Finimpact

Funding Circle Review: Small Business Loans, Rates & Fees Explained

Funding Circle is unique in that it can connect you, a business owner, to a variety of financing products, including term loans, SBA loans, and business lines of credit. Compared to other lenders, it offers low rates and an easy online application process paired with personalized service.

fundingcircle
fundingcircle
3.3
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Credit Score
Min. Credit Score 660+
Loan Amount
Loan Amount $25K-$500K
Loan Repayment
Loan Repayment Up to 10 years
Anna Baluch
Written by:Anna Baluch
Freelance Copywriter

Funding Circle is a peer-to-peer marketplace lender. It was founded in 2010 and uses technology to match small business borrowers to investors who are offering financing. It’s best for business owners who have been around for two years, have good to excellent credit, and are looking for a fast alternative to bank loans.

While Funding Circle lends to businesses in a variety of industries, its loans are not available to nonprofits, speculative real estate firms, weapons manufacturers, gambling businesses, marijuana dispensaries and those in pornography.

Summarized Ratings

This parameter considers loan terms, repayment optionality, and loan limits. For each financing arrangement offered, each of these features was evaluated using the five-point scoring system. Then, the various scores were aggregated and averaged to establish an overall loan features score.

Funding Circle gets a 3.4 for Loan Features. This slightly above average score reflects a fairly broad offering of loan terms, somewhat flexible loan limits, and highly accommodative repayment options.

Pros
Competitive rates
No minimum revenue requirement
Dedicated account manager
Available in 49 states
Few restrictions to your loan purpose
Cons
High origination fees
Startups aren’t accepted

What Is Funding Circle?

A Funding Circle Loan is a little different from those you’ll find at traditional banks. As a P2P lender, you’re instead connected directly to investors that you’ll be repaying the loan to, while Funding Circle will underwrite the loans and approve any applications. Rates are pretty competitive here, ranging between 4.99%-27.99% and you can borrow up to $500,000.

The applications themselves are pretty flexible as Funding Circle is on a mission to help out small businesses. This means you’ll be assessed on much more than just your credit score, making the process a little easier.

Funding Circle Loan Features

All investors are welcome to join the platform and lend money to various businesses at different levels of risk. You’ll find a lot of banks, large financial institutions and angel investors alongside regular retail investors looking for a good return on their savings.

For borrowers, the loan features will largely be dependent on your credit score, and how much risk the investors have chosen to shoulder. There are five types of loans on offer, and we’ve outlined some average rates and terms below, but those with lower credit scores can expect higher rates and shorter borrowing periods.

SBA Loan

This loan is actually guaranteed by the government, and you won’t be borrowing the money directly from Funding Circle. These types of loan generally have more lenient eligibility requirements

Loan Type

SBA

Term Length

Up to 10 years

Repayment Period

Usually monthly

APR Range

Prime rate plus 2.75% (the time of writing the prime rate is 6%, so a total of 8.75%)

Min-Max Amount

$25,000 to $500,000

Small Business Loan

A fairly standard offering and one of the most popular loan choices on offer.

Loan Type

Small Business Loan

Term Length

Up to 10 years

Repayment Period

Monthly

APR Range

4.99% - 27.99%

Min-Max Amount

$25,000 to $500,000

Line of Credit

Lines of credit are a really flexible loan type that allows you to borrow from a designated borrowing limit and only pay interest on the money you withdraw. Think of it as a credit card with much higher borrowing limits. Plus, these types of loans can usually be approved much more quickly than other types of lending.

Loan Type

Line of Credit

Term Length

No limits disclosed

Repayment Period

Daily, weekly or monthly

APR Range

Starting from 4.8%

Plus a 1.6% - 2.5% withdraw fee

Min-Max Amount

$6,000 to $250,000

Merchant Cash Advance

A merchant cash advance involves borrowing against your expected credit and debit card sales. For the length of your loan, you’ll repay directly via your credit card sales, including any interest.

Loan Type

Merchant Cash Advance

Term Length

3 - 18 months

Repayment Period

Monthly or weekly

APR Range

Factor rates from 1.15 (Equivalent to 15%)

Min-Max Amount

$5,000 to $450,000

Invoice factoring

Invoice factoring involves borrowing against any unpaid invoices. It’s a type of short-term borrowing to cover cash flow issues, and your loan is usually paid off once your clients have paid you the following month. These are usually pretty expensive and only recommended in a pinch. Funding Circle actually has very generous borrowing limits here and some pretty low rates though

Loan Type

Invoice Factoring

Term Length

Usually one month

Repayment Period

Daily or weekly

APR Range

Starting from 0.25% per week

Min-Max Amount

Up to $5 million, or 90% of your outstanding invoices

Funding Circle Interest Rates and Fees

Fees and rates can vary considerably across each type of loan, and not everything will be disclosed until you apply. However, we’ve outlined what you can expect below.

