Fundera Business Funding Review - Pros, Cons and Options

For small business owners looking to escape the headache of dealing with traditional lenders for funding, Fundera can help match those businesses with non-traditional lenders to give them the cash they need.

In any given year, an estimated 50 percent of small businesses need some additional funding. Most often, they turn to traditional banks and lending institutions for these loans, given their prominence and good reputations.

However, only 30 percent of small businesses that apply for funding each year receive any money, leaving a huge gap and putting those businesses at risk of closing.

To help change the lower rate of loan approval for small businesses, Fundera was founded in 2013.

They partner with non-traditional lenders who have less stringent lending requirements than traditional banks, and pair those lenders with small business owners seeking loans. When a loan is brokered, Fundera receives a “finder’s fee” from the lender. There is no cost to the small business owner to use Fundera.

Fundera is selective about the lenders with whom they partner, and they reportedly have fewer than 50 approved lenders. These lenders offer a variety of products to Fundera customers, including merchant cash advances, short-term loans, lines of credit, and personal loans used for business purposes.

Applying for funding through Fundera is relatively quick and easy, as one application goes to all the company’s partner lenders who make the decisions. This gives small business owners access to a wide variety of funding options with less time and hassle.

However, because Fundera’s lenders are usually non-traditional lenders and their products tend to be more short-term options, many customers report higher-than-usual interest rates. This can be a trade-off for many business owners, as Fundera allows them access to funding they wouldn’t otherwise qualify for.

Fundera Business Financing: What You Need to Know

Fundera is not a loan originator; they simply pair small business owners with lenders who then originate the loans.

Many traditional lenders require small businesses to meet a higher bar for lending than many can manage, including large annual revenues and a minimum of five years in business. While Fundera does have minimum requirements for lending, including recommending that businesses have at least two years in business and generate at least $10,000 in monthly revenues, its lenders are smaller and able to be more flexible to accommodate businesses that may not meet all these requirements.

Once a funding match has been made, Fundera is no longer involved in the lending process and the lender and small business owner work together.

Fundera also offers a variety of articles and other resources for small business owners, helping them with financial planning and other money-related tasks to support their success.

How Does Fundera Business Financing Work?

When you complete a loan application with Fundera, the company shares that application with all its lenders with whom you may be a match. You can compare and contrast your options, selecting the lender that has the product most suited to your needs.

Once you choose a lender to work with, the lender pays Fundera a “finder’s fee.” There is no cost to you for using Fundera.

You and the lender then continue your relationship separate from Fundera, and you pay the lender directly.

Fundera’s partners offer a variety of financing options, including invoice financing, startup business financing, equipment financing, and short-term loans. They even can help small business owners apply for Small Business Administration (SBA) loans.

Where is Fundera Available?

Fundera is available in all 50 states, but not all of Fundera’s partner lenders offer loans in all 50 states. Depending on where you live, your options may be different.

How Much Does Fundera Cost?

As a small business owner, using Fundera is 100% free.

Fundera makes their money by getting paid by its partner lenders when a loan is matched. This fee is usually between 2 and 5 percent of your loan amount, so Fundera may receive $2,000 to $5,000 on a $100,000 loan, for example.

There are a variety of different fees and interest rates associated with the loans and other funding that Fundera helps match small business owners with. The exact amount you can expect to pay will depend on your individual qualifications, the type of funding you choose, and the lender you select to work with.

What Types of Funding Does Fundera Offer?

Fundera helps pair borrowers with lenders that offer a variety of loans and other financing options. Some of the funding available to small business owners include:

SBA Loans

SBA loans are guaranteed by the Small Business Administration and can be taken out between $5,000 and $5 million. These loans are available for a variety of purposes, including working capital, purchasing inventory or equipment, refinancing debts, or buying real estate.

The SBA loans are available with repayment terms between 5 and 25 years, depending on a variety of factors.

SBA loans typically carry the lowest interest rates because they are underwritten by traditional banks and backed by the Small Business Administration, but the approval process can be slow and you may be required to complete a large amount of paperwork.

Business Term Loans

Business term loans are the traditional type of loans where you receive a lump sum of money and repay it for a certain term.

Fundera’s partners offer business term loans between $25,000 and $500,000, with terms ranging from one to five years. There may be prepayment penalties if you decide to pay your loan off earlier than scheduled.

These types of loans often come with lower monthly payments than other types of business loans, and you may have access to funds in as quickly as two days.

Business Lines of Credit

With a line of credit, you are given access to a pool of money - typically between $10,000 to over $1 million. You withdraw only what you need at any given time, and repay the line of credit.

If you need more money for another purpose, you can continue to draw money against your line of credit until it is depleted. When you repay money on your line of credit, you replenish the amount you’re able to withdraw.

While business lines of credit offer quick access to cash, they often come with far higher fees than other types of funding. And the more money you withdraw, the more you’ll end up paying.

Invoice Financing

If your business invoices its clients, you can receive funding based on any unpaid invoices, up to 100 percent of the face value of the invoice.

For example, if you have $100,000 in unpaid invoices, you can receive invoice financing up to $100,000. The borrowed amount is then repaid when your client pays the invoice.

This type of financing often is much faster to process than other types, with some businesses seeing the money in less than a day after applying.

Startup Business Loans

Startup businesses often face a variety of hurdles qualifying for traditional loans, mostly because of their lack of history in business.

