Breakout Capital Review

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Date Established
2015
Location
McLean, VA

Pros

  • Suited for small businesses
  • Relaxed borrower qualifications
  • Competitive terms and fees
  • Excellent customer support

Cons

  • Potentially high factor rates

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 opaque and offering expensive, inflexible, and 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 short-term business loans to small businesses. Of particular note is a product called FactorAdvantage — a business loan designed to be used in conjunction with invoice factoring. All business loans are tailored to meet the needs of individual businesses; 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, the loan operate like quasi-lines of credit, meaning that merchants often 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 offers the right product.

If you need 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 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 business loans. It also offers business funding matchmaking services.

Borrower Qualifications

Most of Breakout Capital’s loans carry the same minimum requirements, but the requirements for FactorAdvantage are a little different.

Business Loans

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

Breakout’s standard business loans require a minimum of one 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.

FactorAdvantage

Time in business:N/A
Credit score:N/A
Revenue:N/A

Because FactorAdvantage is designed to be used in conjunction with invoice factoring services, Breakout does not require any specific time in business, revenue, or credit score.

Rates & Fees

Breakout Capital offers standard business loans and FactorAdvantage. 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.

Business Loans

These are the terms and fees for most of Breakout Capital’s business loans:

Borrowing Amount:Up to $250,000
Term Length:Up to 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 business loans are tailored to the needs of the business. Depending on your requirements and the strength of your business, you might be offered a loan that is repaid on a daily, weekly, or monthly basis. The maximum term length you will be offered is 24 months (or two years).

Note that, instead of charging interest, Breakout Capital uses a factor rate to calculate the borrowing fee. Unlike interest, which accrues over time, this fee is calculated before borrowing and does not change over the life of the loan.

Factor rates are typically written as decimals, but Breakout writes them as a percentage. For example, you might have a factor rate of 1.2, or 20% (your fee will be 1.2 times the borrowing amount or 20% of the borrowing amount). If you are borrowing $10,000 and you have a factor rate of 20%, your fee will be $2,000, for a total repayment of $12,000.

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).

FactorAdvantage

Borrowing Amount:Up to $500,000
Term Length:Up to 24 months
Factor Rate:Starts at 1.25% per month
Origination Fee:2.5%
Effective APR:Learn more
Collateral:Blanket lien and personal guarantee

FactorAdvantage is a combination of invoice factoring and Breakout Capital’s business loan product. To offer this product, Breakout Capital works with invoice factoring companies; the company does not currently factor invoices itself.

Aside from a higher possible borrowing amount, the terms are the same as those you’d get with Breakout Capital’s other business loans.

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 & 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. Customer service reps are 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, a group that claims to be “dedicated to advancing best practices and standards that support responsible innovation and access to capital for small businesses.”

Customer Service & Technical Support

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

Online customer reviews cite 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 blog articles aimed at helping merchants understand business financing and loan concepts, an APR calculator, and an explanation of double dipping.

Negative Reviews & Complaints

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

Breakout Capital has a presence on TrustPilot, with about 80 reviews. Almost all reviews are positive (with a 4- or 5-star rating), and the company currently has an aggregated rating of 9.3/10.

That said, here are some problems borrowers may encounter with 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/SBA loans, Breakout’s products are expensive.

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 & 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 flexible loan terms, 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 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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