Funding Circle Review
- High borrowing amounts
- Monthly repayments
- No prepayment penalty
- Few additional fees
- Customer service is helpful
- Borrower qualifications might be hard to meet
- Financing isn’t available in some states
- Not available to businesses in some industries
Funding Circle is an online lender that originated in the UK. Funding Circle later merged with Endurance Lending Network to expand its services to the US. This review focuses specifically on the US branch of Funding Circle.
Funding Circle offers medium-term installment loans (commonly referred to as term loans) to established businesses. Term lengths range from six months to five years. Besides interest and an origination fee, Funding Circle charges no fees (as long as you make payments on time) and has competitive rates.
Unfortunately, these requirements rule Funding Circle out as an option for less-established small businesses and startups. However, if you do meet the qualifications, Funding Circle can be a good lending option. The caveat is this: businesses that qualify for Funding Circle will most likely be able to get a better rate from an actual bank. However, if you don’t have the time or don’t want to deal with a long, complicated application process, Funding Circle is definitely an alternative worth considering.
Final Verdict: Funding Circle is a good option for small businesses at least two years old. Although slower than some other online lenders, the Funding Circle application process is faster than many banks. However, businesses that have the time and resources might want to see if they can get better rates from a bank.
Table of Contents
Funding Circle offers installment loans. Also sometimes called “term loans,” installment loans deliver a lump sum of cash upfront in exchange for a promise to repay the amount borrowed plus accumulated interest or a flat fee. The loan is repaid in regular, even installments.
These are the qualifications you must meet to qualify for a Funding Circle loan:
|Time In Business:||2 years|
Also, you cannot have had any bankruptcies over the last seven years or any tax liens over the last 10 years. There is no specific requirement for how much revenue a business must make every year to qualify for a Funding Circle loan. Additionally, Funding Circle does not offer loans to businesses based in Nevada, citing the state’s lending regulations.
Funding Circle also enforces a prohibited industry list, which includes:
- Speculative real estate
- Nonprofit organizations
- Weapons manufacturers
- Gambling businesses
- Marijuana dispensaries
You can use Funding Circle’s loans for a variety of purposes. The one restriction the company specifies is that the loan cannot be used to settle personal debt.
Terms & Fees
These are the terms and fees for Funding Circle:
|Term Length:||6 months -5 years|
|Collateral:||Personal guarantee, a lien on business assets|
Funding Circle offers installment loans with term lengths between six months and five years. Your interest rate is determined by your creditworthiness, the strength of your business, and other factors, such as your business type, how long you’ve been in business, and your real-time cash flow. Your interest rate is also affected by the loan’s term length. It is, however, a fixed interest rate, so once it’s set, that will be your interest rate for the life of the loan.
Because Funding Circle offers installment loans, you can save money on interest costs by paying off your loan early. There are no prepayment penalties. Payments are made monthly and begin the day you accept the loan (not the day you receive the funds). You can use the information on Funding Circle’s support page and our loan calculator to get an idea of how much your monthly payments might be.
Apart from an origination fee and interest, the only other fees you might be charged are for insufficient funds or late payments. This fee is equal to 5% of the missed the payment.
To apply for a Funding Circle loan, you will first have to complete an initial application online to see if you’re “prequalified” for a loan (meaning, “see if your business meets Funding Circle’s minimum qualifications for funding”). Funding Circle does a soft check of your personal credit for the initial application.
Once preapproved, you’ll be given a quote with an estimated interest rate. A Funding Circle representative will call to discuss your quoted loan options and assist you with any questions. Next, you’ll need to provide additional documentation and information about your business. If your business is organized as a general partnership, Funding Circle will do a hard credit check at this point, which may affect your credit score. However, the hard check is not required for most applicants. According to Funding Circle, you’ll need the following documents:
- Two years (most recent) of business tax returns
- One year (most recent) of personal tax return
- Six months (most recent) bank statements
- Business debt information
Once you’ve had your consultation and submitted all the appropriate documents, your application will go through underwriting. Within a day, Funding Circle will send you an offer, including your interest rate and origination fee. If you choose to accept the offer, you’ll receive your funds within a few days. According to Funding Circle, the entire application process usually takes five days or less.
Sales & Advertising Transparency
Funding Circle has a well-designed website and is upfront with information about its lending services. You can learn pretty much everything you need to know on the Funding Circle website, with handy tools, such as calculators and borrowing guides. The company is also a signatory of the Borrower’s Bill of Rights, in which companies promise to be fair and transparent about lending practices. While there’s wide variation in borrowing rates, you should have a pretty good idea of what you’re walking into.
Customer Service & Technical Support
Funding Circle offers phone support and email support. You can also follow them on Facebook, YouTube, Twitter, and LinkedIn. You are assigned a specific account manager for the life of your loan, who will help you understand your loan and repayment options and address any other questions you may have. According to customer reviews, borrowers are happy with the level of support they receive.
Negative Reviews & Complaints
Funding Circle USA, Inc. currently has 42 reviews and 15 complaints closed within the last 12 months with the Better Business Bureau. Interestingly, the last 12 months account for all but one of the complaints. If that sounds PPP-related to you, you’d be correct. Around 11% of the 8,820 user reviews on Trustpilot are “poor” or “bad.”
Aside from the frustrations about the PPP, which are not even remotely unique to Funding Circle, the majority of the complaints are from investors who are frustrated with the investing side of Funding Circle’s service. Complaints from borrowers are more limited. Here are some of the most common complaints about Funding Circle:
- High-Interest Rates: Compared to bank loans, you might pay more for Funding Circle’s services.
- Long Application Process: Compared to other alternative lenders, Funding Circle’s application process is slower.
- Discrepancies Between Sales & Offers: A few customers reported that the rates they were offered and the rates they received didn’t match up.
- Not For New Businesses: You have to have been in business for two years to qualify for funding from Funding Circle.
It’s also worth noting that Funding Circle regularly responds to customer complaints and works hard to correct problems.
Positive Reviews & Testimonials
Funding Circle receives high praise across the board from the majority of reviewers. The company is BBB accredited and gets an A+ rating. Funding Circle currently receives 4.4 out of five TrustScore. Here’s what users love most about this service:
- Easy Application Process: Borrowers found the application to be straightforward and easy to complete.
- Good Customer Service: By far, this is the most common point of praise. Borrowers appreciate how friendly the representatives are and seem satisfied with the level of support given by their specific account managers.
- Quick Funds: Many borrowers like how quickly they were able to apply and receive funds, especially in comparison to the time it would have taken to apply for a bank loan.
Funding Circle’s competitive interest rates and easy application process can be worth looking into for established businesses that have a strong credit history.
While the application process takes longer than that of some other online lenders, it is significantly shorter and simpler than applying for a loan from most banks. Banks may be able to offer better rates than Funding Circle, but the quick access to capital might be worth accepting the trade-off. The small number of complaints, excellent customer service, and the company’s transparency are also great things.
As always, we recommend considering all of your options before accepting a loan so that you can be sure you’re getting the best deal. If you’re interested in other options, check out some of our favorite small business lenders.