Breakout Capital Review

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Phone Number
888-318-3534
Date Established
2015
Location
McLean, VA

Highlights

  • Short-term business loans
  • Bridge loans
  • Invoice factoring
  • Prepayment discounts
  • No double dipping
  • Daily, weekly, or monthly repayments
  • Fast time to funding
  • Transparent service
  • Friendly customer service

Overview

Launched by former investment banker Carl Fairbank in 2015, Breakout Capital is a business funder that offers short-term business financing solutions to eligible merchants.

Often, companies in the short-term funding space have a reputation for being non-transparent and offering expensive, inflexible, confusing products. Breakout Capital is attempting to dispel that reputation by providing transparent, flexible financing options and educating merchants on business financing.

Breakout currently offers offers four short-term financing solutions: Standard Term Loans, Monthly Remit Loans, BridgeConnect Loans, and Factor Capital (a combination of invoice factoring and a short-term loan). All financing solutions are tailored to meet the needs of the business; depending on your situation, Breakout may offer daily, weekly, or monthly repayments, or may offer to reduce your rates if you take steps to improve the creditworthiness of your business. Additionally, many of their loans operate like quasi-lines of credit, meaning that merchants have the option of borrowing (or re-borrowing) additional capital if necessary.

Along with supplying their own financial products, Breakout will evaluate your business to determine if you are better suited for products the company doesn’t provide; if so, they will hook you up with a funder that does offer the right product.

If you are looking for business funding, but don’t know exactly what you’re looking for, Breakout may be a good fit for your business. Because the company places an emphasis on educating merchants, offers very flexible financing products, and is willing to refer businesses to other funders when necessary, Breakout is certainly worth including in your comparisons.

Interested in learning more? Read on for the details!

Services Offered

Breakout Capital offers three products:

  • Standard Term Loans
  • Monthly Remit Loans
  • BridgeConnect Loans
  • Factor Capital
  • Business funding matchmaking services

Borrower Qualifications

Breakout Capital offers four loan products—Standard Term Loans, Monthly Remit Loans, BridgeConnect Loans, and Factor Capital. Eligibility varies depending on the loan:

Standard Term Loans, BridgeConnect Loans, and Factor Capital

Time in business:1 year
Credit score:600
Revenue:$10K/month

All three loans require at least a year in business, a credit score of 600, and a monthly revenue of at least $10K. Your business does not have to be profitable to qualify for a loan.

Monthly Remit Loans

Time in business:3 years
Credit score:640
Revenue:$10K/month

In addition to the above, your average daily bank balance must be at least twice the size of the monthly payment. Like Breakout’s other three loans, your business does not need to be profitable to qualify for a Monthly Remit Loan.

Rates and Fees

Breakout Capital currently offers four different loan products. The product you’re personally offered will depend on the needs and strength of your business. As stated above, if Breakout feels that your business is better suited to a product that is not offered in-house, they’ll hook you up with a financial partner that is able to offer that product.

A note on fees: Instead of charging interest, Breakout Capital calculates the fee for borrowing via a factor rate (sometimes called a “buy rate”). Unlike interest, which accrues over time, the fee is calculated before borrowing and does not change over the life of the loan.

Normally, borrowers have to repay the full fee on a loan with a factor rate, even if you refinance or repay the loan early; however, Breakout Capital offers discounts to people who repay early, and forgive the remaining fee if you refinance your loan with them (not forgiving the remaining fee is a practice known as double dipping).

Factor rates are typically written as a decimal, but might be written as a percentage. For example, you might have a factor rate of 1.2, or 20%. In other words, you fee will be 1.2 times the borrow amount, or 20% of the borrowing amount. For example, if you are borrowing $10,000 and you have a factor rate of 1.2, your fee will be $2,000, for a total repayment of $12,000.

All Breakout Capital loans use factor rates in lieu of interest. Here is more specific information on each product:

Standard Term Loans

Borrowing amount:Max $250K
Term length:6 – 24 months
Factor rate:1.25% to 3.5% per month
Origination fee:2.5%
Effective APR:Learn more
Collateral:Blanket lien and personal guarantee

Breakout Capital’s Standard Term Loan is a short-term loan product similar to the ones offered by lenders such as OnDeck and Credibly.

The loan is repaid in fixed installments on a daily, weekly, or monthly basis. Aside from the factor rate, borrowers are charged an origination fee of 2.5% of the borrowing amount. Otherwise, Breakout does not charge any extra fees.

Monthly Remit Loans

Borrowing amount:Max $200K
Term length:12 – 24 months
Factor rate:1.25% to 2.5% per month
Origination fee:2.5%
Effective APR:Learn more
Collateral:Blanket lien and personal guarantee

The Monthly Remit Loans are short-term loans with monthly repayments. As shown above, the Monthly Remit Loans have higher borrower qualifications than Breakout’s other loans—you have to be in business at least three years and have a credit score of 640 or above to qualify.

