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In this video, I will show you the best places to go to if you’re looking for a business loan for your small business.
Hey, everybody. Welcome to my channel. I am your host, Leo Landaverde, business coach and outsourced CFO, helping you scale your business. If you’re ready to grow your business to seven figures and beyond while creating the financial freedom and the lifestyle you want, then don’t forget to hit the bell and subscribe to this channel. And you’ll be notified every time a new video comes out.
I assume you’re watching this video because you are a small business owner yourself, and you’re looking for ways to raise capital for your business. But let’s face it, raising capital is hard, especially nowadays. And the last thing you want to do when you need a business loan is to go to your local bank. Why? Because what I always say is you don’t go to a bank when you need money, because when you need money, it’s too late. Banks right now, especially in the recent years, they only want to be lending to businesses that are so cashflow positive, they don’t really need the money. So what gives? Why banks are supposed to lend money, but they don’t want to lend right now. Luckily for you, I have options. These are the 10 best places to go to to get a small business loan for your business.
Hey, everybody. Welcome to today’s video. As I said at the beginning, here are the top 10 places to go to to get a business loan for your small company. Number one, it’s Lendio. Lendio overall probably has the best marks for a business. And we’re going to start with strengths and weaknesses. So the strengths are it’s a fast application process, a wide variety of funding and lenders, personalized guidance, and expertise. The weaknesses there’s high-interest rates on some of the loans and reports hard or hard credit inquiries, which means that they’re going to pull your credit report. It’s going to show that you’ve been looking for a loan.
Lendio is the best business loan company for most businesses. That’s because Lendio is more like a loan matchmaker than a lender, which is really good news for you because all you have to do is go through their platform and do a 15-minute online application. Then Lendio will leverage that application to match with the best loans available. So, for instance, we’re going to have loans that we can get from 5,000 to two million. The interest rate for the term loans is not bad, about 6%. You can repay that loan in one to five years. You can also get a line of credit anywhere from 1,000 to 500,000 with an APR of about 8%, repayment terms one to two years.
You can get a commercial mortgage as well, up to $5 million with a pretty decent APR of about 4.25%, 20 to 25%. And those especially SBA related. We’ll get into SBA stuff later. You can also get invoice financing, up to $100,000 with a 5% factor rate and up to a year, which probably were the most expensive. They have over 75 lenders in their platform, which improves your odds. So that’s pretty good if you’re looking for a one-stop-shop. That’s why they are the most friendliest when it comes to working with small business owners.
Now I’m going to show you in QuickBooks, what happens for the next two? So the next two are going to be BlueVine and Fundbox. You might’ve heard of them. I am an accountant. And a lot of my clients are in QuickBooks Online, and it’s a pretty cool marketplace. QuickBooks is moving away from the desktop product and really putting all of their money into the online application software as a service. So if you are in your dashboard here in your QuickBooks Online, just click on Apps, as you see here, and this is going to take you to this screen. And all I have to do is funding.
You’re going to see here that the first two that show up are Fundbox and BlueVine. So there are others, QuickBooks Capital, QuickBooks is coming out with their own lending product, but there are others. But beware because all of them have pluses and minuses. So with that said, let’s go to BlueVine. Strengths, it’s a simple, quick process, low credit score requirements. There are large loans available. Weaknesses, limited availability in some states, depending on what state you are in the US, and potentially large fees. BlueVine has three different funding loan options available, including loan-terms, lines of credit, and invoice factoring.
While all three are decent choices, it’s the last one that makes BlueVine stand out. In addition to having an easy as pie application, BlueVine offers invoice financing up to $5 million. And let’s face it, some of you guys will not be able to qualify anything other than invoice financing. Your invoices act as collaterals for your loan. In other videos, I’ve talked about when it’s business loan, using the assets of your business, asset-based lending. So the collateral is what makes these types of funding only for business to business. You can get lines of credit for up to 250,000 at a pretty decent APR of 4.8. And the invoice financing can be 0.25% APR per week. So that is on BlueVine.
