4 Services That Fund Your Small Business When You Need It
By Kristi Hines on August 18th, 2014
No matter how savvy you are with budgeting and saving money in your business, there might come a time where you find yourself in a crunch. Maybe it’s due to a summer slump in sales, or maybe it was an unexpected expense. No matter what the reason, if you find yourself in need of quick capital for your business, there are services that can help.
Pros and Cons of Capital Funding Services
Before we share the most popular capital funding services for small businesses, let’s look at the pros and cons of using them.
Pros of Capital Funding Services
- You can get funding for your small business, sometimes in just minutes, deposited directly to your PayPal or bank account.
- Funding is based on your business’s income as opposed to your personal credit (although some use both as a qualifying factor).
- Many funding services do not report to credit bureaus.
- Early repayment of your loan may result in lower interest and fess with some services.
Cons of Capital Funding Services
- You will have to link your financial institution to the funding site’s service to allow them to automatically debit your account to repay your loans.
- You may have to provide your social security number as part of the application process, either to establish you as the owner or to qualify you for the loan. Some may show up on your credit report as an inquiry, but not necessarily as a loan.
- Each funding service has very specific rules for borrowing money – if you break any of these rules, they have the right to take the full amount loaned to you plus applicable interest.
- Fees and interest rates for some services tend to be higher than traditional bank loans and credit cards.
4 Funding Services Compared
Now, let’s look at popular funding services that you can choose from to fund your small business when needed.
PayPal Working Capital
If your business is already using PayPal, then PayPal Working Capital may be a good funding option. PayPal Working Capital bases your loan amount on what you have earned through PayPal over the last twelve months.
To repay your loan, you will choose a fixed fee between 10% to 30%. Whenever you receive money into your PayPal account, PayPal Working Capital will deduct the percentage you choose from your daily income. This amount will continue to be collected until you repay your loan.
Sample loan amounts, fees, and repayment options are as follows.
Once you have received your loan approval amount and selected a repayment option, cash can be deposited into your PayPal account within minutes. Once you have repaid your PayPal Working Capital Loan, you can apply for another one.
Kabbage is one of the most popular small business loan and capital funding services. They will connect to a variety of services (business checking accounts, eBay, Sage, Etsy, Amazon, Authorize, PayPal, etc.) to determine the loan amount that your business deserves.
Sample loan amounts, fees, and repayment options are as follows. You can use their loan estimator and payment calculator to determine specific amounts applicable to your business.
Once you have been approved for a loan, cash can be deposited into your PayPal account within minutes, or deposited to your bank account within a couple of days. You can borrow portions of your Kabbage loan at a time, and as you repay your loan, you can borrow it again as part of a new loan.
CAN Capital is a capital funding service that offers business loans and merchant cash advances. To qualify, they will ask you a series of question to determine your business’s eligibility for a loan. You will also have to provide them with three months of bank statements to verify your recent income and possibly speak to them by phone to confirm your business details.
Sample loan amounts, fees, and repayment options are as follows. You can use their loan calculator to determine specific amounts applicable to your business.
Once approved, cash can be wired to your bank account in a few days. Repayment options can be spread from four to six months, and payments are deducted from your business checking account daily.
OnDeck is a business loan service that offers businesses loans based on annual revenue. To qualify, they will ask you a series of questions and ask to connect to your bank account (or PayPal) to see your most recent statements, or you can choose to manually send your statements. The latter will increase the length of time to approve your business for a loan. During this process, OnDeck’s disclaimer says that it will not be able to transfer money, view future statements, or monitor your account.
Sample loan amounts, fees, and repayment options are as follows.
Once approved, cash can be wired to your bank account within one day. Larger businesses may qualify for loans with repayment terms spread out between 12 – 24 months.
Best Practices When Getting Capital Funding
Last, but not least, here are some best practices when it comes to getting quick capital funding online.
- Read reviews of any services you are considering, especially if you haven’t heard of them before. Specifically:
- Look for them on the Better Business Bureau (Google search company name + BBB)
- Look for write ups on the company (Google search company name -site:companyname.com). Legit capital funding companies usually have mentions on Wikipedia, TechCrunch, Inc, Forbes, and related publications.
- Many capital funding companies have reviews on sites like CreditKarma.
- Read the terms and conditions of the service you choose thoroughly. Many will specify what you can and can’t do with your loan money, and if they find out you’ve done anything against their rules, you could end up losing the entire loan.
- Budget your loan payback carefully to ensure that you will be able to make your payments + interest timely, otherwise you could end up losing the entire loan.
Have you used one of the above services or another one for small business funding in a pinch? What was your experience? Please share in the comments below!
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