BridgeConnect Loans

Borrowing amount:Max $250K
Term length:1 week – 24 months
Factor rate:Starts at 1.25% per month
Origination fee:2.5%
Effective APR:Learn more
Collateral:Blanket lien and personal guarantee

This loan is intended for businesses that only need a loan for a short time, generally because they’re waiting for other financing to come in (such as an SBA or bank loan). The loan can range anywhere from one week to 24 months in length, depending on the needs and strength of your business.

In anticipation that the loan is going to be repaid early, Breakout offers “aggressive early repayment discounts,” in which the borrowing fee is discounted depending on how early you repay.

Factor Capital

Borrowing amount:Max $150K (for loans)
Max $5M (for factoring)
Term length:Max 24 months (for loans)
Max 90 days (for factoring)
Factor rate:Starts at 1.25% per month (for loans)
0.5% – 4% per month (for factoring)
Origination fee:2.5%
Effective APR:Learn more
Collateral:Blanket lien and personal guarantee

Factor Capital is a combination of invoice factoring and a short-term loan. If you are a B2B business that processes invoices, but you need a loan in addition to selling your unpaid invoices, Factor Capital might be a good fit.

Breakout offers both loans and invoice factoring in-house, but might refer you to another factoring company if there’s one that better suits the needs of your business.

Application Process

To get started with Breakout Capital, you can fill out a pre-qualification or application form on the website, or call up customer service to talk to a representative. You will be required to submit basic information and documents about yourself, your business, and what you’re looking for in a loan.

Breakout will use the information to determine the best loan for your business, whether that’s via one of their products or something offered by one of their partners.

Sales and Advertising Transparency

Breakout Capital’s website provides a fair amount of information regarding rates, fees, and other information that might help merchants understand the products and easily compare this funder’s rates and fees. The customer service is also willing to disclose information and educate potential customers on the products.

It is worth noting that Breakout Capital is a member of the Innovative Lending Platform Association which is, according to the organization, a group that is “dedicated to advancing best practices and standards that support responsible innovation and access to capital for small businesses.”

Customer Service and Technical Support

Customer service is available via phone, email, or live chat.

Online customer reviews cite the customer service as a positive aspect of Breakout Capital, claiming that representatives are responsive, transparent, and not pushy. All my experiences with Breakout staff have been similarly positive.

The website also includes a number of other resources, including informative articles on their blog aimed at helping merchants understand business financing and loan concepts, an APR calculator, and an explanation of double dipping.

Negative Reviews and Complaints

Breakout Capital is accredited on the Better Business Bureau with an A rating. Currently, the company has no reviews or complaints on this platform.

Otherwise, the Breakout Capital has a presence on TrustPilot, with about 60 reviews. All reviews are positive (with a 4- or 5-star rating), and the company currently has an aggregated rating of 9.2/10.

Regardless, here are some problems that borrowers may come across in regards to Breakout’s products:

  • Short term lengths: Breakout’s business loans currently cap at a maximum term length of two years (though the term lengths can be extended if you borrow additional capital). If you’re looking for something with a longer term, a loan from Breakout may not be the right fit.
  • Expensive fees: Compared to other forms of business financing, such as bank and SBA loans, Breakout’s products may be more expensive than what you’re expecting.

However, keep in mind that Breakout is interested in helping merchants improve their creditworthiness and graduate to less-expensive or longer-term products. Even if you are not eligible for alternative products yet, you may be in the future.

Positive Reviews and Testimonials

The largest source of positive reviews comes from Breakout’s TrustPilot page. Here are some common praises of Breakout’s products:

  • Transparent, helpful customer service
  • Fast time from application to funding
  • Little documentation required
  • Flexible financing options

Customers also like Breakout’s renewal process, which is expedited (because they have most of your information), and cheaper than usual (because Breakout doesn’t double dip, a practice that is essentially paying interest on interest).

We’d like you to join the conversation, though. Do you have experience with Breakout Capital, either good or bad? Leave a message in the comments!

Final Verdict

Breakout Capital’s financing products may be helpful for merchants in need of short-term financing, whether that’s through loans or invoice factoring. Between the wide range of products and repayment frequencies available, the prepayment discounts (and no double dipping policy), and the easy renewal process, it’s apparent that the company is interested in offering fair, helpful products to their customers.

In addition, because Breakout’s borrower qualifications are relatively low, this funder will be able to work with businesses that might not qualify for loans from other places.

Naturally, however, it’s best to make some comparisons before settling on an offer from Breakout Capital (or anywhere else). Looking for some other lenders that might fit your needs? Check out some of our other short-term funder reviews.

Bianca Crouse

Bianca Crouse

Bianca is a writer from the Pacific Northwest. As a product of the digital age, she likes absorbing large amounts of information and figures she might as well pass it on. When not staring at a screen, she is probably foraging for food outside, playing board games, or harassing somebody with theories about that movie she just watched.
Bianca Crouse
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