As I said, what makes BlueVine pretty easy to work with is if you are a QuickBooks Online client, they will pull the data when you connect the app. All you have to do is connect the app right here. Actually, we’ll start with funding. And let’s say you wanted to choose BlueVine. And you can read a little more about BlueVine right on the QuickBooks app. And all you have to do is get the app. I have several clients that have used it. You get the app, and it connects, and what it starts doing it starts pulling data. Basically, they get a chance to look at your actual books and your profit and loss and your balance sheet right there without you having to do anything because you’ve given them permission to do that. So that’s what makes it so user friendly.
Let’s go into Fundbox. The strengths are, it’s an automated application, low approval requirements, fast funding. And sometimes, when you need, it’s money today. If that matters to you, this probably is going to be the best choice for you. But there are some pretty major weaknesses. The low maximum loan amounts, their max loans are very small, probably you won’t get more than like 100,000. If you need more, this is not going to be a good thing for you. And this is a very high APR. Some of the loans could go as 4, 5, 6. These are going to be 10, 11, 12. They also offer lines of credit, but the lines of credit only go up to 250,000. So, that’s for Fundbox.
Number four, it’s going to be Fundera. Now, what you have to remember about Fundera is that they are more like Lendio. They’re not a lender themselves. They are a marketplace within one easy application. As you can see from the website, you can access the 7A loans, term loans, the invoice, and more, and get funded faster than at your bank. And remember, if you’re a small business, especially two years or less, chances are you’re not going to be approved by a regular community bank or a major national bank. Just because you won’t have the profitability that they’re looking for and the debt service coverage ratio. I also did a video a few weeks ago about the SBA 7A loan program, which is phenomenal, that works for startups. And that works for small businesses that are less than two years old.
Back to Fundera, the strengths, and weaknesses. Strengths, they also offer personal loans, and they offer credit card recommendations. So it’s not just for your business. It’s also for you personally, whether you have a business or not. But the problem is that there is a lack of transparency in their website, and you got to beware of the platform. It won’t show you everything. They work a lot like Lendio. As I said, it’s a marketplace. Some businesses, especially new ones, will have an easier time getting a loan than anywhere else. You can get lines of credit if you’re established business of two years more, at 7%. And you can get personal loans up to 35%. You can get short-term loans at 250,000. You can get term loans up to half a million dollars. And then the interest rates basically from low 7s, to 10.5, 11, which isn’t bad. So keep in mind that this is a business, so they’re in a business to make money. So they’re going to try to place you where Fundera is going to make basically the best referral fee. If you will, okay?
Number six, Funding Circle. Strengths, up-front cost, and fee information. They’re pretty transparent with their fees. So the opposite of Fundera, Funding Circle, it’s known basically as peer to peer lending, P2P lending for large loans. What does that mean? Funding Circle will pull the investors together, high net worth individuals that have money to lend, and they will put them together and then collectively lend to small businesses like yours. So they will be very transparent. It’s a highly regulated industry. So they’re very transparent on their fees. Upfront, you’re going to know exactly what you’re going to get in terms of the interest rate, your repayment terms, any pre-payment penalties. They have low starting rates. They have excellent customer services. Several of my clients have gotten loans. It’s been a very easy experience.
But they also have some weaknesses. This is not the loan that you get if you want a quick and easy answer. They have exclusive borrower preferences. There are certain industries that they won’t go to. They prefer the mature businesses, three years plus with solid financials, but that quite couldn’t get a loan from a bank. For instance, say you are a business that already has a loan with Bank of America, and you have a line of credit with Bank of America itself. So you have a loan, you have a line of credit, and you probably took an SBA loan. So you really are getting near the capacity of your debt service published ratio and your debt to equity ratio, but they will take a chance. They may not mind being in third position, but that may cost you 11.5% APR on a five-year term loan for, say, up to half a million dollars. But for some folks, it’s a great way, and there are no pre-payment penalties. So, that’s Funding Circle.
