If you’re a small business owner, there are lots of reasons you might find yourself needing a loan. For example, maybe one of your delivery trucks breaks down and you need to repair or replace it. Or maybe you need to buy an expensive piece of equipment.
No matter what the reason, online lenders like Fundation allow you to borrow money fast. Fundation provides small business loans, including term loans and lines of credit.
This Fundation review will cover everything you need to know about getting a small business loan from the company.
In this review:
- Getting Fundation Loans
- Basic Information: Rates, Terms, Fees, & Limits
- The Benefits of Fundation Loans
- The Downsides of Fundation Loans
Getting Fundation Loans
Fundation requires applicants to have at least two other employees to qualify for a working capital loan. Business owners must also have a credit score of at least 640 for loans greater than $75,000 (the minimum score for smaller loans is 620). The business itself needs to have been in operation for at least two years, with annual revenues of at least $100,000.
However, according to the company, the typical Fundation borrower has a credit score between 680 and 700, has been in business for five to 10 years, and has annual revenues ranging from $250,000 to $750,000. Overall, though, the requirements are a bit more stringent than some other small business lenders.
The Fundation loan application process involves filling out multiple online forms and connecting with a customer relationship manager who will guide you through the process. You might be required to provide additional documents (such as bank statements) later, especially if you’re borrowing more than $200,000. Both the business’ credit profile and the owner’s personal credit are taken into account, and funds can be disbursed within one to three days upon approval.
Basic Information: Rates, Terms, Fees, & Limits
Small business owners looking for Fundation financing need to consent to a blanket lien on their business assets, which means you risk losing your livelihood if you become unable to make payments. You also need to provide a personal guarantee, putting your individual assets — such as a car or home — at risk of being seized.
Other factors associated with a small business term loan from Fundation include:
- Rates: 8% to 30% APR
- Terms: One to four years
- Fees: $0 prepayment fee
- Limits: Loan amounts range up to $500,000
The Benefits of Fundation Loans
Fundation loans are an attractive option for many business owners thanks to fast funding and relatively low interest rates. Borrowers with excellent credit might even enjoy an interest rate under 10%. And although Fundation has more stringent requirements to qualify for a loan compared to other online lenders, you have a better shot of being approved with Fundation than you probably are with a traditional financial institution.
In addition, Fundation takes a somewhat different approach when evaluating applications, looking beyond credit scores alone to evaluate a business’ stability, financial metrics, cash flow, and debt to make lending decisions. These alternative lending criteria means you’ll have to answer questions about what you’ll do with the money and talk to a Fundation underwriter about your plans and to answer questions.
Fundation, an award-winning lender, also gives borrowers the chance to borrow more money or refinance their loan for a potentially lower interest rate or different term length.
Although there are many benefits to borrowing from Fundation, its stricter requirements mean Fundation loans are only a good option for businesses that are more established and need quick financing.
The Downsides of Fundation Loans
Unlike some online lenders, Fundation has fairly stringent minimum lending requirements. For that reason, it’s not an option for recently started businesses, startups, or businesses that don’t have employees or significant revenue.
Although Fundation loans have lower interest rates than many online lenders, many of the businesses that would qualify might also qualify for loans at a bank or a credit union at lower rates. While these loans will take longer to fund, the money your business could save on interest might be enough to make waiting worthwhile. If you don’t need cash immediately and have excellent credit, Fundation might not be the best choice for your business.
Fundation deducts loan payments twice a month from your bank account, versus requiring monthly payments like many other lenders. Although more frequent payments have their benefits (e.g. you save on interest over the life of your loan), some businesses just aren’t in a position to make double the payments. For that reason, Fundation might not be a good lender for businesses who don’t have a lot of working capital or have to schedule their payments carefully to ensure positive cash flow.
Another downside might be the relatively high minimum loan amounts Fundation requires. If you need to borrow just a few thousand dollars, a small business loan from Fundation won’t be available to you.
Fundation.com is a great online business lender if your business is relatively established and you need money quickly, since it provides fast funding at relatively reasonable rates. However, if you think your company might be able to qualify for a bank loan at a lower interest rate — and you’re not in a particular hurry to receive your loan proceeds — you might shop around lenders to make sure you’re getting the best deal.