Most businesses face the need for financing in one form or another to help fund business operations, ensure cash flow is positive, or take on a new project such as expansion. However, obtaining financing for a small business can be tough.
Not all lenders seek to approve conventional loan applications for business because of the perceived risk involved. Additionally, tapping a friend or family member is rarely a comfortable path for small business owners needing financial assistance.
Fundera, an online business lending marketplace, was created to solve the difficulties of small business financing for companies in most industries. Here is our review of Fundera and how it can help finance your small business needs in 2024.
How Does Fundera Work?
Fundera does not make or fund loans in-house. Instead, Fundera works as the connection between borrowers needing funding for their small business and lenders willing to provide that funding.
As a different type of lending broker, Fundera is designed to help small businesses that have difficulty securing the funding they need from traditional banks and credit unions.
Instead of partnering with traditional financial institutions, the company works with lenders that require less from small business owners from an underwriting perspective. This makes it easier and quicker to qualify for financing the company needs.
You Can Work With a Business Funding Advisor for Free
Fundera provides each potential borrower with a funding advisor who helps match them with appropriate funding types. There can be numerous financing vehicles available to qualified businesses. That can make it a challenge for an individual or business to fully review all the products and confidently decide which is the best choice for them.
Borrowers may be matched with small business lenders who offer long-term fixed-rate loans, SBA loans, accounts receivable financing, equipment financing, merchant cash advances, or short-term loans and lines of credit.
Fundera funding advisors can take much of the pain out of the borrowing process. These lending consultants work with borrowers to evaluate the loan offers they qualify for, then reviews their applications and helps submit them to select lenders within Fundera’s network. They also advise on how to receive better offers in the future.
In return for making the connection and walking prospective borrowers through the application process, Fundera collects a finders fee from the lender once a new loan or line of credit is completed.
Which Small Businesses Can Benefit from Fundera?
Conventional bank loans are often the most cost-effective choice for small businesses. However, with their rigid requirements and lengthy processing times, financing business needs in this way leaves something to be desired.
For business owners seeking a better, more efficient, and transparent way to secure the money they need to cover regular operating expenses, finance a new piece of equipment, buy inventory, or invest in business growth, Fundera has a solution.
Any business owner can benefit from working with a Fundera loan consultant to gain a stronger understanding of the types of financing available and the loan options that best fit their unique business needs. This includes startups, small businesses with bad credit, and businesses with excellent credit.
Fundera Business Loan Types, Credit Score and Other Qualification Requirements
The lending partners connected to Fundera carry important eligibility requirements for prospective borrowers, such as time in business, financial history, and credit score information.
Small business owners need to understand where their company stands regarding its financial footing and how the new funding will be used to move things in a positive direction.
Additionally, lenders want to feel confident that the borrowed funds will be repaid over time per the terms of the initial agreement. To help in this process, borrowers should work with a funding advisor to crunch the numbers to ensure enough positive cash flow to cover the required payments.
Fortunately, the qualification requirements through Fundera partners are often more flexible than conventional bank lenders. Borrowers may also receive offers from multiple financial institutions to compare. This gives business owners the upper hand in the process.
Here are the most common small business loan types and their typical qualification requirements through the Fundera marketplace.
– SBA Loans
Most small business owners think of Small Business Administration (SBA) loans when they consider options for financing. An SBA loan is a low-interest-rate small business loan with a long repayment term and is backed by the United States government.
To qualify for an SBA loan, businesses must have at least two years in operation, a personal credit score of at least 640 for the business owner, and no less than $100,000 in annual revenue.
Fundera partners with several lenders through its platform to offer SBA loans to qualified business owners from $5K – $5M with up to 25 years to repay and approval as fast as two weeks.
– Business Term Loans
A term loan is one of the most common types of business financing available. It supplies businesses with a lump sum of capital and is also one of the most popular choices among small business owners. With a fixed interest rate and steady repayment expectations over its lifetime, a business term loan offers continued clarity on how much financing will cost from start to finish.
