They say it costs money to make money, but it also costs money to borrow money, a notion that may seem at odds with the goals and ambitions of small business owners. Whether it’s a term loan or a line of credit, securing funding will likely mean paying interest, but it can also mean paying a variety of fees, including an origination fee, or the fee charged by a lender at the start of a lending agreement. Though it’s not likely that you’ll escape an interest rate, you may be able to avoid an origination fee. That’s particularly true if you’re considering one of the following borrowing solutions.
American Express Business Loans
American Express has a steady presence in both personal and business finance, and though their business credit products may come with hefty fees, the American Express Business Loan departs from that norm. American Express customers can access between $3,000 and $50,000 without incurring origination fees or pre-payment penalties, and funds are typically available within three to five business days.
Rates & Terms
Approved customers can expect a fixed interest rate with an APR between 6.98% and 19.97%. This lender also has flexible repayment terms, offering 12, 24, and 36-month repayment options.
To be eligible for an American Express Business Loan, you must be an American Express Business Card Member with pre-approved business loan offer. To determine if you’re pre-approved, you can log into your account and check for an existing offer, which will include information about your pre-approved borrowing limit as well as the maximum rate for which you may qualify.
Kabbage has recently entered into its tenth year in business and has continued to be a popular alternative lending option for small business owners who need quick access to funds. Typically, borrowers can take out to $250,000 and access those funds within as little as one day.
Kabbage offers qualified borrowers monthly rates between 1.5% and 10%, and those rates are applied to the existing balance for the duration of the loan term or, in the case of early repayment, until it’s paid in full. Borrowers may be eligible for six- or twelve-month terms.
To be eligible for a line of credit through Kabbage, you must be in business for at least one year and have an annual revenue of at least $50,000. Though many lenders rely on a credit score, Kabbage does not, depending more on an analysis of your business’s cash flow and financial history. As such, Kabbage is often an appealing option to business owners with poor credit scores.
PayPal has had a powerful impact on small business owners, and LoanBuilder, a PayPal service, continue to solidify the relationship between entrepreneurs and one of the nations most notable payment processor. As is the case with many online lenders or lending products, the application process is quick, and in some cases, loan funds, which can range from $5,000 to $500,000, can be available as soon as the next business day.
Rates & Terms
Though PayPay is often known for transparent fees, you won’t find specific information about the LoanBuilder rate on their site. As per PayPal, this is largely because the rate is a flat fee based on the applicants personal and business credit and is therefore different for everyone; however, borrowers typically report paying the equivalent of a 25% and 50% APR. Fortunately, if you’re interested in a LoanBuilder loan, you can quickly complete their online eligibility form to determine the cost of the loan.
If you’re considering a LoanBuilder loan, then you’ll need to be in business for at least nine months and have an annual revenue of $42,000 or more. Additionally, you will need a personal FICO of 550 or higher. Because of the partial dependence on your personal credit score, if you have thin or poor business credit, you may still be able to secure a loan, and PayPal encourages potential borrowers to complete that online eligibility form, which will result in a soft inquiry that will not impact your credit score.
Like Kabbage, Fundbox is another alternative lender that provides small business lines of credit free of origination fees. A Fundbox line of credit is designed to meet short-term gaps in cash flow and amounts can range between $1,000 and $100,000.
Rates & Terms
Fundbox’s rate structure is a slightly different than other lenders and is based on a flat weekly payment. Generally speaking, customers pay, on average, $7 a week for every $1,000 they draw. For example, if a $10,000 loan would cost about $280 a month, with fees accruing as long as there is a balance. These loans are designed to be a short-term solution, and as such, borrowers typically have terms between twelve and twenty-four weeks.
To be eligible for financing through Fundbox, you must be in business for at least three months and have a revenue of at least $25,000. Additionally, you must have and use a business bank account with a balance of at least $500. Fundbox does not have a minimum credit requirement, but the company does perform a hard credit inquiry and uses the information to set your rates and terms.
Finding the right lending solution can be difficult, and though origination fees are something to consider, the absence of these fees doesn’t necessarily translate to the cheapest loan. As such, it’s important to factor in all fees and evaluates the total cost of the loan, including origination fees, before deciding on which loan product best meets your needs.