Looking for Funding Circle reviews? We took a look at this alternative lender to see if the information we had on them is still true. Welcome to Funding Circle reviews.

Funding Circle is one of several lending companies in the online space. They have loaned over $11.7 billion, with over 4.9 million loans under management. They work as a peer to peer lender.

In the US, Funding Circle leads the Marketplace Lending Association, along with LendingClub, Prosper, and Sofi.

Funding Circle Reviews: Background

Funding Circle is online here: www.fundingcircle.com/us/. Their physical addresses are in San Francisco, Denver, London, and Berlin. You can call them here: (855) 385-5356. Their contact page is here: www.fundingcircle.com/us/about/contact/. They have been in business since 2010.

Funding Circle Reviews: Their Borrower’s Bill of Rights

Funding Circle has a business borrowers’ Bill of Rights, here: www.fundingcircle.com/us/business-borrower-bill-of-rights/

It says:

1. The Right to Transparent Pricing and Terms 

You have a right to see the cost and terms of any financing you are offered in writing and in a form that is clear, complete, and easy to compare with other options, so that you can make the best decision for your business.

1. The Right to Non-Abusive Products 

You have a right to loan products that will not trap you in expensive cycles of re-borrowing. Lenders’ profitability should come from your success, not from your failure to repay the loan according to its original terms.

Borrower’s Bill of Rights Continued

1. The Right to Responsible Underwriting 

You have a right to work with lenders who will set you up for success, not failure. High loss rates should not be accepted by lenders simply as a cost of business to be passed on to you in the form of high rates or fees.

1. The Right to Inclusive Credit Access 

You have a right to fair and equal treatment when seeking a loan.

1. The Right to Fair Collection Practices 

If you are unable to repay a loan, you have a right to be treated fairly and respectfully throughout the collections process. Collections on defaulted loans should not be used by lenders as a primary source of repayment.

Funding Circle Reviews: SBA 7(a) Loans

At Funding Circle, you can borrow anywhere from $20,000 to $5 million from the SBA. Loan terms run for up to 10 years. Pay an interest rate of prime +2.75%. as of the writing of this blog post, that is 6%.

There are no prepayment penalties. 

Fees

Funding Circle will charge a one-time origination fee on each loan they fund. This amount ranges from 3.49% to 6.99% of the approved loan amount.

Funding Circle Reviews: Qualifying for an SBA 7(a) Loan with Funding Circle

Small businesses which meet the below criteria are eligible to apply for an SBA 7(a) loan:

• In business for more than 3 years
• At least $500,000 in annual revenue
• No federal tax liens
• 680 FICO for personal Guarantor
• Positive book value (assets > liabilities)

Qualified Industries

Because these are SBA loans, Funding Circle must conform to the SBA’s requirements when it comes to industries. Therefore, they cannot lend to these industries:

• Speculative real estate
• Nonprofit organizations
• Weapons manufacturers
• Gambling businesses
• Marijuana dispensaries
• Pornography

Funding Circle Reviews: COVID-19 Relief

As a part of working with the Small Business Administration, Funding Circle offers their COVID-19 relief, in the form of the Paycheck Protection Program.

What frustrates you the most about funding your business during a recession? Check out how our guide can help.

Funding Circle Reviews: More Information

Apply online, and a personal account manager will reach out to you within one hour. They will ask about your business and request and collect documentation. They will decide on your loan in as little as 24 hours. 

If you accept a loan offer, you can get funding in as little as one business day. You can return for more funding in as little as six months.

If your monthly payment is more than 10 days late, they may charge a late fee of up to 5% of each missed payment amount. The late fee will be payable immediately and is in addition to the missed payment.

They will place your loan into default if you miss three or more consecutive payments, four out of six monthly payments or do not comply with your loan agreement.

Funding Circle Reviews: Advantages

So the advantages include no prepayment penalty. There are also relatively fast decisions and funding. In addition, the Borrowers’ Bill of Rights is encouraging. The maximum rates you could pay are within reason.

Funding Circle Reviews: Disadvantages

So what are Funding Circle’s disadvantages? It should be obvious: fees, fees, and more fees. They are for origination, missing payments, and also for insufficient funds. 

An Alternative to Funding Circle

Of course one great alternative to Funding Circle is to build business credit. But how do you do that? Fortunately, we have the method right here. And we’re more than happy to let you in on the secret.

Corporate credit is credit in a small business’s name. It doesn’t connect to a business owner’s personal credit, not even if the owner is a sole proprietor and the only employee of the business. Accordingly, an entrepreneur’s business and personal credit scores can be quite different.

The Advantages

Because small business credit is separate from individual, it helps to protect a small business owner’s personal assets, in the event of legal action or business insolvency. Also, with two separate credit scores, an entrepreneur can get two different cards from the same vendor. This effectively doubles buying power.

Another benefit is that even startups can do this. Visiting a bank for a business loan can be a formula for disappointment. But building business credit, when done the right way, is a plan for success.

Individual credit scores rely on payments but also other components like credit usage percentages. But for company credit, the scores actually only hinge on whether a company pays its bills in a timely manner.

The Process

Growing small business credit is a process, and it does not happen automatically. A corporation must proactively work to establish corporate credit. Having said that, it can be accomplished readily and quickly, and it is much more efficient than establishing individual credit scores. Merchants are a big part of this process.

