- Business installment loans
- Working capital loans
- Business expansion loans
- Competitive interest rates
- Bi-weekly payments
- No prepayment penalty
- Excellent customer service
Fundation is a business lender that offers medium-term installment loans to qualified borrowers.
The company was founded in 2011 and has quickly become one of the top funders in the alternative lending space, for good reason: the terms and fees are just about the best you can get outside of a bank or credit union, and the time from application to funding beats out banks by weeks (if not months). On top of that, Fundation’s advertising is transparent, their customer service is fantastic, and there are virtually no negative reviews of the company to be found on the web.
In other words, if you don’t qualify for a bank loan or don’t want to spend the time applying for one, Fundation may be the next best thing.
That said, many smaller businesses won’t meet the lender’s qualifications: you have to have been in business at least two years, have at least three full-time employees, make a minimum of $100K per year, and have a credit score of 600 or above.
Not to worry: if you don’t meet those qualifications, there are other reputable lenders that might work. However, if you’re close to meeting the qualifications, I would still encourage you to apply; the customer service will tell you what you need to do to meet qualifications and help you consider other financing options.
Read on for the full review, or check out our other favorite lenders.
Fundation offers two fixed-rate loans:
- Working capital loan
- Business expansion loan
These are the minimum qualifications required to be eligible for a loan from Fundation:
|Time in business:||2 years|
Additionally, your business must have at least three full-time employees (yourself included).
Terms and Fees
These are the terms and fees stated on Fundation’s website:
|Borrowing amount:||$20K – $500K|
|Term length:||1 – 4 years|
|Origination fee:||2% – 3%|
|APR:||7.99% – 29.99%|
|Collateral:||Personal guarantee, UCC-1 blanket lien|
Technically, Fundation offers two different loans: a short term and a long term loan. The short-term working capital loan has a term length between 1 and 2 years, with a maximum loan amount of $150K. The long term business expansion loan has a term length between 2 and 4 years, with a maximum amount of $500K.
Both products are fixed rate installment loans, which means that the loan has a set term length, and the interest rate will not change over the life of the loan. Every two weeks until the loan is paid off, Fundation will deduct a fixed amount of money from your bank account via ACH.
To apply for a loan from Fundation, you start by filling out the application on their website.
The application will ask for information about you, your business, and your potential loan. Most of the information is fairly basic: what kind of business you own, annual revenue, number of employees, etc. To gauge the strength of your business, at some point they’ll want your business tax ID, three months of bank statements, and two years of business tax returns. However, if you give permission, Fundation can retrieve that information on their own.
What I really like is that throughout the application process, Fundation will interpret what all your information means. Own a coffee shop? Fundation will tell you the historical delinquency rate of coffee shop borrowers. Only been in business for 2 years? Have 8 full-time employees? Fundation will tell you if those characteristics are good or bad.
At the end of the online application, you might be presented with an estimated quote, depending upon how much information the system could gather based on your application.
Regardless, before getting a real loan offer, everybody has to talk to a Fundation “customer relationship manager.” Sometime in the 24 hours following the completion of your application, a rep will get a hold of you to discuss your business, your application, and to make sure that you understand the lending and repayment process.
After you’ve talked to a rep and provided all necessary documents, your application will be sent through underwriting and you will be presented with a final loan offer. When you accept and sign the loan agreement, the money will be sent to your bank account.
The time from application to funding generally takes between 2 and 7 days.
Sales and Advertising Transparency
Fundation’s website discloses just about everything you’d want to know before applying for a loan: minimum qualifications, term lengths, APR range, collateral, repayment, and fees. Potential borrowers shouldn’t encounter any surprises during the application and funding process.
Additionally, the website abounds with plenty of educational material. For example, there is information about how interest rates are determined, and this calculator, which explains the difference between loans that use interest rates and those that use fixed fees.
Customer Service and Technical Support
Customer service is available by phone and email.
Merchants are generally happy with Fundation’s customer service. They claim that the reps are actually interested in educating merchants on the loan and the process and appear invested in getting you the capital that you need.
The website also has a fairly thorough FAQ. Although the FAQ appears to be aimed at merchants who haven’t yet taken out a loan, it also includes some information that might be useful for those who’ve already gone through the process as well.
Negative Reviews and Complaints
Complaints about Fundation are sparse.
Nonetheless, here are some complaints that customers might have about the service:
- High interest rates: Fundation’s interest rates are undoubtedly higher than those of a bank or SBA loan. However, this lender’s rates are comparable to other mid-prime lenders such as Lending Club and Funding Circle, and tend to be less expensive than other short-term financing products.
- High qualifications: With mandatory minimums of 2 years in business and 3 full-time employees, some merchants may not meet Fundation’s borrower qualifications. Unfortunately, if you don’t meet those requirements, you’ll have to look elsewhere for financing.
Positive Reviews and Testimonials
- Personal touch: The customer service takes the time to get to know you and your business, and wants to make sure you’re informed about the whole process.
- Fast funding rate: Time to funding is usually a week or less. When you consider that the process to get a bank loan or SBA takes months, a week starts to look pretty darn quick.
- No prepayment penalty: You are not penalized for being proactive about repaying your loan.
- Low interest rates: While some people complain about high interest rates, many people are happy with the rate that they received.
If you have an established business that doesn’t quite qualify for a bank loan, or you don’t have the time to go through the lengthy process, Fundation may be a good choice. Customer service is informative and helpful and the rates and fees on offer are competitive with others in the industry.
That said, you cannot know your personal rates until you apply. Because each lender has their own underwriting standards, your rates will vary from lender to lender. To ensure you’re getting the best deal, it’s best to compare your options between a couple lenders. Interested in making some comparisons? Check out some of our other favorite lenders.