Startup loans are available up to $150,000 and are designed to help startups get off the ground by putting up business equipment as collateral.

Equipment Financing

If your business needs new equipment but you can’t afford to pay the asking price right away, Fundera’s partners offer financing.

They put up the money to purchase the equipment - up to 100 percent of the value of the new or used equipment - and then you repay them.

Think of equipment financing as similar to getting a loan to purchase a personal car - Your lender pays the dealer for the car you drive off the lot, and then you pay the lender back for the amount of that car purchase.

Short-Term Loans

For those times when your business needs cash quickly to respond to an emergency, cover cash flow problems, or take advantage of a business opportunity and you’re confident you can repay a loan within 18 months, a short-term loan may be a good option.

These loans are available from $2,500 to $250,000 but, due to the short-term nature of the terms, often come with higher interest rates than longer term loans. They do provide somewhat more flexible qualification requirements, though, opening them up to more small business owners.

Merchant Cash Advances

If your business takes credit cards to process payments, you may be able to receive a cash advance against future credit card processing.

You receive a lump sum of funding - from $2,500 to $250,000 depending on your needs and your average credit and debit card receipts - and then that loan is repaid through future daily credit and debit card receipts.

This option offers fast access to cash, but also comes with higher fees than traditional loans.

Personal Loans for Business

For businesses that don’t have a lengthy business history, owners can take out personal loans for business purposes.

These loans can come with far lower fees than traditional business loans, but may provide access to less cash than your business needs. Additionally, because you are taking out a personal loan, it is reported on your personal credit report.

Fundera Business Financing Features:

• Founded in 2013
• Headquartered in New York City
• Partners with non-traditional lenders
• More flexible lending requirements than traditional banks and financial institutions
• Wide variety of financing options
• Some financing options have large maximum amounts, over $1 million
• No cost to business owners for using Fundera
• Saves you time when applying for business financing
• One easy application goes to all available lenders
• Library of articles and resources to help small businesses succeed financially

Pros and Cons of Fundera Business Financing

Here are some of the pros and cons of choosing Fundera for business financing:

Pros

• No cost to business owners to use
• More flexible lending requirements, opening up access to financing
• Variety of loan and other financing options
• One application gets sent to multiple lenders
• Excellent public reputation
• Transparent terms and fees
• Variety of extra financial resources for small business owners

Cons

• Higher interest rates than from traditional banks
• Not all businesses qualify
• Not all funding options available in all states
• Additional fees may apply to certain accounts
• Not a direct lender
• May not be the least expensive option available

Fundera Business Financing Customer Reviews

Overall, Fundera has an excellent public reputation and large amount of positive customer reviews.

The company has more than 500 reviews on Trustpilot, with an average star rating of 5 out of 5.

“I reached out to Fundera for help with obtaining an SBA loan to grow my business. Graham and Alex were extremely patient and did not use pushy sales tactics, something I really appreciate. They did a lot of hand holding, answered dozens of my questions, and made the process of filling out the paperwork very easy. Their upfront due diligence paid off when it came time to formalize the loan application, as I received an offer from the bank within a few business days, and funding within just 2 business days of submitting a signed contract with their recommended bank, First Home. Now it's time to put that money to work!” - Steve B.

“I had low expectations, and I was wrong. I just stumbled upon the website and really didn't think anything would come of it. I am glad my rep followed up with me. I now have a loan that is helping me and my business.” - Kathy G.

“They don't leave you alone after doing business with them. I keep getting phone calls and emails asking me to refinance my loan and have told them to "go away," but the emails just keep coming.” - Mark

How to Apply for Fundera Business Financing

Applying for funding through Fundera’s partner lenders is quick and easy, with most people completing the application in less than 10 minutes.

1. Visit Fundera's official site.
2. Answer a few questions about your business, including the year you founded your business, your average monthly revenue, and how much money you need. You may be asked to provide other additional information.
3. Fundera connects you with an individual lending specialist who calls to collect additional necessary information about you and your business to help match you with the best lending options.
4. You are presented with the best funding options for your business, and you choose the product that’s right for you.
5. Once you have chosen an option, you are connected directly with the lender to complete the application process.

How to Contact Fundera

Address: 123 William Street Floor 21 New York, NY 10038 Customer Service: (800) 386-3372 Email Support: [email protected] Website: Fundera.com Facebook: https://www.facebook.com/fundera/ Twitter: @fundera

Does Fundera Offer Other Kinds of Financing?

Fundera only offers business financing matching services.

Fundera Review – Summary

Getting the money you need for your small business, whether it’s for purchasing equipment, covering your bills in a slower month, or jumping on a sudden opportunity that could help you grow your business, is important. For many small businesses, though, traditional lenders make it more difficult to gain access to the money they need to thrive.

Thanks to small business lending marketplace services such as Fundera, small businesses have a greater ability to get the funding they need with less hassle and without spending tons of time filling out frustrating applications.

One quick application is sent to Fundera’s partner lenders, and the borrower is presented with the best options for funding to choose from. Borrowers pay nothing for the matching service. Instead, Fundera receives a fee - usually between 2 and 5 percent of the amount borrowed - from the lender once you’ve been fully approved.

If you’re a small business owner struggling with the frustration of applying for lending from traditional banks and financial institutions with no luck, Fundera may be a great option for you. Its more flexible requirements and wide variety of funding options means more businesses qualify for funding.