Funding Circle is a lending platform that aims to help small businesses secure the finances they need. The service offers several perks that attract entrepreneurs, including an easy online application, quick payouts, and low monthly payments. But is Funding Circle worth the hype? In this review, we’ll outline the pros and cons.
Funding Circle Compared to the Best Small Business Loans
If you’re looking for the best business loan services around, check out our Golden Eggs—the brands we highlight in our list of the top small business loan services.
With a single application, Lendio matches you to one of 75 different lenders, giving your small business the best possible loan for your circumstances. Best of all, it’s 100% free to fill out that application.
Funding Circle: The Good and the Bad
As with every service, Funding Circle comes with certain strengths and weaknesses. What’s a deal breaker for one user might be no biggie for another. The important thing is knowing what the pros and cons are so you can make an informed decision.
What Funding Circle Is Good At
During our research, it became clear that there’s a lot users love about Funding Circle. They have lower interest rates than competitors, dole out cash within days after loan approval, and don’t penalize users if they pay a loan off early. Let’s take a closer look at Funding Circle’s strengths.
Lower rates: There are several factors that go into the loan rate you’ll get with Funding Circle, from the type of loan you’re applying for to how long your business has been up and running. And of course, your credit score will be one of many deciding factors.
This is true for any lender, though Funding Circle makes no promises and loan rates can vary—a lot—but Funding Circle generally offers APRs between 15.22% to 45% (as of October 2023) for term loans. For comparison, other services might offer APRs starting at 29% and going as high as 97%.
Multiple financing products: Funding Circle advertises a range of financing products through Funding Circle and their network of partner lenders, including:
- Term loans: borrow up to $25,000 to $500,000 and repay it over a term of six months to seven years.
- SBA loans: borrow $50,000 to $500,000 and repay it in up to 10 years
- Lines of credit: decide when and how much to withdraw from a business line of credit and repay it over a specific amount of time—typically 6 to 12 months.
Multiple funding options means there’s an ideal borrowing solution for just about any user who qualifies.
Dedicated account manager: After you fill out an application and get approved for an offer, Funding Circle assigns qualified applicants a dedicated account manager. When we studied reviews, users praised their account managers, often calling them out by name.
According to these reviewers, Funding Circle’s account managers help users understand their loan options, answer questions, and guide them through the entire process of securing a loan.
Quick cashouts: While Funding Circle advertises next-day funding, most loans pay out within one to five days of approval. This is still much quicker than a bank, which can take one to three months to pay out a loan after approval.
Keep in mind that different loans can come with different timelines. Because it’s backed by the federal government, an SBA 7(a) loan, for example, can take longer to process than a business term loan or business line of credit. Still, Funding Circle usually gets SBA 7(a) applicants a decision within three weeks.
Zero prepayment penalties: It’s always good to pay a loan off early, right? Not so much. Lenders profit off of the interest you pay each month, and if you pay your loan off early, they don’t get as much of that profit as they expected.
That’s why some lenders hit you with a prepayment penalty to compensate for the loss of expected profit. Funding Circle does not charge prepayment penalties if you pay your loan off early.
What Funding Circle Is Lacking
Even though Funding Circle comes with several good qualities, our research team found it inadequate in a few ways. For starters, it’s impossible for new businesses to apply for loans. In addition, Funding Circle charges high origination fees. Let’s take a look.
No support for new businesses: Small business loans can be crucial to helping businesses get up and running, but Funding Circle is not an ideal choice for startups. To apply for a loan through the Funding Circle platform, your business will need to be at least two years old.
Plus, your personal FICO score must be 660 or higher, and you—or your business—can’t have declared bankruptcy in the past seven years. Because of these strict requirements, some businesses that need loans the most won’t qualify to get them through Funding Circle.
Above-average origination fees: Funding Circle charges a one-time origination fee between 4.49% to 10.49% (as of October 2023) of a loan amount. This is higher than the average of 3% to 5%. However, the amount of the origination fee is added to your loan amount.
Other business loan funding services, such as those on our list of the top small business loans, charge lower—or no—origination fees.
Pushy marketing practices: During our research, we found dozens of customer complaints regarding unwanted communication from Funding Circle. It appears to be difficult to unsubscribe from Funding Circle marketing campaigns, including emails, phone calls, and even letters. While this isn’t necessarily a critical flaw, it’s certainly exasperating.
Funding Circle Options and Pricing
Funding Circle offers a variety of different borrowing options. Before you apply to borrow anything through this platform, make sure your business meets Funding Circle’s requirements. The business must have two years of operating history with at least $50,000 in yearly revenue. Business and personal FICO credit scores must be above 660. The three products Funding Circle advertises most heavily are a business line of credit, a business term loan, and an SBA 7(a) loan.
Funding Circle Business Line of Credit
Like a credit card, Funding Circle’s business line of credit option offers companies a set amount of money to borrow. You only pay interest on the money you use from the credit line.
A business line of credit is ideal for short-term needs. If you suddenly find that you need to cover payroll one month because several outstanding invoices haven’t been paid, for example, a business line of credit can fill the gap for you. If you promptly repay the amount you withdrew from the line of credit, you’ll be able to use that money again.
Funding Circle offers business lines of credit up to $250,000, with funds being available in as little as one day.
There’s no fee to apply for a business line of credit through Funding Circle, and you won’t need to pay a monthly maintenance fee, either. You will, however, have to pay a draw fee and a late-payment fee on any past-due amounts.
Funding Circle Business Term Loan
A business term loan gives you a lump sum that you must then repay, with interest, over a period of time. Funding Circle offers business term loans from $25,000 to $500,000 and repayment terms of up to seven years.
Loan money can become available in as little as two days. If you pay your loan off early, you won’t incur a prepayment penalty.
Funding Circle’s business term loans are ideal for businesses that are expanding. If your coffee shop is so successful that you’re running out of space, for example, a business term loan can finance a remodel to expand your seating area. You might also need a business term loan to pay employees, purchase equipment or inventory, or cover unexpected costs.
Funding Circle allows you to calculate an estimated rate, but you’ll have to fill out an application and submit the necessary paperwork to get a clear answer on pricing. Funding Circle’s homepage quotes terms of up to seven years with payments made monthly.
Funding Circle SBA 7(a) Loan
Partially backed by the United States government, SBA 7(a) loans can be tricky to apply for. Funding Circle helps you navigate the process with a network of SBA Lenders that offer in-house approvals and accelerated processing.
This gives you fast answers and even faster closings.
SBA 7(a) loans are great for startups—unless you’re applying through Funding Circle, which does not allow startups to apply. Funding Circle clients who choose to apply for SBA 7(a) loans are typically using the money to hire employees, pay off debt, or fuel their marketing strategy, according to the company.
Through their network of partner lenders, Funding Circle offers SBA 7(a) loans of up to $500,000 with a rate of Prime + 2.75%. Loan terms are 10 years.
Funding Circle in Summary
Funding Circle offers a range of options for established small businesses that need some buying power. With lower-than-average APRs, fast funding, and a dedicated account manager for each applicant, there’s plenty to like about Funding Circle.
But it’s not the only option by any means. Lendio is a great option to connect with many potential lenders, OnDeck is known for getting loans super fast, and Bluevine includes a full business banking system. Check out our Golden Eggs—and the other small business loan services we love most.