Performing the steps out of order will cause repetitive denials. No one can start at the top with company credit. For instance, you can’t start with store or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Company Fundability

A business needs to be fundable to loan providers and vendors. For this reason, a business will need a professional-looking website and e-mail address, with website hosting bought from a supplier like GoDaddy. And company phone and fax numbers need to have a listing on ListYourself.net.

In addition the business telephone number should be toll-free (800 exchange or the like).

A corporation will also need a bank account devoted strictly to it, and it must have all of the licenses necessary for running. These licenses all must be in the specific, correct name of the company, with the same company address and telephone numbers. Bear in mind that this means not just state licenses, but possibly also city licenses.

What frustrates you the most about funding your business during a recession? Check out how our guide can help.

Working with the Internal Revenue Service

Visit the IRS website and acquire an EIN for the small business. They’re totally free. Choose a business entity such as corporation, LLC, etc. A business can start off as a sole proprietor but will probably want to change to a kind of corporation or partnership to decrease risk and maximize tax benefits.

A business entity will matter when it concerns tax obligations and liability in the event of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. Nobody else is responsible.

If you operate a business as a sole proprietor at least file for a DBA (‘doing business as’) status. If you do not, then your personal name is the same as the corporate name. Hence, you can find yourself being personally responsible for all small business debts.

In addition, per the Internal Revenue Service, with this structure there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 possibility for corporations! Avoid confusion and significantly decrease the odds of an IRS audit at the same time.

Note: any DBA filing should be a steppingstone to incorporating, which is best for building business credit.

Starting Off the Business Credit Reporting Process

Begin at the D&B web site and obtain a free D-U-N-S number. A D-U-N-S number is how D&B gets a business in their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the corporation. You can do this at https://www.creditsuite.com/reports/. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process. By doing this, Experian and Equifax will have activity to report on.

Trade Lines

First you must establish trade lines that report. This is also called vendor accounts. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can begin getting revolving store and cash credit.

These varieties of accounts have the tendency to be for the things bought all the time, like shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first of all, what is trade credit? These trade lines are creditors who will give you initial credit when you have none now. Terms are often Net 30, versus revolving.

Hence if you get approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, such as within 30 days on a Net 30 account.

Details

Net 30 accounts must be paid in full within 30 days. 60 accounts must be paid in full within 60 days. Compared to with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of.

To launch your business credit profile properly, you need to get approval for vendor accounts that report to the business credit reporting agencies. Once that’s done, you can then make use of the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Not every vendor can help like true starter credit can. These are vendors that will grant an approval with minimal effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 3 of these to move onto the next step, which is revolving store credit. 

Accounts That Don’t Report

Non-Reporting trade accounts can also be helpful. While you do want trade accounts to report to at least one of the CRAs, a trade account which does not report can yet be of some worth. You can always ask non-reporting accounts for trade references. And credit accounts of any sort ought to help you to better even out business expenses, thus making financial planning simpler. These are providers like PayPal Credit, T-Mobile, and Best Buy.

Revolving Store Credit

Once there are 3 more vendor trade accounts reporting to at least one of the CRAs, move onto revolving store credit. These are businesses which include Office Depot and Staples.

Use the business’s EIN on these credit applications.

Fleet Credit

Are there more accounts reporting? Then move to fleet credit. These are companies such as BP and Conoco. Use this credit to buy fuel, and to repair and maintain vehicles. Make certain to apply using the small business’s EIN.

Cash Credit

Have you been sensibly managing the credit you’ve up to this point? Then move onto more universal cash credit. These tend to be MasterCard credit cards. Keep your SSN off these applications; use your EIN instead.

If you have more trade accounts reporting, then these are in reach.

What frustrates you the most about funding your business during a recession? Check out how our guide can help.

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and deal with any mistakes ASAP. Get in the habit of checking credit reports and digging into the specifics, and not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less. Update the relevant information if there are errors or the data is incomplete.

Disputing Errors

So, what’s all this monitoring for? It’s to challenge any mistakes in your records. Mistakes in your credit report(s) can be corrected. But the CRAs usually want you to dispute in a particular way.

Disputing credit report errors typically means you send a paper letter with copies of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always send copies and retain the original copies.

Disputing credit report errors also means you precisely spell out any charges you contest. Make your dispute letter as clear as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you sent in your dispute.

A Word about Building Business Credit

Always use credit smartly! Never borrow beyond what you can pay off. Track balances and deadlines for repayments. Paying off punctually and in full will do more to elevate business credit scores than almost anything else.

Growing business credit pays off. Excellent business credit scores help a business get loans. Your creditor knows the business can pay its financial obligations. They recognize the small business is for real. The small business’s EIN attaches to high scores, and creditors won’t feel the need to require a personal guarantee.

Business credit is an asset which can help your small business for years to come.

Funding Circle Reviews: Takeaways

Fees are high at Funding Circle, but at least they’re being transparent about them. Plus, there is no prepayment penalty – but there are late fees. Hence Funding Circle is best for companies which do not need to borrow much and can pay it all back not only on time, but early. Borrowers which need more time to pay a loan back would probably do better elsewhere.

Finally, read the fine print and do the math. Therefore, go over details carefully. And decide if this option will be good for you and your company. In addition, consider alternative financing options beyond lending. This includes building business credit, to best get the money you need. Funding Circle reviews should be just the beginning.

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