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What we like:
Low minimum borrowing limit
|Estimated APR||6.99% – 42.00%|
|Loan Amounts||$1,000 – $250,000|
|Term Lengths||3 – 24 months|
|Origination Fee||0% – 2%|
In the business world, financing can be a necessary tool. Working capital, equipment leases, and cash advances are all things that a growing business may need to work with a finance company for, and Balboa Capital is one of the companies that deals specifically with business finance. Are they worth looking into? Let’s look at the data.
What is Balboa Capital?
Balboa Capital is an independent financial services company that began in 1988 in Costa Mesa, CA. Its co-founders, Patrick Byrne and Shawn Giffin, were two recent graduates of the University of Arizona. While the company had modest beginnings, it grew quickly, and in 2014 Balboa boasted a loan volume of $250 million per year, with offices in Arizona and Florida as well. According to their website, Balboa also has over $5 billion in funding.
Balboa offers several types of business financing – small business loans, equipment and vendor financing, loans for franchisees, and cash advances. Some products can be procured without collateral, such as the small business loans. They also have several online tools for businesses, such as calculators for loans and equipment leases so that business owners can project what their total costs will be if they borrow from Balboa Capital .
Small Business Loans
Balboa Capital’s small business loan product is an unsecured loan up to $250,000. Terms can be as short as 3 months, or as long as 24. One of their biggest selling points is that they will consider all credit ratings, so if your business has been denied elsewhere, Balboa may be a viable option.
According to their online loan calculator, a $30,000 loan with a 12-month term would result in a monthly payment of $2950. That adds up to $35,400 over the term of the loan – but nowhere on their website does Balboa list their interest rates, choosing instead to market their products based upon monthly payment alone.
No fees are listed on their site either, and that could be misleading to business owners looking to know the total potential cost of their loan before applying. The application process is quick, and Balboa says it disburses funds in a matter of days.
Balboa also offers equipment leasing; business owners who apply can get software, machinery, or vehicles through its lease program. Like the small business loan, there are no listings of APR or fees; a calculator allows owners to use a slider to determine monthly payment based upon term (12-60 months) and amount requested.
A $30,000 lease agreement, according to the calculator, would cost your business $623 per month on a 60-month term, leading to a total of $37,380 not counting any fees or additional charges – none of which are listed on the website.
Large commercial financing is also available with Balboa. Operating leases, capital equipment financing, and lease lines of credit all come under its commercial category. Balboa assigns one account manager to a business, which means that there’s a single point of contact for as long as your business has an account with Balboa.
In order to be considered for commercial financing, your company needs an annual revenue in excess of $10 million. The commercial application process is quick, much like the small business loan, but the website doesn’t state how long it takes for large funding packages to be disbursed.
No calculator exists on the website to project costs for a commercial loan; in addition, no term or APR data is listed. In order to learn more, the company asks business owners to complete a loan application.
Balboa also offers vendor financing, which means your customers can apply for financing through Balboa when purchasing equipment or inventory from your business. Customer businesses must have more than one year of operation, with annual revenue of over $300,000. Credit rating is not an issue; all ratings are considered.
Terms, fees, and interest rates are determined per customer company; the upside for you as a vendor is fast payment and more sales.
For those looking to open, grow, or re-image a franchise, Balboa offers financing options up to $250,000. Terms range from 24 to 84 months, and no collateral is needed. Your business needs one year of operation and annual revenue of $300,000 to qualify – as with other products, all credit ratings could be approved if other requirements are met. While Balboa says its rates are “competitive,” it does not list rates or fees for franchise financing on the website.
Is Balboa Capital Reputable?
The short answer is that it depends on who you ask. On TrustPilot, Balboa enjoys a rating of 4 out of 5 stars, with well over 100 positive reviews. On Yelp and other rating sites, however, it’s a different story.
Yelp reviewers consistently find Balboa to be a “scam” offering shady business practices. Several reviewers bemoan the idea that they cannot give lower than a 1-star rating – in fact, Balboa’s overall rating on Yelp is just that.
The main customer complaint seems to be three-fold: hidden fees, unfair business practices, and horrifying customer service. One client relayed that he was charged with another year of equipment lease because he notified them 290 days before the lease term was up that he wanted to end the lease – 20 days before a clause in his contract said he should notify them.
A business loan customer stated that he was required to pay both the first quarterly payment and last quarterly deposit as soon as he received the loan – effectively reducing the term of the loan by six months even though he was charged full interest. In addition, the customer stated he was charged an end-of-loan fee that wasn’t explicitly stated up front.
Perhaps the worst review came from a customer who pasted the text of a letter they say they received from their rep at Balboa. The email consisted of the Balboa rep using demeaning language and even profanity, while he told the customer to ‘take responsibility.’
Balboa was also named in an investigation by then-California Attorney General Jerry Brown in 2009, in which 30 African-American churches were forced to pay exorbitant amounts for computer kiosks that they were told would be free.
While Balboa Capital exists as a viable option for businesses, vendors, and franchisers looking for financing, you may want to do some research before filling out an application. The history that Balboa has with customers might change your mind.4.26 Balboa Capital Small Business Financing
Author: Jeff Gitlen