Knight Capital Funding Review

Pros

• No credit score requirements
• No prepayment penalties
• Applicants can be quickly prequalified
• The application process is fast and easy
• Funds are disbursed quickly

Cons

• Rates can be expensive
• Some additional fees charged
• No long-term financing options available

Knight Capital Funding Overview

Knight Capital Funding is a Florida-based funder that provides merchant cash advances (MCAs) to small businesses. Knight’s offerings differ from traditional loans in one important way: Rather than make monthly payments toward your principal plus interest, you’ll pay Knight a percentage of your sales revenue every business day until you’ve paid off the total amount owed.

Knight strikes me as a fairly typical MCA, albeit one that is slightly more transparent than most. The company’s been around for about six years now but still has a small review footprint. What’s out there is mixed, so proceed with caution.

Note: You should always approach the world of alternative funding with caution; the rates are often usurious, and the terms can be punishing for the unprepared or unlucky. You should always make sure you’ve exhausted other potential sources of funding first (take a look at our handy short-term funding comparison chart to make sure).

Services Offered

Knight offers the following types of business funding:

• Merchant Cash Advances: Once approved for a merchant cash advance, your funder will purchase a percentage of your future credit/debit card sales. Funds will be deducted from your card-based sales each business day until the funder has collected the amount it’s purchased.

Borrower Qualifications

Because it offers MCAs, Knight Capital Funding is more interested in your monthly revenue than in your credit rating, although it will use your credit rating to help determine your factor rate.

To qualify for funding from Knight, you must meet these prerequisites:

Knight also looks for indications that your business has growth potential.

Terms & Fees

Here’s a snapshot of what Knight offers:

One of the first things you should know about short-term online funders is that they typically don’t charge interest, at least not in the way that banks do. Rather than apply interest over the life of the loan, Knight factors all of its costs into your fee upfront. The amount you owe won’t change over the course of the advance. Instead, Knight uses a factor rate (or fixed fee), which it then multiplies by the amount you owe. So you can expect to pay between $1.19 and $1.40 for every dollar you receive, plus the origination fee. Factor rates are calculated using a variety of determinants, though these often include your credit rating and projected term length.

Note that this system causes some strange behaviors when expressed as an APR, inverting the relationship between time and the amount of money you pay. That is, the quicker you pay off your advance, the higher your APR. That doesn’t necessarily mean that a lengthier term will have a better APR, however, as many funders will offer a lower factor rate for shorter terms. Be aware that factoring doesn’t translate perfectly to APR, but it can give you a way to roughly compare different financial products.

These days, the term “MCA” applies to a broad range of short-term funding arrangements, but Knight’s repayment system turns out to be pretty traditional. When you agree to the terms of your MCA, you’ll be signing over an agreed-upon percentage of your daily credit card sales to Knight. This amount will fluctuate depending on your sales, though Knight pledges to contact you before changing your daily repayment amounts.

The advance is paid off when it’s paid off, so in this sense, the term lengths in the table above are less about hard and fast repayment dates and more about estimating the percentage that will be held back. Knight refers to this as a “turn length” rather than a “term length.” A “turn” is equivalent to a business day on which a payment is withdrawn. Payments are withdrawn Monday through Friday, excluding holidays.

Application Process

Online funders make it easy to get the ball rolling. You can apply online with a simple form that will help Knight determine right away whether you qualify. You’ll be asked basic questions about yourself and your business, including names and revenue. If you submit the application, you’ll be contacted by an agent who will confirm your information and likely ask for some evidence that your revenue is what you say it is. That usually means providing several months’ worth of bank statements.

Funding decisions are typically made within 72 hours.

Sales & Advertising Transparency

It’s the rare, almost mythic online funder that lays all its cards on the table. While Knight is not exactly riding into battle on a unicorn, you can find a lot of useful information by going to the rate and terms page on its site. The company’s website is otherwise pretty minimalistic, offering a brief overview of what it offers as well as a blog that features mainly arguments about why you should consider short-term funding.

Customer Service & Technical Support

Knight’s staff was helpful and pleasant in my interactions with them. You can reach Knight by phone, submitting an application, or by connecting with it on Facebook, Twitter, LinkedIn, or YouTube.

User Reviews

Knight Capital Funding is accredited with the BBB and currently has an A+ rating, indicating it’s gotten better at responding to customer complaints. There’s currently only a single complaint on record. Google reviews are largely positive, and the funder ranks 4.4 out of 5 stars, with 431 reviews. There are only two reviews on Trustpilot — one extremely negative and one extremely positive. Make of that what you will.

Negative Reviews & Complaints

Criticisms include:

• Cost: MCAs are an expensive way to fund your business, and Knight Capital Funding is no exception.
• Daily Payments: The percentage-based payment system means you won’t have to worry about being able to make daily payments to Knight, but it can be difficult to meet your other costs if you aren’t prepared. A customer also had some trouble getting withdrawals stopped during the COVID-19 crisis.
• Unusual Requests: At least two reviewers complained that Knight requested their bank account username and password as a part of the application process.

Positive Reviews & Testimonials

Points in favor of Knight include:

• Easy Qualifications: As long as your business makes the profits Knight is looking for, you can probably get funding.
• Fairly Transparent: Knight doesn’t completely obscure the details about what it’s offering, which, in this business, is all too rare.
• Customer Service: I found Knight’s staff to be responsive, friendly, and helpful.

Final Verdict

Knight Capital Funding, as do most funders that offer MCAs, targets a particular niche: businesses with poor credit that need cash quickly. Knight’s rates aren’t terrible as far as MCAs go, but you’ll still want to exercise caution and make sure you’ve exhausted cheaper options before you sign on the dotted line.

Not sold on this funder? Check out our alternative suggestions page and make some comparisons.

Sources

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