SBA Loan

Loan Type

SBA Loan

Origination Fees

3.49% - 6.99%

Prepayment Fees

None

Late Payment Fees

5% charge for payments more than seven days overdue

Maintenance Fees

1% annually

Interest Rates

4.99% - 27.99%

Small business Loan

Loan Type

Small business loan

Origination Fees

3.49% - 6.99%

Prepayment Fees

None

Late Payment Fees

5% charge for payments more than seven days overdue

Maintenance Fees

1% annually

Interest Rates

From 4.8%

Plus 1.6% - 2.5% charge for every withdrawal

Line of Credit

Loan Type

Line of Credit

Origination Fees

3.49% - 6.99%

Prepayment Fees

None

Late Payment Fees

5% charge for payments more than seven days overdue

Maintenance Fees

$20 annual fee

Interest Rates

From 4.8%

Plus 1.6% - 2.5% charge for every withdrawal

Merchant Cash Advance

Loan Type

Merchant cash advance

Origination Fees

3.49% - 6.99%

Prepayment Fees

None

Late Payment Fees

5% charge for payments more than seven days overdue

Maintenance Fees

Not disclosed

Interest Rates

Factor rates from 1.15

Invoice Factoring

Loan Type

Invoice factoring

Origination Fees

3.49% - 6.99%

Prepayment Fees

None

Late Payment Fees

5% charge for payments more than seven days overdue

Maintenance Fees

Not disclosed

Interest Rates

Starting from 0.25% per week

How to Qualify for a Funding Circle Loan?

To be eligible for a business loan, Funding Circle requires that you’ve been in business for at least two years. In addition, one business owner must have a minimum personal FICO score of 660. If one of the business owners has had a personal bankruptcy within the last seven years, your business may get disqualified.

While there is no minimum annual revenue requirement, Funding Circle’s other criteria seems to be stricter than that of other lenders. According to Funding Circle, the average borrower has good or excellent personal credit, has been around for 11 years, earns $1.4 million in annual sales, and has a team of 12 employees.

The Funding Circle Application Process

While Funding Circle offers a number of small business loans, the application process is the same for every prospective borrower. Here’s what it entails.

Submit an online application
Visit the Funding Circle website and click “Apply Now” on the upper right hand corner. The application will take less than six minutes to complete and will ask you for the following:

  • Loan amount
  • Loan term
  • Business name
  • Owner’s name
  • How long you’ve been in business
  • Your financial history


You’ll need to check a box that states Funding Circle can distribute your information to its lending partners. Note that your credit score won’t be affected if you submit an application.



Connect to a personal account manager
Once you complete your application, a personal account manager will reach out to you. They’ll discuss your needs and may request additional information and documents like bank statements and tax returns so that the underwriting process can begin.

Wait for a decision
You won’t have to wait long to find out whether you’ve been approved for a Funding Circle loan. Depending on your situation, you might receive an answer in as little as 24 hours. If Funding Circle would like more information, they’ll get in touch before they make a decision.

Accept for a loan and collect funds
Upon approval, you’ll receive a loan agreement, which you can choose to accept. If you do decide to pursue the loan, the money will be distributed to your business bank account in as little as one business day.

Start making payments
During the application process, you’ll enroll in automatic payments from your business bank account. However, if you prefer, you can repay your loan via check.

How Does Funding Circle Determine the Loan Amount?

Everything here is based on how much risk the investors are willing to take on. If you’ve got a pretty high-risk venture to propose, your application will likely come with a high interest rate and shorter repayment terms in order to guarantee your investors make some kind of return. Outside of this, your previous business performance, general financial health and business plan will all help in determining your final offer.

Funding Circle is at the forefront of innovation in the lending industry and recently won an award from the Center for Financial Professionals for its contributions to FinTech. In addition, the platform can stake claim to creating more than 135,000 sustainable jobs throughout 2020, quite an impressive feat during a global pandemic. Funding Circle takes great care to review every application that comes through its doors, meaning those that do get accepted have a much higher chance of maintaining a successful business.

