CIT Direct Capital Review
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- Date Established
- Portsmouth, NH
- Low factor rates
- Good public reputation
- Opaque terms and fees
- Stringent borrower qualifications
CIT Direct Capital is a New Hampshire-based online funder serving small businesses; it is a division of New Jersey-based CIT Bank. The company offers several categories of financing: working capital, equipment financing, SBA loans and franchise financing. This review will focus on Direct Capital’s working capital line.
Direct Capital makes a much better first impression than most online funders, with both better short-term loan (STL) rates and transparency than many of its competitors. There is a small tradeoff, though: companies with really poor credit might not qualify for financing.
Table of Contents
Direct Capital offers:
- Short-term loans
- Equipment financing
- Franchise financing
- SBA loans
These are the minimum qualifications for getting working capital from Direct:
|Time in business:||2 years|
|Revenue:||$100,000 per month|
You also need to own at least 50% of your business.
Terms and Fees
Here are the terms and fees for Direct’s STLs:
|Borrowing amount:||Up to $250,000|
|Term length:||6 – 18 months|
|Fixed fee:||9.99% – 18% of the borrowing amount|
|Origination fee:||1% (for first-party loans), higher for third-party|
|Effective APR:||Learn more|
Like most short-term funders, Direct uses factor rates rather than interest rates to calculate its loans. So if you were to borrow $10,000 at 9.99%, you would have to pay back $10,999 ($10,000 x 0.0999 + $10,000). Another way to look at it: for every $1 you borrow, you’ll have to repay between $1.09 and $1.18.
This does not include any origination fees Direct may charge. If Direct originates the loan itself, the fee will be around 1% of the amount you borrow. If Direct can’t help you, you may still be able to get you a loan through one of its partners, in which case you should expect a higher origination fee.
If you’ve never taken out an STL before, the repayment method might come as a bit of a surprise. Rather than send Direct a monthly check, you’ll be making daily or weekly payments. These payments are debited from your business account via automated clearing house (ACH).
Note that a counterintuitive feature of fixed fees is that your interest is front-loaded into your loan, which means you’ll have a higher effective APR the more quickly you pay your loan off. Keep in mind, however, that many funders will factor term length into their fees so that longer term lengths tend to carry higher fees.
You can begin the application process online or over the phone.
Completing an STL application usually involves providing some corroborating documents such as bank statements, so if you want to expedite the process, you may want to have them handy. If all goes well, you can get same day funding. More realistically, you’ll get your funding within three days.
Sales & Advertising Transparency
Direct Capital’s website is better than that of most short-term funders, offering most of the key statistics you need. The caveat is that the site doesn’t give complete ranges for all Direct’s products.
Customer Service & Technical Support
Direct Capital’s staff was helpful and responsive to my inquiries with almost no gratuitous sales pressure. You can reach Direct Capital via its toll-free number. The company can also be reached through its Facebook, Twitter, and LinkedIn accounts.
Most customers who left user reviews were also happy with the service they received.
Negative Reviews & Complaints
Direct Capital has a C- rating with the BBB and has received 92 complaints over the last three years, most of which involved problems with the product/service or billing issues. General criticisms include:
- Unclear terms: Many of the complaints revolved around unexpected fees or terms.
- Billing logistics: One customer said the automated billing continued after the completion of their loan.
- Difficulty reaching customer service: Some customers complained they had a hard time reaching relevant staff.
Positive Reviews & Testimonials
Direct Capital gets a 9.2 out of 10 on Trustpilot (based on 174 reviews). Customers liked Direct Capital’s:
- Customer service: Many users were satisfied with customer service, calling it prompt and pleasant to deal with.
- Speed: Customers appreciated how quickly they received their funds.
- Flexibility: A lot of customers liked the breadth of Direct Capital’s services.
CIT Direct Capital stands out from that of many of its competitors by offering not-too-unreasonable rates for working capital quickly. The company is also more transparent than the average online funder, which is usually a good sign. On the other hand, there are a fairly high number of complaints to the BBB.
As always, approach even the better online funders with caution. If you want to see what else is available, check out our comparison charts of merchant cash advances and small business loans for alternatives.
Business Loan Rating Criteria.