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Updated on Monday, August 3, 2015
Balboa Capital is a direct lender specializing in equipment financing that has been around since 1988. It offers a selection of small business financing, ranging from merchant capital advances, to flexible loans, to franchise financing, to standard working capital loans.
Balboa is mostly looking to bridge the gap between businesses that don’t qualify for bank loans that still need financing from other sources.
Balboa Capital Small Business Loan Details
Balboa Capital offers small business loans of up to $250,000 on terms of 3 to 18 months (sometimes 36 months). If you need more than that, it’s possible to receive $2 million by providing more documentation and information about your business.
APR ranges are heavily dependent on a number of factors such as your unique credit profile, time in business, and revenue. Since Balboa Capital is a direct lender, it has a lot of flexibility with regards to the terms and rates it can offer.
If you’re not qualified for a standard working capital loan, Balboa also offers something called a flexible business loan. You can receive up to $1 million if your gross revenue and bank balances are high enough. There are no prepayment penalties, and you’ll have payments debited from your account on a daily basis. All you need to apply are your most recent business bank statements (3-6 months should be enough), and funding can be completed in 48 hours from when you sign your loan agreement.
The Pros and Cons of a Balboa Capital Small Business Loan
Pro: Balboa Capital needs minimal information (especially when compared with a bank) to offer you a loan of up to $250,000.
Con: Balboa Capital’s repayment terms are on par with some lenders, though there are others out there offering 5 year terms. Make sure your business can handle larger payments paid back in shorter time frames.
Pro: As it’s a direct lender, Balboa Capital has greater flexibility to work with businesses of all types. While this makes it a little difficult to pin-point exactly which businesses should apply here, it mostly works to your favor. If your credit score isn’t the best, but you have a lot of time in business and generate a good amount of revenue, then you still have a chance of qualifying. This is in stark contrast to bank loans, where you may be denied solely based on your credit score.
Pro/Con: The terms and rates offered are a little vague, as with most direct lenders. This is a con because it might make it harder for you to decide whether or not the loan is a good fit for you without going through the application process. On the other hand, rates and terms can vary a lot because they’re dependent on a number of factors. No two businesses are exactly alike. Balboa also uses its own technology and internal systems to evaluate a business, which means all its loans look different. However, that does mean it’s up to you to do your due diligence and make sure the terms you’re receiving are comparable to what other lenders are able to offer you.
Pro: There are no restrictions on how you can use your small business loan. That freedom is great to have, especially if an emergency occurs and you find yourself needing to use the funds for something else.
Which Businesses Are Eligible For a Loan With Balboa Capital?
Your business must have one or more years of operating history, no large tax liens, and no recent bankruptcies to qualify. You also need $100,000 in annual sales and a decent credit score, but “perfect” credit isn’t needed. A mid-level and higher score is fine; the better your credit score is, the better your rates and terms will be.
Again, because Balboa Capital is a direct lender, it has the ability to evaluate each business individually on a number of criteria, so there are no hard and fast rules (beyond the above) for eligibility.
Application Process and Documents Needed
Balboa Capital’s funding process can take five days or less to complete, and you don’t need to provide a ton of information to get approved for $250,000 or less. It can even provide same-day funding in select cases. Expect to be contacted by a representative shortly after completing the application online.
If you’d like to get more financing, Balboa Capital offers loans up to $2 million, but you’ll be asked to provide more information and documentation on your business, including:
- Business plan
- Recent bank statements
- Recent credit card statements
- Balance sheet
- Legal statements (showing the structure of your business)
- Previous years’ tax returns
This makes sense considering $2 million is a large amount. Balboa Capital wants to make sure you have a need and a plan for how you’re going to use your funds, and they also want to make sure you can handle a larger payment.
It may help to consult with your accountant to get all your documentation in order before applying.
The Fine Print
There’s no prepayment penalty with this loan, though there is an origination fee. The amount will depend on your loan, as fees are evaluated on a case-by-case basis.
There’s no personal collateral needed as the loan is unsecured, but a personal guarantee is required.
Which Businesses Benefit the Most from a Loan With Balboa Capital?
Businesses looking for the “full financial package” Balboa Capital offers ($2 million in funding) will benefit from the larger loan amount available. Business owners with less than perfect credit can benefit, too.
Basically, if you’ve been turned away by traditional bank loans, Balboa Capital is worth a try. It’s not restricted to the same type of set guidelines banks are, so your chances of being approved are greater.
The funds can be used without any restrictions, but popular reasons for financing include business expansion, inventory, payroll, taxes, debt consolidation, and more.
Additionally, beyond its small business loans, Balboa Capital also has an extensive equipment leasing program for many different industries. It also provides financing for franchises.
Other Alternative Small Business Lenders
If Balboa Capital’s standard loan size is too small for what you need, or if the repayment terms are a bit too short, here are a few other alternative options you can look at.
smartbiz offers SBA loans that are great alternatives to traditional bank loans. You can borrow $30,000 up to $5,000,000 on 120 to 300 month terms, with an origination fee up to 0.00% - 4.00%, and with interest rates ranging from 4.75% to 7.00%. A minimum of two years in business, positive cash flow, and no negatives on your credit history are required. A minimum credit score of 600 is also needed to qualify. There are other closing costs associated with this loan.
Lending Club is a peer-to-peer lender offering loans of up to $500,000 on terms of 12 to 60 months. Origination fees range from 3.49% - 7.99%, with fixed APRs ranging from 9.77% to 35.98%. You need at least two years in business, $75,000 in annual sales, and fair or better personal credit with no recent bankruptcies or tax liens.
Looking for a bit more? FundingCircle offers loans from $25,000 to $500,000 on terms of 3 to 120 months. Its origination fee ranges from 3.49% - 6.99%, and its interest rates range from 4.99% to 24.90%. You must have two or more years of operating history, $150,000 in annual revenue, and a minimum credit score of 620 to qualify.
Bond Street also offers loans ranging from $50,000 to $1,000,000 on terms of 12 to 36 months. The origination fee ranges from 3.00% - 5.00%, and APRs range from 8.00% to 25.00%. Again, you need two years or more in operating history, $200,000 in annual revenue, and around a 660 credit score to qualify.
Be Sure to Shop Around
It’s no secret that securing a small business loan online is a bit more expensive than a traditional bank loan, but if you don’t qualify for the latter, then these alternatives might be your best bet. However, that means it’s up to you to shop around for your best rates and terms possible, especially when it comes to direct lenders that don’t advertise the minute details of their loans on their websites.
If you shop around within a period of 30 days, your credit score won’t suffer that much, and you’ll be able to compare all the offers you’ve received to see which loan will cost the least. Remember to consider repayment terms, APRs vs. factor rates, fees, and how often you have to pay. You don’t want to borrow money only to end up behind on payments because you didn’t think about how it would impact your business.