Customer Support

  • Funding Circle offers customer service via phone and email. You may call 855-385-5356 to connect to a representative Monday through Friday from 7am to 4pm PST or email customer support at loanquestions@fundingcircle.com.
  • The lender’s detailed FAQ page can also help you out round-the-clock. It answers questions you might have on applying for loans, repaying loans, the costs of borrowing, and more.
  • If you decide to move forward with Funding Circle, you’ll be assigned a personal account manager who can help you find the best loan for your small business and guide you through the process. You can count on them to ensure your application has been completed correctly and inform you of a decision in as little as 24 hours.

    The majority of Funding Circle reviews are positive. Most customers are pleased with the helpful customer support. “Great service. Great customer care. We got approved for a loan quickly and the follow up due diligence was carried out without a hitch,” said one customer. “These guys provide an unbelievable loan application service. They are simply the best. From the start of the loan application to the receipt of the fund was easy and very straightforward.,” explained another satisfied Funding Circle borrower.

Funding Circle Loan Reviews

Funding Circle loans have a very respectable score of 4.5 out of 5 stars on both TrustPilot and MerchantMaverick. Customers are particularly impressed with the constructive and helpful support provided by the customer service team, and just how easy the application process is to get to grips with. The service is incredibly personalized too, with individual loan officers able to guide you through every step of an application.

Some customers have been a little shocked by the sometimes high origination fees, while others feel that withdrawal fees on lines of credit are a little steep too. Funding Circle makes every effort to respond to each piece of criticism individually and it welcomes any direct feedback via its website and customer service team.

Positive Reviews

Negative Reviews

Excellent customer service

High origination fees

Fast application process

Expensive withdrawal fees

Clear guidance on loan types

Poor responses to emails

Fast turnaround times on funding

Some slow service on complex applications

Funding Circle Perks and Bonuses

Flexibility:
If you’re late on repaying your loan or believe you will be, Funding Circle encourages you to get in touch with them right away. Depending on your circumstances, they can explore several options.

Transparency:
The Funding Circle website is professional and informative. It features detailed information about each loan product it offers. There’s also a handy resource center, loan calculator, list of frequently asked questions, and customer success stories. In addition, the website is transparent about rates and fees. Overall, Funding Circle has a track record of ethical sales. This is no surprise as the lender “believes small businesses should be protected from unfair, deceptive financial practices.”

Technology:
Funding Circle can set up automatic payments from your business bank account so that you’re never late and always keep your credit score in tip-top shape. Unfortunately, the mobile app is only available to investors at this time. This means you’ll have to apply for a small business loan and manage it online on a computer or laptop rather than a mobile device.

Final Thoughts

The flexible loan options, generous terms, high funding limits, and low interest rates all make Funding Circle a great choice for a small business loan. Combine this with a smooth application process and excellent customer support and you can rest easy knowing your borrowing needs will be well taken care of. Plus, the wide range of different loan types affords a high degree of flexibility.

However, if you’ve got bad credit, are a new startup, or simply don’t have enough business experience, you'll likely need to try another provider. You might want to try a bad credit lender or try borrowing at lower amounts at other platforms until you can build your score up.

Frequently Asked Questions (FAQ)

Is Funding Circle A legitimate lender?
Funding Circle is a legitimate marketplace lender that matches business owners to several financing options. It’s accredited by the Better Business Bureau (BBB) and approved as an SBA lending partner.

To date, FundingCircle has assisted more than 118,000 small businesses secure more than $17.5 billion in funding. It’s known as one of the largest online small business loan providers and listed on the London Stock Exchange.
What bank does Funding Circle use?
Funding Circle uses INTRUST Bank, which is a regional bank headquartered in Kansas. INTRUST Bank serves individuals and small business owners with a variety of products, such as checking and savings accounts, credit cards, and loans. Funding Circle and INTRUST Bank announced their partnership in 2019.
Is Funding Circle still lending?
In April 2020, Funding Circle decided to pause retail lending to focus on lending through the government-backed coronavirus business interruption loan scheme (CBILS). The lender stated that once the CBILS comes to an end, they’ll continue to help small businesses with their small business loan programs.
Does Funding Circle offer startup business loans?
Funding Circle requires that borrowers have been in business for a minimum of two years. However, its term loans, SBA 7(a) loans, and business lines of credit can be a good option for newer businesses.

About the Author

Anna Baluch

Freelance Copywriter

Freelance copywriter who enjoys writing for large publications as well as startups, small to medium sized businesses. Anna Baluch is a personal finance writer with over 7 years of experience covering topics related to mortgages, debt management, student loans, personal loans, and more.

More about me