Breakout Capital Review

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

Highlights

  • Short-term business loans
  • Merchant cash advances
  • Prepayment discounts
  • No double dipping
  • 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 offers short-term business loans to qualified merchants (and merchant cash advances on request). Business loans 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 may 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:

Borrower Qualifications

To qualify for Breakout Capital’s business loans, you must meet or exceed these business benchmarks:

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

Rates and Fees

Breakout Capital offers short-term business loans. The company also offers merchant cash advances upon request, though I have not included the statistics here. Here are the rates for Breakout’s business loans:

Borrowing amount:$6K – $250K
Term length:6 – 24 months
Factor rate:x1.01 – x1.04 per month
Origination fee:2.5% – 4%
Effective APR:Learn more
Collateral:Blanket lien and personal guarantee

Breakout Capital’s business loans have term lengths ranging from six to 24 months. Borrowers repay a fixed amount in periodic installments. In the case of Breakout Capital, you may have the option of repaying on a daily, weekly, or monthly basis, depending on the needs and strength of your business.

Instead of interest, Breakout Capital charges a flat fee, also sometimes called a “factor rate” or “buy rate.” The total repayment amount is calculated by multiplying the flat fee by the principal. For example, if you had a 12-month loan of $10,000 with a fee of x1.01 per month, you would have to repay $11,200. The calculation looks like this:

1.01 x 12 months = 1.12

$10,000 x 1.12 = $11,200

To compare your offer from Breakout to other options, and understand the cost of borrowing, the lender offers an APR calculator on their website.

Normally, because Breakout charges a fixed fee instead of interest rate, you would not be able to save money by repaying the loan early. However, Breakout offers an early repayment discount to those who repay before their term is up.

In addition, Breakout is an outspoken opponent of double dipping, a practice used by many short-term lenders in which merchants essentially pay interest on interest for loan renewal. To avoid double dipping, if you renew a loan from Breakout Capital, the unpaid fee is canceled before the remaining principal is rolled into the new loan.

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 steering committee member of the Coalition for Responsible Business Finance which is, according to the organization, a group that works to “improve best practices” in the alternative small business lending space.

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 30 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. Between the wide range of repayment frequencies available (daily, weekly, or monthly), 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 other lenders might not touch.

Naturally, however, it’s best to make some comparisons before settling on an offer from Breakout Capital (or anywhere). 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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