties, and more — that you’ll want to check for prior to signing on the dotted line
Small business credit card
What is it? A credit card operates on a revolving line of credit. That means you have a limit on how much debt you can accrue at one time, and the amount of money available to you depends on how much you spend and subsequently pay off. Just like a personal credit card, you’re required to make a minimum monthly payment each month.
Who is it best for? Businesses with short-term financing needs or smaller regular expenses (think utility bills or other common operating expenses).
What to consider: When used responsibly, small business credit cards are convenient, good for your credit score (as long as you make timely payments and aren’t racking up excessive debt that you can’t pay off), and offer certain perks like travel mile rewards and cash back. However, credit cards tend to have higher APRs typically ranging from 12% to 22%whereas Funding Circle can offer interest rates as low as 4.99%. And with credit cards, it’s not enough to think about the initial interest rate alone; you also have to consider variable rates, annual fees, and late payment penalties.
Merchant cash advance
What is it? With a merchant cash advance (MCA), a lender advances you a lump sum of capital in exchange for a certain percentage of your daily credit card sales. Most businesses are eligible for an MCA, due to the fact that you do not need to have perfect business and personal credit scores, and funding is fast.
Who is it best for? Businesses that need a small boost of capital quickly, but are able to pay it off ASAP.
What to consider: Almost any business can get approved for a merchant cash advance in just a few hours — however, that speed can come at a steep price. You could pay for that quick turnaround and superficial underwriting process with dangerously high interest rates that can reach upwards of triple digits.
Business lines of credit
What is it? Business lines of credit give you access to a specific amount of capital that you can tap into on an ongoing basis and use repeatedly (as long you pay what you borrowed off). Much like a credit card, you don’t make payments or rack up interest until you actually use your money. However, business lines of credit offer higher credit limits than credit cards and function more like a loan when it comes to repayment. Whenever you draw a portion of your funds, you will be expected to repay the borrowed money over a predetermined repayment schedule.
Who is it best for? Businesses with short term working capital needs, ongoing operating expenses, or cash-flow shortages.
What to consider: Though lines of credit often have interest rates comparable to those of term loans, keep in mind that the rate you get may be variable and can skyrocket if you miss a payment or go over your limit.
Small Business Administration loans (SBA loans)
What is it? SBA loans are provided by participating lenders, most commonly traditional banks, but backed by the Small Business Administration. In general, these small business loans offer some of the lowest interest rates around.
Who is it best for? Businesses that need a long term borrowing option to finance expensive equipment or inventory purchases.
What to consider: While SBA loans often offer low rates, the application and funding process can take weeks or even months. And unless you have both an excellent business and personal credit history, it can be difficult to get approved. But, don’t fret: Funding Circle has taken the best parts of an SBA loan, like fair rates, fixed and affordable once-monthly payments, and no prepayment penalties, and created something faster and more flexible for businesses like yours.
Small business grants
What is it? Free money. You simply need to qualify, apply, and wait to hear if you’ve been awarded the funds.
Who is it best for? Businesses with a niche focus or those that are women, minority, or veteran-owned (there are much more options available!).
What to consider: It doesn’t get much better than free money. That being said, small business grants can be hard to locate, are often outdated, and tend to have hyper-specific guidelines for eligibility and/or how you can use the funds. And since there is a limited number of money to doll out, competition can be fierce.
What is it? If you’ve ever watched Shark Tank, you probably have a basic understanding of venture capital, which involves selling a percentage of ownership (and in turn, control) of your business for cash.
Who is it best for? Businesses with much higher funding needs and the potential of being the next “Unicorn.”
What is it? While venture capital tends to focus on startups with some traction, angel investments are geared toward providing seed funding to promising startup companies.
Who is it best for? Businesses who are just getting off the ground and have the potential to make it big.
What to consider: Angel investors invest their own personal money (and time!), and often serve as valuable mentors to new businesses. But their investment does come with strings attached — including a chunk of your future net earnings and a hands-on role in helping to steer your company toward profitability.
Friends and family
What is it? Entrepreneurs will often look to friends and family for financial contributions to get their business up and running. This usually comes in the form of a loan, but in some cases, it can involve bringing on a familiar face as an investor.
Who is it best for? Businesses that don’t qualify for startup loans.
What to consider: There’s a saying that warns entrepreneurs to avoid “mixing business with pleasure.” Why? Because these types of situations can get complicated real fast. When you’re starting up, there’s no guarantee that your endeavor will be a success story. Your friends and family may not get their money back, which can ruin relationships.
What is it? Crowdfunding is a method of raising funds through online campaigns. Most often, these initiatives are either donation-based or rewards-based. Crowdfunding is a great option because it not only offers you cash, but also a platform to build awareness for your business and a community invested in your success.
Who is it best for? Businesses with creative ideas that can rally a group of people behind their cause.
What to consider: Crowdfunding is a good source for quick funding, as long as you have properly prepared and can get the word out to enough people who are willing to contribute (which requires a certain investment of time and money in marketing). However, most companies who offer these services take a cut out of the money you raise, and in some cases, if you do not reach your predetermined goal, you will not receive any of the funds.