Number seven, Kabbage. We’re in 2020. As the recording of this video, Kabbage has just entered into an agreement to be purchased by American Express. So American Express is purchasing Kabbage. But they have loans up to 250,000, and this is changing because who knows what’s going to happen once they’re going to be in the ecosystem for American Express, which is one of the largest financial companies in the world. But they used to offer lines of credit pretty much like Fundbox. And they have an automated, robust back-office application that just requires a connection with your bank account. I believe that at some point, they were associated with QuickBooks Online, but I don’t see them anymore. I haven’t seen them in a while, but the application is just the beginning of a relationship with Kabbage. They would want you to bank with them. They would want you to get lines of credit. They would want you to keep coming back. They want you to be part of their ecosystem. So they’ll be willing to let go of some of the requirements because they’re in growth mode. So, that’s on Kabbage.
Accion. What is Accion? I have some experience, not as much experience with them as I’ve done with all the other platforms, but they are best for startup business loans. So if you’re a startup, this is definitely for you. Okay? They are a nonprofit community lender dedicated to helping entrepreneurs generate income, build assets, and create jobs, and achieve financial success through business ownership. So they are pro-business. They have a network of small business communities and what they do is they lend through their community development financial institutions, also known as CDFIs.
So, it’s a pretty cool proposition if you are a startup, but there are some drawbacks. They probably will not give you more than 15,000. So if you want more than $15,000, you probably want to go elsewhere because they really zero in on, they give you the starting capital to kind of get you started, basically seed capital. They’re known for their seed capital, okay?
Next, number nine, it’s Ondeck. OnDeck is best if you’re looking for repeat borrowing. So, for instance, if you’re doing projects and you need financing for those projects, and you’re going to keep getting loan after loan and paying them off, OnDeck’s will probably be your best. If you think you’ll be taking several short-term loans over the next few years, take a look at OnDeck. They’re not my go-to place. That’s why they’re number nine on my list, but they offer incentives like lower rates and reduced fees for their good customers. So they may pack their fees at the beginning. But if you’re coming back for another loan, they will be discounting the rates massively. So, they’re the kind of lending company that you either love it or hate it. I have customers that absolutely love them. And there are some that don’t want to deal with them at all. But they have a place in the marketplace. They have higher application requirements than some of the other lenders that we’ve covered. So if you’re a brand new business, this is probably not the place for you. Okay?
And last but not least, Lendr. I left this last because I would consider Lendr as a last resort. And the reason for that is because they are into factoring. This is not quite a loan. There are two products that they’re known for, factoring and merchant cash advance, also known as MCA. Here is the deal. So they don’t deal in terms of, and I don’t think you’re going to find it at any other website. Actually, it’s what it says. So it’s not bad considering that you’re not really getting a loan. So what they are charging you is they basically leverage your invoice against a fee. So they’re securing their loan against your invoice. Now it’s particularly good if you have national merchants, say you deal with Walmart and Costco, and Target, the big retail players, and you deal with them, and then you have, say, a $20,000 invoice. Well, you know what it’s going to cost you. A thousand dollars per invoice, if it is a $20,000 invoice, it’s three to 5%. It’s not the cheapest kind of money, but it has some value.
And some of you, because of your FICO and because of your history, if you’re a startup less than six months in business, your FICO is not 600, and you’re not cashflow positive. So the only thing that you got is basically factoring. But you’ll get the funding that you need as you build your credit. And make sure that if you do that, anything that you do is reported to Dun & Bradstreet and Experian because you really want to build your business credit. And there’s another video I’m going to do about really how to leverage your EIN. That’s a video for next week.
So there you go. Those are the top 10 places to go to if you’re looking for a business loan for your small business. Thanks. Please comment below and let me know which loan of the ones we went through is the best one for you and why. Also, if you want to join a community of like-minded successful entrepreneurs, just like you, then join the Facebook group at the link below, where I share tips, tactics, and strategies for how my clients are growing their businesses to seven figures and beyond.
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