When you’re taking out a loan, the last thing you want to do is part with your existing savings or cash flow just to get the loan, but for many small business owners, finding lenders that don’t require upfront, out-of-pocket fees or collateral can be difficult. These five finance options can help you secure the funds you need without immediately turning over some of your own.
1. PayPay Working Capital
PayPal has a history of helping small business owners, and their Working Capital Loan continues to do that, particularly when it comes to limited fees. Borrowers are charged a single, flat fee that is incorporated into repayment. Repayment is automatic and deducted as a percentage of each PayPal sale, though borrowers can make manual payments as they see fit.
Borrowers can only take out a PayPal working capital loan for up to 35% of the total PayPal sales over the last twelve months. First-time borrowers can access up to $125,000 and borrowers that have borrower and successfully repaid two working capital loans may be eligible to borrow up to $200,000.
To be eligible for this loan, you must have a PayPal Business or Premier account that is at least three years old. In addition, eligibility is based on the total sum of all PayPal sales processed. If you have a business account, your business must process between $15,000 ad $20 million in PayPal sales per year. If you are a Premier account holder, your business must process between $20,000 and $20 million per year.
2. Square Capital Loan
Like PayPal, Square is another popular payment processor that has expanded their offerings to included small business financing products. The Square Capital Loan is very similar to the PayPal working capital loan; it’s free of application and closing fees as well as compound interest. A single, flat fee, which is determined during the application process, is applied to the total of the loan, and repayment is automatically made by deducting a percentage of daily card sales.
Loan amounts range from $500 to $100,000, and eligibility is based on your Square Card history, including your Square processing and payment frequency. Users can check eligibility by logging into their Square Dashboard, where an existing offer can be found under the Capital Tab. If not offer is available, you are not eligible for a Square Capital Loan.
If you’re looking for a term loan or equipment financing, you may want to consider StreetShares. StreetShares extends loans from $2,000 to $250,000, though you can’t borrow more than 20% of your total annual revenue. Terms are available for three months to three years, and rates typically fall between 7% and14%, though they can be higher.
Though there are no “up front” fees, this loan does include an origination fee between 3.95% and 4.95% . This fee is added on to the total loan and incorporated into your payments.
To be eligible you must be in business for at least one year and have annual revenue of $25,000 or more. Further, applicants typically must have a personal credit score of above 600 to qualify.
OnDeck is another popular online lender that has become popular in the small business sector, and that’s largely because of their quick funding process and slightly less restrictive qualifications. Eligible small business owners can take out up to $500,000 in as little as one day, and both short ( 3 – 12 months) and long-term (15 – 36 months) loan products are available.
Rates, which range between 9% and 25.3% (long-term loans start at 9.99%), can be higher than many other products on the market, but borrowers who need fast cash yet have trouble finding a loan elsewhere may find OnDeck to be a reasonable option. Additionally, this loan does come with origination fees between 2.5% and 4%; however, these are deducted from the total loan amount, so if your finances won’t allow for upfront, out-of-pocket fees, this is one way to skirt that obligation.
To qualify for a loan through OnDeck, you must have a personal credit score above 500, which is why it’s attractive to borrowers who have been turned down elsewhere. Further your business must be at least one year old and have an annual gross revenue of $100,000.
Regardless of what loan product you choose, you’ll be responsible parting with extra cash, whether it be interest rates, flat fees, or origination fees, but that doesn’t mean you need to part with your hard earned cash to cover an up-front, out-of-pocket fee. The loans above can help you finance your next venture without breaking the bank before the funds are even in your account.
This article was originally written on November 22, 2018 and updated on December 7, 2021.