Business term loans are offered from $5K to $600K with a 3-month to 3-year repayment period and approval as quick as three hours. Business owners will need a minimum personal credit score of 600, at least one year in operation, and $90,000 in annual revenue to qualify for a term loan through Fundera.
– Equipment Financing
Another option for funding through Fundera’s lending partners is equipment financing. Business owners may apply for a loan for the sole purpose of financing the purchase of equipment to be used in business operations. The equipment purchased is then used as collateral to offset any risk of loss the lender may be exposed to on the loan.
Companies can obtain equipment financing through Fundera up to the amount of the equipment with repayment terms of 5 to 6 years and approval as fast as two days. Business owners will need a personal credit score of at least 600 to qualify, a minimum of $100,000 in annual revenue, and one to two years in business.
– Invoice Financing
Invoice financing, also known as accounts receivable financing, is a form of asset-based financing that allows small businesses to receive funds up to 90% of the value of an outstanding customer invoice in exchange for a fee paid to the lender.
Business owners with poor credit may qualify more easily for invoice financing. To qualify, the business must be active for at least six months and have an annual revenue of $50,000 or more. Funding can be as fast as one day, and the borrowed funds aren’t due until the invoice is paid.
Invoice financing offered through one of Fundera’s many partners can be a handy option for small businesses needing funding quickly. However, use caution because it can have higher fees than traditional financing.
– Short-Term Business Loans
Shor-term business loans are another option for qualified business owners through Fundera. With a short-term loan, businesses may borrow a lump sum of up to $250,000 to finance their business needs and repay the principal and interest over a short period, typically 3 to 18 months.
Business owners need a minimum personal credit score of 550 to qualify, as well as one year in business and annual revenue of at least $50,000. Short-term business loans offered through Fundera can be funded in as little as one day.
– Merchant Cash Advance
A merchant cash advance (MCA) is a lump sum of capital lent to an organization by a Fundera partner to be repaid as a percentage of its daily credit card transactions.
A small business can borrow up to $500,000 and receive funds in as little as one day but must be in operation for at least five months and have $75,000 in annual revenue. A low personal credit score of only 400 is needed to qualify for a merchant cash advance from some lenders.
– Business Lines of Credit
A business line of credit is a flexible form of financing that allows businesses to receive a credit line similar to a credit card. It allows businesses to withdraw only what they need and pay interest on the funds withdrawn, not the entire credit limit.
The qualifications vary from lender to lender, as do the loan limits and repayment terms, but qualified businesses can receive credit lines from $5,000 to $250,000 with repayment terms of up to 18 months and approval within one day.
A business line of credit through Fundera generally requires at least six months in business and $50,000 in annual revenue.
Is Fundera Legit?
Yes. Fundera is a legitimate company, not a scam. Established in 2013, Fundera, Inc., also known as Fundera by NerdWallet, or just Fundera, is a small business lending network powered by a safe online platform. Its success in the business lending market led to an acquisition by NerdWallet in 2020. Hence its new name, Fundera by NerdWallet.
Final Thoughts on Obtaining Small Business Loans with Fundera by NerdWallet
Finding – and understanding – the best options for financing business operations can be an uphill battle. A quick online search for small business loans returns far too many results to count, and each comes with a variety of credit requirements, loan limits, and repayment terms that may not be the strongest fit for your specific business needs.
The online lending marketplace, Fundera, has set out to make the process of finding the right business loan easier to navigate by connecting prospective borrowers with mostly non-traditional lenders that offer a slew of financing options for small businesses.
Fundera is a great tool for helping business owners find and understand their financing options in a streamlined, transparent way. Before heading to the bank to apply for a traditional business loan, check out what Fundera has to offer you and see if it might be a good fit for your business financing needs.
I hope you found this “Fundera Review” helpful. If you have a question, business loan tip, or another comment, please don’t hesitate to use the Comments section below. Good luck funding your small business needs!
